abstract despite its contributions to the state economy, relatively little is known about north carolina’s forest-based economic network. in order to further understanding, qualitative input-output analysis was applied to determine the number of supply chains present within the state’s forest industries. a 2014 input-output model of the north carolina economy was constructed using the impact analysis for planning database. the inter-industry transactions table was first normalized by dividing the cells contained in each column by their respective sum. this illustrated the relative contribution each row industry provided to producing one dollar of each column industry’s output, where the focus here was on the 29 sectors considered to be forest-based. cells greater than or equal to $0.01 were re-coded as “1,” else “0.” this revealed direct purchases made by the forest sectors of measurable size, and sequentially raising this new binary matrix to higher powers illustrated the number of indirect connections between a forest sector and its upstream suppliers. while forest industries’ direct links to other sectors numbered about 250, more than 15,000 total supply chains of three or fewer links were discovered. forestry and logging contained less supply chains than the manufacturing industries (wood products, paper, and wood furniture) at each measured length. this is a first step to tracing the paths of transmission taken by the forest industries’ multiplier effects through a regional economy. the benefits to understanding these pathways can include not only identifying where potential bottlenecks inhibiting forest-based growth may reside but also where economic assistance efforts could aid in tempering any negative effects associated with industry contraction. keywords: forestry and logging; input-output model; paper manufacturing; wood furniture manufacturing; wood products manufacturing qualitative input-output analysis of north carolina forest sector supply chains nathan s. gerber1 and t. eric mcconnell2* acknowledgements: we thank the anonymous reviewers for taking the time to review our manuscript and help us improve it. 1 graduate student, department of sustainable biomaterials, virginia tech university, blacksburg, va. 2 assistant professor, school of agricultural sciences and forestry, louisiana tech university, ruston, la. * corresponding author: email: temc@latech.edu bioproducts business 2(3), 2017, pp. 23-28. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-003 1.0 introduction forestry in north carolina contributes jobs and income to every county in the state through its linkages with more than 500 economic sectors (mcconnell et al. 2016). the forest industry directly supported 70,300 jobs and $4.96 billion in value added to produce timber, wood products, paper and paper products, and furniture in 2013. accounting for the industry’s multiplier effects pushed total forest-based contributions to 144,800 jobs and $29.4 billion in output, which included $10.9 billion to the state’s gross domestic product. for its size and importance to economies across the country (dahal et al. 2015; golden et al. 2015), there is little documented knowledge regarding forest industry supply chains beyond the recent identification of potential bottlenecks within michigan’s forest products export base (cooke et al. 2015). many business-to-business transactions comprising an industry’s supply chain network are simply direct purchases and intuitive. for instance, a sawmill acquires sawlogs for processing into lumber. but the timber harvester had to successfully bid for the landowner’s timber, and the landowner in turn may have paid a professional forester to manage the property. this highlights a single supply chain with three links, but as many as six 24 bioproducts business 2(3) 2017 individual chains of varying lengths are present in this straightforward example (figure 1). the paths traced from the demanding sector (the sawmill in this example) to an upstream supplier become significantly more complex with each additional round of spending. an economic input-output (i-o) table provides a mechanism for tracing an industry’s purchases through the economy (table 1). the i-o table quantifies transactions by how many dollars each sector makes (processes for sale to other sectors) and uses (purchases to produce its product). in the united states, business establishments are classified into sectors following the north american industry classification system (usdc census bureau 2016). for example, hardwood and softwood lumber producers are grouped collectively into the sawmills sector. the i-o table separates processing sectors by rows (i) and purchasing sectors by columns (j); every sector is considered to be both a processor and purchaser. each cell of the table has a dual interpretation as either a sale (if reading across a row) or a purchase (if reading down a column). summing each row quantifies an industry’s output, or gross sales. this includes intermediate sales to other sectors along with those to final users. the total outlay of inputs, which are the column sums, includes local purchases from intermediate production sectors, value added, and institutions, as well as imports from outside the study region. the column and row sums must balance. an industry’s supply chain network more so resembles a web (cooke et al. 2015) that is comprised of a number of poles (sectors) transmitting purchases along arc-like paths and occasional feedback loops across the economic system. structural path analysis (spa) maps and quantifies the flows present in an economic system. defourny and thorbecke (1984) published the seminal work on spa using a social accounting matrix, which is an extension of the input-output table. the circular flows between industries, factors of production, and institutions were traced following injections at various stages using the south korean economy as an example. spa decomposes the multiplier matrix of total requirements1 into various channels by which their influence to the system’s total change can be quantified. a recent application of structural path analysis to the forest products industry occurred in michigan, where the export base contributions of leading forest sectors were found to be highly dependent upon the production of locally sourced timber and wood products (cooke et al. 2015). the concept has more recently expanded into other areas, including energy use and emissions (matthews et al. 2015). highlighting the number of paths existing between a purchasing industry and supplying sector at each round of spending can be illustrated by qualitative i-o analysis (aroche-reyes 2003). this can provide a rapid assessment of important relationships underlying within a regional economy. qualitative i-o analysis applies a binary approach to the matrix of industries’ production requirements to determine the connections between table 1. input-output table of a hypothetical three sector economy. processing sectors purchasing sectors final demand total output agriculture and forestry manufacturing services agriculture and forestry 8 4 4 20 36 manufacturing 7 9 5 11 32 services 4 2 4 24 34 value added 11 15 13 39 imports 6 2 8 16 total outlay 36 32 34 55 157 figure 1. hypothetical system of wood supply chains. 1 in matrix notation, a* = (i – a)-1, where a* is the total requirements matrix, i is the matrix of initial requirements, and a is the matrix of fixed coefficient production functions. each element of a* describes the amount needed from sector i (row) as input to produce one dollar of output in sector j (column) to satisfy final demand. summing the column elements for each industry j provides industry j’s output multiplier. gerber and mcconnell — qualitative input-output analysis of north carolina forest sector supply chains 25 sectors. based upon a minimum size criterion set for inter-industry purchases, cells coded “0” are not connected, whereas a “1” means they share a connection. graph theory can then be utilized to visually map a matrix’s pathways. this method has been used to illustrate both economic (ghosh et al. 1998) and environmental data (seung 2014). our goal was to use qualitative i-o analysis to determine the number of inter-industry supply chains in north carolina’s forestry and forest products industries. this is a first step to gaining a better understanding of the state’s forest-based network. a secondary goal was to compare the number of supply chains across industries at various transactional stages to determine if and where differences existed. 2.0 methods a north carolina i-o model was constructed using implan’s 2014 economic database of all 100 counties (implan llc 2015). the implan system was created to detail the economic impacts of forest management activities occurring on federal forest lands to surrounding communities. the system is comprised of both a database and software that analyzes economic impacts generated within a predefined region in terms of dollars added into the economy and jobs produced. data are obtained from various government sources, including the bureau of economic analysis, the us census bureau, and us department of agriculture, among many others. the current version of implan’s i-o model is based on an economy containing 536 sectors. north carolina timber income accounts were customized using data collected by north carolina state university extension forestry (jeuck and bardon 2015). the model was next aggregated from 536 sectors to 112 and reconstructed. of the 112, 29 forest-based and 16 other agriculture, fishing, and hunting sectors remained completely disaggregated along with one non-wood furniture manufacturing sector. all others were aggregated to the 3-digit north american industry classification system (naics) classification (table 2). the i-o table was exported to excel, where the 112 x 112 z-matrix of inter-industry activities was segregated for analysis. using the total outlays from the model, the z-matrix was column-normalized to create the a-matrix of direct requirements, where 𝑎𝑎𝑖𝑖𝑖𝑖 = ( 𝑧𝑧𝑖𝑖𝑖𝑖 𝑍𝑍.𝑖𝑖 ). table 2. north carolina forest-based industrial sectors. industry implan sectors (implan sector code) forestry and logging (naics 113), and support activities for forestry (naics 115) forestry, forest products, and timber tract production (15); commercial logging (16); support activities for forestry (19) wood products manufacturing (naics 321) sawmills (134); wood preservation (135); veneer and plywood manufacturing (136); engineered wood member and truss manufacturing (137); reconstituted wood product manufacturing (138); wood windows and door manufacturing (139); cut stock, resawing lumber, and planning (140); other millwork, including flooring (141); wood container and pallet manufacturing (142); manufactured home manufacturing (143); prefabricated wood building manufacturing (144); all other miscellaneous wood product manufacturing (145) paper manufacturing (naics 322) pulp mills (146); paper mills (147); paperboard mills (148); paperboard container manufacturing (149); paper bag and coated and treated paper manufacturing (150); stationery product manufacturing (151); sanitary paper product manufacturing (152); all other converted paper product manufacturing (153) wood furniture manufacturing (naics 337) wood kitchen cabinet and countertop manufacturing (368); upholstered household furniture manufacturing (369); nonupholstered wood household furniture manufacturing (370); institutional furniture manufacturing (372); wood office furniture manufacturing (373); custom architectural woodwork and millwork manufacturing (374) each aij described the amount purchased from each row sector i to produce one dollar of column sector j’s output. a filter size of 0.01 was established, where all direct suppliers with at least a $0.01 contribution per dollar of sector output were highlighted. the approach originally taken was to calculate aij ≥ 1/n (n = 112) as a benchmark (aroche-reyes 2001), which was then rounded to a filter of aij ≥ 0.01. this filter was applied to construct a w-matrix, which was a binary matrix consisting of 0s and 1s. any cell value greater than or equal to the filter was coded as “1” else “0.” the numbers of direct connections with suppliers for each forest-based sector were then summed. 26 bioproducts business 2(3) 2017 the w-matrix was then sequentially multiplied by itself, which is an adaptation of the power series approximation of the total requirements matrix. eight rounds will capture approximately 99% of a regional economy’s total flows following an external change (schaffer 1999). here, higher powers of w illustrated the number of indirect connections between a forest sector and its upstream suppliers. the focus was on the number of connections of length 3 or less, because supply chains of greater length have been found to be of lesser economic consequence (defourny and thorbecke 1984; dietzenbacher and romero 2007). the numbers of chains connecting a row sector i with each forest sector j were summed following each round of multiplication. forest sector results for each round of expansion were collapsed into four broader industries for reporting: forestry and logging (n = 3 sectors), wood products manufacturing (n = 12 sectors), paper manufacturing (n = 8 sectors), and wood furniture manufacturing (n = 6 sectors). these aggregations served as class variables for performing a kruskal-wallis test of differences in the number of supply chains across industries at the alpha = 0.05 level using sas 9.4 (2013). 3.0 results north carolina's forest industries were found to contain a total of 15,691 supply chains (table 3). across all forest-based sectors 249 chains were direct links of length 1; 1,894 were of length 2; and 13,548 were of length 3. the overall number of forestry and logging supply chains was 584; wood products manufacturing was 6,305; paper manufacturing was 4,917; and wood furniture manufacturing was 3,885 respectively. the four forest industry groups significantly differed with respect to the number of supply chains at each round of spending (table 4). given the much lower number of supply chains in forestry and logging relative to the other industries, we performed a second series of kruskal-wallis tests for only the three forest products manufacturing industries. wood products manufacturing, paper manufacturing, and wood furniture manufacturing did not significantly differ in the number of supply chains present across lengths (table 4). while no significant differences were present between the forest products manufacturing industries, the results pointed to differences between the timber production sectors and at least one of the three forest products manufacturing industries. 4.0 discussion converting inter-industry purchases to a binary system revealed more than 15,000 supply chains provided inputs to north carolina’s forest industries in 2014. the number of supply chains grew by an average factor of more than seven with each additional link of spending across all forest-based sectors. the industry with the lesser number of supply chains of direct length, length 2, and length 3 was forestry and logging. this was because the inputoutput model operates as a backward linked model, and forestry and logging is located at the upstream end of the forest industry production chain. the w-matrix is easily interpreted by observing the column for the desired industry. forest sector j in the column purchases input from row industry i, which likewise sells output to forest sector j. higher powers of w (w2 and w3) reveal the number of supply chains beginning at forest sector j (the demanding sector) and ending at row sector i (the supplier), but the indirectly connected links themselves are not revealed. supply chains of intertable 3. north carolina forest industry supply chains. industry number of supply chains length 1 (direct) length 2 length 3 total forestry and logging (n = 3) 12 76 496 584 wood products manufacturing (n = 12) 100 764 5,441 6,305 paper manufacturing (n = 8) 80 593 4,244 4,917 wood furniture manufacturing (n = 6) 57 461 3,367 3,885 all forest industries (n = 29) 249 1,894 13,548 15,691 table 4. kruskal-wallis results comparing the number of supply chains present at each length across forest-based industries in north carolina. supply chain lengths industry length 1 (direct) length 2 length 3 p values all forest industries 0.010 0.008 0.001 forest products manufacturing industries 0.136 0.076 0.057 gerber and mcconnell — qualitative input-output analysis of north carolina forest sector supply chains 27 est can be mapped in this context, though, by referring back to the w-matrix to trace specific paths of 1s. significant differences in the number of supply chains between the four forest industries were found at each length. the kruskal-wallis test is nonparametric and can only be used to identify whether at least one significant difference exists between categories, not which categories are indeed significantly different. visual inspection of the data suggested there was a significant difference in the number of supply chains between forestry and logging and at least one of the forest products manufacturing industries. rerunning the kruskal-wallis tests exclusive of forestry and logging noted no significant differences. the fewer number of chains leading to forestry and logging overall was indicative of it being located at the upstream end of forest economic supply chains (dietzenbacher et al. 2005). the ripple effects forest industries have on other sectors in north carolina’s economy were underscored in this analysis. given the number of links present in many forest sector supply chains, the effects are not necessarily one-step solutions to how a region reacts to industrial changes. exogenous shocks experienced by one industry, such as an increase in lumber exports, spread backward through the economy to other industries both directly and indirectly connected to the sawmill sector. while the input-output model is to be considered as a snapshot in time, usually one year, sequential raising of the binary w matrix to higher powers highlighted the successive nature by which multiplier effects occur before a new equilibrium is reached. qualitative i-o analysis provides an efficient means of highlighting discernible linkages and the distance between sectors. how forestry and forest products in north carolina might compare to other states’ forest economies is currently unknown. the more regional nature of forest products industries and markets, e.g. pacific northwest, south, appalachia, etc., might imply regional differences in structure, capacity, and performance as well. this is but one avenue of future research requiring further study. the analyst’s discretion governs exogenous filter size and will affect the number of chains revealed (arochereyes 2003). a filter too large will highlight only a minimal number of paths of the greatest magnitudes, while a filter too small can overstate the roles particular supply chains play in a region. also, leakages, or monies leaving a region at each round of spending, dictate that a supply chain’s overall influence lessens with its length (schaffer 1999). the question(s) being asked will ultimately direct the research regarding transactional influences in a region. this is a first step to quantitatively tracing the paths of transmission taken by forest industries’ backwardlinked multiplier effects, which can include not only identifying how other sectors contribute to forestry and forest products activities but also where potential bottlenecks inhibiting sector growth may reside. this could have particular policy implications in regions looking to the forest sector for development and/or expansion opportunities. for example, the impact a new sawmill might have in a region is relatively straight-forward to determine in terms of size (total sales of output, labor income paid to households, or value added provided to the region). but what is the order by which existing industries benefit by meeting these new demands? are there potential factors present that might prevent this growth from reaching its potential? as important, perhaps even more so, might be the opposite occurring – a mill closure. multiplier effects not only describe the benefits of sector expansion, but they also illustrate the unfortunate effects of industry contraction. understanding the paths negative effects might take could direct policymakers to particular key sectors that shared basic relationships with the affected facility. economic assistance in this case could help lessen any fallout spilling over from the distressed forest sector. 5.0 references aroche-reyes, f (2001) the question of identifying industrial complexes revisited: a qualitative perspective. pages 280-296 in m. lahr and e. dietzenbacher, eds. input-output analysis: frontiers and extensions. palgrave macmillan, uk. aroche-reyes, f (2003) a qualitative input-output method to find basic economic structures. pap reg sci 82, 581-590. cooke, s, kay, d, alward, gs, watson, p (2015) identifying important sectors among michigan’s forest product sectors: using i-o coefficients to measure comparative gross and base value added, competitive advantage, and structural path analysis. the alward institute for collaborative science, huntersville, nc. 19 p. dahal, rp, henderson, je, munn, ia (2015) forest products industry size and multipliers in the us south. forest prod j 65(7/8):372-380. defourny, j, thorbecke, e (1984) structural path analysis and decomposition within a social accounting matrix. econ j 94(373):111-136. dietzenbacher, e, romero, i (2007) production chains in an interregional framework: identification by means of average 28 bioproducts business 2(3) 2017 propagation lengths. int regional sci rev 30(4):362-383. dietzenbacher, e, luna, ir, bosma, ns (2005) using average propagation lengths to identify production chains in the andalusian economy. estud econ apl 23(2):405-422. ghosh, s, roy, j (1998) qualitative input-output analysis of the indian economic structure. econ syst res 10(3):263-273. golden, js, handfield, rb, daystar, j, mcconnell, te (2015) an economic impact analysis of the u.s. biobased products industry: a report to the congress of the united states of america. a joint publication of the duke center for sustainability & commerce and the supply chain resource cooperative at north carolina state university. 127 p. implan llc. 2015. 2014 north carolina database. huntersville, nc. jeuck, j, bardon, r (2015) 2014 income of north carolina timber harvested and delivered to mills. https://forestry.ces.ncsu. edu/county-income-and-economic-data/. matthews, hs, hendrickson, ct, matthews, dh (2015) life cycle assessment: quantitative approaches for decisions that matter. lcatextbook.com. mcconnell, te, jeuck, j, bardon, r, hazel, d (2016) north carolina’s forests and forest products industry by the numbers, 2013. north carolina cooperative extension service, raleigh, nc. 10 p. sas institute. 2013. version 9.4. sas institute, cary, nc. schaffer, wa (1999) regional impact models. regional research institute, west virginia university, morgantown, west virginia. 81 p. seung, ck (2015) untangling economic impacts for alaska fisheries: a structural path analysis. mar res econ 30(3):331-347. usdc census bureau (2016) north american industry classification system (naics). http://www.census.gov/eos/www/naics/. last accessed april 24, 2016. abstract geographical information systems (gis) is a growing technology but its uptake by the wood products industry is still largely limited to biomass mapping and logistics domains. the primary purpose of this paper is to explore ways in which gis can be applied to marketing domain in the wood products industry. toward that end, this paper develops a gis database for primary and secondary wood products in virginia. using cluster analysis, space relationships, and case study techniques, we also propose how gis can be applied to various elements of a company’s marketing mix: product, place, price, and promotion. keywords: geographic information systems, marketing, wood products industry assessing geographic information systems use in marketing applications for the wood products industry henry j. quesada-pineda*1 melissa brenes-bastos2 and robert smith1 1 department of sustainable biomaterials, virginia tech, brooks forest products center, 1650 research center drive, blacksburg, va, 24061 2 marketing account manager, expedian; email: melibrebas23@gmail.com * corresponding author: email: quesada@vt.edu; tel: (540) 553-6111 acknowledgements: this project was funded through a grant from the virginia department of forestry (vadof). bioproducts business 2(1), 2017, pp. 14-22. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-002 1.0 introduction the primary purpose of strategy is to help companies find a fit with its environment (hoffman et al. 2005). a good way for a company to adapt to its ever-changing environment is through a strong marketing mix strategy (hoffman et al. 2005) that includes decisions related to product, place, promotion, and price. marketers continue to explore application of the internet and information systems to develop new and innovative marketing mix strategies. for example, contemporary companies try to leverage social media to enhance their electronic marketing, channels of communication, selling skills, and distribution of products and services. still many procurement and distribution managers continue to limit their attention to logistics aspects in order to decrease cost and increase asset utilization. a common tool to assist logistic and distribution functions is geographic information systems (gis). however, there is little information on gis applications outside the realm of mapping and logistics. as some authors have indicated (longley & graham 1995, clarke & flaherty 2005), it seems that spatial analysis or gis, have enormous potential to be incorporated in strategic planning, including the marketing process. current knowledge regarding gis applications in the marketing process focused on aspects such as marketing mix implementation (hess, rubin & west 2004) and several investigations regarding applications of gis in marketing have demonstrated the relationship of the two parts–gis and marketing (wu & rathswohl 2010, esri 2010, usc 2011, johnson 2010, musyoka et al. 2007, scgis 2008, miller 2007). in addition, most significant studies suggest that the significance of gis in marketing applications can be validated by the use of marketing mix variables: product, price, place, and promotion (hess, rubin & west 2004, clarke & flaherty 2005). for example, a product could be designed to target a niche market with specific demographics such as ethnicity and socioeconomic status. depending on the select niche market for that product, the product´s price needs to be determined considering distribution, delivery, competition and demand. in addition, gis quesada-pineda et al. — assessing geographic information systems use in marketing applications for the wood products industry 15 could also be used to establish the best way to distribute (place) the product as well as the best strategy to promote the product. it has been documented that gis is helpful in the development of marketing mix elements (hess, rubin & west 2004). researchers consider that a holistic implementation of marketing strategies based on the marketing mix elements could benefit wood products companies in areas such as strategic planning and implementation, product development, management of manufacturing cost, lead times, and asset allocation (wu & rathswohl 2010, musyoka et al. 2007). the goal of this research is to advance an understanding and application of gis application in marketing mix realms in the wood products industry. three specific objectives were formulated to achieve this goal. first, an industry gis dataset was obtained and validated through a survey. second, clustering techniques based on gis data were used to evaluate and identify potential marketing opportunities, and third, expert input and literature review were used to propose specific strategies to promote gis application in marketing mix elements. 2.0 literature review 2.1 marketing according to the american marketing association (ama 2016), marketing is defined as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” armstrong & kotler (2005) defined marketing as the process of telling and selling products to satisfy customer needs. marketing is a process by which consumers (individuals and groups) obtain what they want and need by creating value in the product and exchanging value with others. moore & pareek (2006) mentioned that marketing has two goals: (1) to attract new customers by emphasizing the value of the product or service offered by the company and (2) to retain the customer interested and keep satisfying the customer with old and new products and services. an important milestone in the history of marketing is the separation from the production of goods to its consumption that happened during the industrial revolution (kotler 1999). during the production orientation era, the focus was on producing at the lowest possible cost, as producers were able to sell everything they were able to produce. after the turn of the first half of the 20th century, marketing was more focused on sales rather than production. at this time, there was more competition and it became important to communicate, advertise, and to appropriately brand products. at this point, marketing was still a support process but was more focused on distribution and communication with the goal to convince customers that one product was better than another (bartels 1988). after the 1960s, the marketing orientation era was born. marketers began to get involved in the strategy development of the organizations so that; decisions about what to produce, distribution channels, pricing, and how to advertise were now part of the marketing department functions. 2.2 a new era of marketing the marketing orientation era has been critical in the development of strategic marketing. a marketing orientation is defined by moorman & rust (1999) as a process in which all functional areas of the organization participate in incorporating customer’s needs into their strategic processes. marketing is a business process that can fit into the overall companies’ strategy, decision-making, mission statement, and corporate strategy (moore & pareek 2006, howe & bratkovich 2005). marketing should not only fit the company strategy, but organizations can also create their own marketing mix (strategy) to fit their consumer preferences and behavior as well as the goods or services provided by the company. this new marketing orientation has evolved into a holistic concept where everything matters. early in the 1960s one of the first attempts to integrate marketing with the organization’s operations (manufacturing cost, product design, distribution, and advertisement) was conceived by mccarthy (1964) where the elements of marketing mix were: product, place, price, and promotion (also known as the 4p’s). under this holistic strategy, marketing is not only directed towards the customer but also towards the company where the organization is fully aware of the strategic goals and the specific tasks to be conducted to remain competitive. perhaps the most significant challenge marketer’s face today is to provide solid return of investment on the marketing activities conducted. this new holistic marketing era has been potentiated thanks to critical advancements in information technologies such as internet, 16 bioproducts business 2(2) 2017 social networking, and data mining (trainor et al. 2011). currently marketers can integrate their activities through various information technology platforms to implement more efficient marketing activities. for instance, targeting specific niche groups in order to develop the right product, distribution, pricing, and promotional content is today an easier task thanks to application of information technologies such as geographical information systems (gis) in these decisions. 2.3 marketing in the wood products industry marketing has been an important support process for the wood products industry sector (dasmohapatra 2009). most of the marketing research produced in the last three decades for this industry sector have been focused on marketing strategies to support mature products (smith & bush 1994), identification of export barriers (ifju & bush 1993, cohen & smith 1991, lyon et al. 2013), understanding of product, consumer, and supplier attributes (forbes et al. 1994, hansen & bush 1999, and bumgardner, bush, & west 2000), and specific competitiveness issues (gazo & quesada 2005, bowe, smith & labissoniere 2005, smith & olah 2000). there is no specific research in the literature that has studied the marketing process as a holistic strategic approach in the wood products industry. it seems most of the recent research in marketing for wood products industries, have been isolated attempts to cover only parts of the marketing mix as developed by mccarthy (1964). for example, de hoop et al. (1997) and parhizkar & smith (2008) research on the mapping of wood residues could be classified as focus on product and anderson et al. (2005) research on consumer behavior in forest products could be connected with price determination. finally, green advertising research by grillo, tokarcsyk & hansen (2008) could be linked to product promotion. toivonen (1999) presents a case study on the use of information technology in marketing for the finnish forest industries as perhaps one of the few attempts to study the marketing process in a more holistic approach. as dasmohapatra (2009) indicated, the new era of the forest products industry relies on accepting global markets, targeting products to a changing demographic structure and to customer’s tastes, to products with environmental taste, innovation, efficient management, trade practices and policies. the recent research on marketing applied to wood products provides limited insights on how to integrate the marketing process into the strategic process of forest products industries. moreover, there is very limited research on the use and potential of information technologies such as gis in the marketing process. 2.4 geographic information systems in the wood products industry demers (2009) defined geographic information systems (gis) as a system designed to input, store, edit, retrieve, analyze, and output geographic data and information. as with all systems, gis is composed of integrated parts that allow it to perform correctly. these parts include (1) computer hardware and software, (2) space and organization, (3) personnel and (4) data and information (demers 2009). combining conventional marketing techniques with geospatial methods might enable users to picture the spatial distribution of data in maps–such as the distribution process, the market diversity–also complementing it with statistical graphs and diagrams that could link marketing and gis (musyoka et al. 2007). the marketing process is perhaps one of the best fits for applying gis. in general, marketing emphasizes on demand (customers) and supply (outlets, retail, shopping centers), which are easy to analyze and see in gis (toppen & wapenaar 1994). there have been reports on peer-reviewed articles, news and industry reports about how gis applications are integrated in the marketing process such as; customer marketing analysis, (toppen & wapenaar 1994) penetration & winning strategies (thompson 2010), customer profiling & costumer behavior (badea et al. 2009), business analysis (radut 2009), and market segmentation (musyoka et al. 2007) among others. other findings highlight gis applications on the marketing mix in the retail sector (nasirin & birks 2003). the wood products industry has used gis application for different purposes such as; surveying and mapping wood residues (de hoop et al. 1997), planning the use of information technology in marketing (toivonen 1999), consumer behavior in forest products (anderson et al. 2005), green advertising in forest sectors (grillo, tokarcsyk & hansen 2008), availability of biomass residues for bioenergy production (parhizkar & smith 2008), and forest cover changes (kumar 2011) to mention some. even though there has been recent research regarding the application of gis in the wood products industry, those quesada-pineda et al. — assessing geographic information systems use in marketing applications for the wood products industry 17 applications are not commonly related to the marketing strategic planning process. therefore, more research and models could provide strategies and examples of how to use gis as a part of the strategic marketing process in wood products industries. 3.0 methodology the goal of this research was to advance the understanding of gis application in developing the elements of the marketing mix. in so doing, we first developed and validated an industry dataset (objective 1) that includes geographical information of the companies to be studied. we then conducted visualization and analysis of the geographical data in order to determine basic space relationships leading to uncover potential marketing applications (second objective). the third objective included interviews with gis experts in other industries in order to benchmark and better understand what potential uses can be outlined when using gis in developing the elements of the marketing mix (product, price, promotion, and place) in wood products industries. 3.1 gis database generation the database is limited to primary and secondary industries in the state of virginia in the united states of america (usa). in this context, primary industries are defined as industries classified under the north american industry classification code system (naics) 321 and secondary industries as naics 337. geographical data regarding primary industries was obtained from the virginia department of forestry (vadof). the geographical information for secondary industries was purchased from a third party, infogroup academic. this original dataset already included location data and had a total of 1001 companies classified as secondary wood products industries. after revising and validating the initial dataset for empty and inconsistent data, the dataset was reduced to 989 businesses. in addition, the remaining industries in the dataset were surveyed to confirm geographical information data. even though the dataset provided by infogroup academic included location data, it was necessary to confirm and validate the location of each company. in addition to location data, other information was also requested: (1) demographics, (2) raw materials consumption, (3) production of residues and (4) export information. these additional data helps uncover potential opportunities with suppliers or potential customers when conducting spatial analysis. for example, raw materials needed could be related to suppliers in the area where the company is located. as another example, residue production could also be connected with biomass plants or pellet plants in the area where the companies are located. procedures for the survey implementation were followed as recommended by fowler (2002) and dillman (2000). after the first mailing, a postcard reminder was sent. an online version of the questionnaire was made available to those companies that wished to respond electronically instead of mailing back the questionnaire. companies that did not respond at all were called to verify their location, confirm they were active, and that they could be classified as secondary or primary wood products industries. wave analysis was used as the non-response bias technique to test the null hypothesis that the respondents were a valid representation of the sampled population as recommended by atif, richards and bilgin (2012). after the companies’ responses were received, clustering techniques were used to explore space relationships between the primary and secondary companies. clustering refers to techniques used to classify classes into groups that are relatively homogenous within themselves and heterogeneous between each other on the basis of a set of variables (sas institute 2014, everitt 2011, milligan 1996). visualizing the data in cluster format helps the researchers to better understand the environment and the location of the dataset to make better decisions, develop business strategies and to comprehend the entire situation that they are in or they plan to venture. for this particular research, the k-means (for large datasets) clustering method was selected to perform the clustering analysis due to the large sample size. in combination with cluster analysis techniques, spatial analysis techniques were used to help visualize and interpret the data (pick 2005, austin et al. 2013). the choosing mapping tool was online esri arcgis because it is available to most users having internet access. finally, structured, in-depth interviews were conducted with three conveniently selected industry gis experts with the goal to better understand how gis tools could be used for marketing applications. structured format helped ensure thematic consistency (kvale and brinkmann 2009). experts were contacted on an individual basis and invited to participate. interviews were conducted by telephone and written notes were 18 bioproducts business 2(2) 2017 recorded. the interview protocol included five general questions: demographic information, gis supplier applications, gis internal applications, gis customer applications, and general perceptions on gis. after the invited candidates agreed to participate, the purpose of the interview was explained as well as the terms of confidentiality, format, and length. when the interview was over, interviewees were notified on how to get in touch with the interviewer and asked them if they had any questions. this procedure is recommended by kvale and brinkmann (2009). 4.0 results and discussion 4.1 gis dataset generation the primary wood products gis data was obtained from the vadof. this dataset is current and the geographic information is in good standing. location data was tested for accuracy by comparing longitude and latitude with the establishments’ current mailing addresses. the dataset of primary wood products industries contains 90 establishments. the secondary wood products gis data was obtained through a survey of 989 establishments in the state of virginia as explained in the methods section. a total of 125 establishments returned the questionnaire. after validating the returned questionnaires, only 108 were considered of good use for further analysis, representing an 11% response rate. a non-respondent analysis was conducted using wave analysis (atif, richards, & bilgin 2012). the proportion of responses received during the first mailing and the second mailing were compared by industry sector using a chi-square test (with a significance level of 0.05). in this particular case, the second wave of respondents (second mailing) is used as a proxy of the non-respondents. there were no statistical differences in the proportions by industry sector when comparing the first and the second mailing; therefore, the sampled companies are considered a good representation of the entire population being studied. given that the objective of the survey was to validate location data and to confirm the industry sector in the original dataset, phone calls were made to the 864 companies that did not respond to the questionnaire. the results of the phone calls are shown in table 1. the phone call results indicated that 748 of the non-respondent companies were able to confirm their location and validate their industry sector. table 1. phone survey response status answered survey phone survey 1st round 2nd round total wood products industry 334 414 748 other industry sector 0 116 116 total 334 530 864 the gis data (from primary and secondary industries) were used to build a relational database, including an interface to manipulate data and prepare industry reports. a relational database is a collection of data stored in two-dimensional tables that allows for better data management (sciore 2009). 4.2 cluster analysis cluster analysis is an important technique that helps separate groups or classes by common features. in this case, cluster analysis was used to examine space relationships between primary and secondary industries. as described earlier, there might be certain locations where companies in the same industry sector tend to be agglomerated based on the following factors: supplier availability, customer closeness, labor polls, specific niche markets, competitors, distribution challenges, and potential product offerings to specific regional markets. based on the first output, there are 946 companies from the primary and secondary wood products sector available. given the large sample, the most appropriate clustering technique is k-means (sas institute 2014). figure 1 shows the industries clustered in k=3 groups with frequencies of 1=352, 2=350 and 3=244. even though the size of two of the clusters is very similar, it seems companies could be clustered in smaller groups. when the data is clustered in k=5 groups, the number of members per cluster varies even more: 1=298, 2=192, 3=50, 4= 168, 5=238. companies were also clustered using k=10 and similar to k=5, the size per group is very dissimilar. it seems that when using k=3, the size and composition of the cluster is more uniform and aligned with cluster analysis theory (milligan 1996). following, the dataset was uploaded into online esri arcgis for further visualization and spatial analysis. figure 2 shows the distribution of primary (black dots) and secondary industry (yellow dots) by average household income in the state of virginia where darker green means higher income. this spatial representation indicates that the secondary industry (yellow dots, naics 337) tends to cluster in higher income household regions such as quesada-pineda et al. — assessing geographic information systems use in marketing applications for the wood products industry 19 washington dc, richmond, roanoke/blacksburg valleys and virginia beach, figure 3 shows a heat map of the distribution of primary industries (naics 321) by the type of virginia forest. blue and purple colors indicate regions where hardwood forest is dominant while pink color shows where softwood forest is dominant. figure 1. data grouped in 3 clusters figure 2. primary and secondary industries distributed by average household income. when primary industries are overlayed against the type of forest coverage, it appears to be some level of aggregation along hardwood forested areas (see figure 3). this observation and the previous space analysis where primary industries do not seem to cluster based on the average household income (figure 2) might lead 20 bioproducts business 2(2) 2017 table 2. list of gis marketing strategies by elements of the marketing mix (hess, rubin & west 2004, esri 2010, moore & pareek 2006 and interviews to gis experts). generic strategy specific strategy examples product match products attributes to characteristics of customer groups college students tend to prefer contemporary furniture vs traditional solid furniture match the product to ethnic population distributed geographically understand needs and taste of specific ethic groups on wood species product design decisions packaging design for ready-to-assemble (rta) furniture consumers match with the product characteristics understanding why consumers preferred solid to laminated flooring in specific locations. place products routing design of distribution routes to minimize transportation costs of lumber deliveries determine location of distribution channels retail stores, distribution centers, warehouse locations of wood composite products determine customer buying habits by location understand better shopping behavior of rural vs urban customers promotion integration of internal and external data for an accurate and efficient promotion strategy location data needs to be effectively integrated with targeted campaigns target promotional campaigns location of specific customers such as hotels, office, and other institutional furniture consumers verifying the effectiveness of promotional campaigns by location analyzing and comparing data from similar customers in different locations understand better needs and behaviors of customers by location design of promotional campaigns based on behavior of customers by location price pricing estimation and modification based on location pricing for urban vs rural settings may vary maximization of return of investment based on specific locations identify what locations generate the best return of investment for specific marketing campaigns one to believe that primary wood products industries prefer to be closer to the supply than high income areas. 4.3 gis strategies for marketing applications even though none of the industries in the database reported using gis for marketing applications; the performed cluster analysis indicates that there might be some strong space relationships in regards to the key elements in the marketing mix. for example, secondary wood products industries tend to cluster closer to potential customers and primary wood products industries tend to cluster near suppliers (see figures 2 and 3). these two space relationships could be used to figure 3. primary industries distribution in virginia based on type of forest coverage. quesada-pineda et al. — assessing geographic information systems use in marketing applications for the wood products industry 21 develop location-based supplier relation collaborations (for primary industries) and specific pricing strategies based on niche markets for secondary industries. in order to identify other potential applications and strategies for the application of gis in the developing of the elements of the marketing mix (product, place, price, and promotion); the results from the clustering section were complemented with data from secondary sources and interviews of three gis experts. see table 2. the perception of the gis industry experts is that most companies (in any industry sector) focus on utilizing gis for logistic applications but have found little use of gis for marketing purposes. the gis experts also indicated that capital investments in gis have a very good return on investment (roi) and that there is a general positive perception of gis applications and its advantages. in addition, the interviewed experts pointed out that companies in general lack information and procedures to implement gis in marketing applications but the opportunity to incorporate gis in the marketing process is there. 5.0 conclusions information systems are a critical component to support the strategic process of business organizations, including wood products industries. previous research indicated that there is access to a large number of datasets that could be used to support the decision making process such as strategic marketing. it was also found from the literature that little has been done to study the marketing process as a holistic and strategic approach in the wood products industry. rather, the majority of marketing research on the wood products industry has been focused on specific aspects of the marketing mix. this research was conducted in response to the lack of examples of integrating information technologies with the marketing mix’s elements it was found that secondary wood products industries in virginia are not aware of the potential of using new information technologies for marketing applications. specifically, secondary wood products companies in virginia are aware of gis but do not use it in their marketing strategic processes. a gis database was developed using primary and secondary wood products industry data in virginia. cluster analysis was conducted on the dataset and several interesting spatial relationships were revealed that are a good fit for marketing applications. interviews with gis experts in combination with the cluster analysis were used to define specific strategies based on the elements of the marketing mix. the gis data was implemented in esri arcgis maps allowing flexibility and easy manipulation of the dataset to uncover other potential relationships. a total of 14 different strategies for using gis in the development of the marketing mix’s elements were determined using the results of the cluster analysis and the opinions of the consulted gis experts. as presented in the results section, the opportunity to apply gis in marketing applications is very promising but it would require some level of creativity by the interested parties. this could be an issue for the majority of wood products industries as investment in marketing efforts are minimal and the industry is considered a slow-technology adopter. the cluster analysis revealed that primary and secondary industries in virginia tend to cluster along certain economic regions and that location plays indeed an important role in the strategic process of wood products industries but it is rarely explored. for example, primary wood industries are grouped closer to forested areas (proximity to raw material) whereas secondary wood products industries are clustered closer to the end customers. a primary wood products company that processes logs into lumber for example, would like to know the distance between his processing facilities and the location of the raw material (suppliers). for the same reason, knowing the location of customers could help the lumber producer to develop effective delivery routes to impact cost and delivery times. 6.0 references anderson, r. c., fell, d., smith, r. l., hansen, e. n., & gomon, s. 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(1999). planning the use of information technology in marketing: the case of finnish forest industries. forest products journal, 49(10), 25-30. toppen, f., & wapenaar, h. (1994). gis in business: tools for marketing analysis. the hague: gis foundation. trainor, k., rapp, a., beitelspacher, l.s., & schillewaert, n. (2011). integrating information technology and marketing: an examination of the drivers and outcomes of e-marketing capability. industrial marketing management, 40(1), 162-174. university of southern california (usc). (2011). the relationship between gis and marketing. retrieved from http://gis.usc.edu/ msp-resources/the-relationship-between-gis-and-marketing/ wu, p. y., & rathswohl, e. (2010) visualizing opportunities: gis skills for retail marketing. proceedings from 2010 information systems educators conference. nashville tennessee, us. retrieved from http://proc.isecon.org/2010/pdf/1361.pdf abstract koa (acacia koa a. gray), a species endemic to the hawaiian islands, has ecological, cultural, and economic significance. its wood is prized globally but today, most woodworkers only use koa wood from dead and dying old-growth trees. the general perception of wood from young-growth koa is that it lacks the color and figure of old-growth wood and is thus less appealing to consumers. to evaluate consumer preference of koa attributes, a conjoint choice experiment was conducted using randomly combined levels of attributes, including color, figure (curl), and price, with six identically shaped bowls from which respondents selected their preferences. the survey was conducted at six locations on o’ahu (372 respondents) to poll a variety of koa product consumers. latent class analysis software was used to separate respondents into distinct classes based on expressed preferences. the results identified five classes of respondents. class 1 (24% of respondents) showed significant preference for lower prices, medium color, and non-curly bowls. class 2 (22% of respondents) showed significant preference for light colored and curly bowls. class 3 (20% of respondents) showed significant preference for light or medium colored and curly bowls. class 4 (19% of respondents) significantly preferred lower prices and light or medium colored bowls. class 5 (15% of respondents) also significantly preferred lower prices but they significantly preferred darker colored and curly bowls as well. opportunities exist for koa woodworkers to create products manufactured from young-growth koa wood that appeal to different market segments. the ability to substitute young-growth koa for the decreasing supply of old-growth wood can aid in promoting active management of the species. keywords: acacia koa, conjoint choice, hawaii, consumer preferences, wood products, young-growth consumer preference study of characteristics of hawaiian koa wood bowls eini c. lowell*1, katherine wilson2, jan wiedenbeck3, catherine chan2, j. b. friday4, and nicole evans2 1 usda forest service, pacific northwest research station, 620 sw main st. suite 400, portland, or 97205 2 college of tropical agricultural and human resources, university of hawai‘i at mānoa, 1910 east-west road, honolulu, hi 96822 3 usda forest service, northern research station, 301 hardwood lane, suite b, princeton, wv 24740 4 college of tropical agricultural and human resources, university of hawai‘i at mānoa, cooperative extension service, 875 komohana street, hilo, hi 96720 * corresponding author: email: elowell@fs.fed.us; tel: (503) 808-2072 acknowledgements: the authors would like to thank the hawai‘i forest industry association for allowing surveys to be conducted during their annual woodshow. we appreciate the assistance of cassie zhang, a graduate student at the university of hawai‘i, who aided in conducting the surveys and analyzing the data. the authors would like to acknowledge and thank timothy allen shafto for turning the bowls used in this study. bioproducts business 2(5), 2017, pp. 42-51. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-005 1.0 introduction endemic to hawai‘i, koa (acacia koa a. gray) wood is prized internationally for its attributes of color and figure (curl; figure 1). koa’s reputation has been built primarily on wood cut from old-growth trees. the price for koa is one of the highest in the world (elevitch et al. 2006), particularly for highly figured lumber. color and figure are two characteristics that play an important role in determining the price of each piece of wood (dudley and yamasaki 2000). koa’s value is evidenced by the small sizes of pieces manufactured and marketed. for example, pen blanks as small as ¾ inch by ¾ inch by 5.5 inch are sawn and sold. branches and stumps are also used to create products. woodworkers and craftspeople in hawai‘i use variations in these attributes to create one-of-a kind products – everything from large pieces of furniture and sculptures to salad servers and pens. woodworkers delight in working with koa’s variable grain, curly figure, and color to create uniquely beautiful products. people value the presence of koa in their homes and buildings with appearance preferences varying as much as the wood itself. lowell et al. — consumer preference study of characteristics of hawaiian koa wood bowls 43 visual recognition of the wood is uncertain, using koa from young-growth trees in products may be acceptable for many consumers. appearance attributes, such as color and figure, also influence consumer preferences and perceptions. color and figure have been identified as key attributes in creating and marketing koa products. curl is an almost iridescent sheen that is only occasionally present in trees. one observation suggests that even when a tree has curl, it is found in only approximately 10% of the wood (woodshop news 2009). loudat et al. (1996) estimate that only 5% of lumber will be of higher grades with curl. woodworkers desire the old-growth koa trees because of the wood density, color (darker and more variation), and presence of curl (dudley and yamasaki 2000). in contrast, young-growth koa trees are perceived to be lighter in color and lacking in curl, however, loudat et al. (1996) reported curl and figure in 20-year-old koa. in a study by bumgardner and bowe (2002), consumers thought darker color woods reflected higher value than lighter color woods and lighter color was associated with modern or contemporary designs. results such as these suggest that opportunities exist for producing and marketing koa products from both youngand old-growth trees. the importance of wood product price and origin have been shown to be important in consumer preference studies. individual consumers surveyed in guangzhou, china indicated a preference for gift baskets made from koa as being more important than price or however, availability of the old-growth resource is decreasing. more than two decades ago, shehata (1993) had forecast that koa would no longer be available to the forest products industry in approximately 14 years as a result of unsustainable harvesting, disease, and decay, coupled with high demand for koa logs. while not quite as dire as the prediction, koa harvest on private lands continues but is largely limited to dead, dying, and downed trees. there is no current harvesting of koa from state or federal public lands, with the exception of harvesting for cultural uses. as an example, recent timber sale contracts on lands administered by the department of hawaiian homelands (dhhl 2014) have specified that no healthy koa trees, defined as vigorous trees with full crowns and little or no dieback, would be disturbed or harvested. therefore, most old-growth stock comes from private lands. these supply limitations only increase koa’s value. koa, while having cultural and ecological significance, also plays an important role in the hawaiian economy. koa products were estimated to comprise 75 percent of the total value of all hawaiian grown wood products sold by hawaiian retailers in 2001 (friday et al. 2006), contributing an estimated $18 million to the hawaiian economy. sustainability of this endemic tree is a major concern and requires active management of younggrowth trees (baker et al. 2009). interest in establishing koa plantations is limited, as little economic benefit is reaped in the time between planting and harvest, which can be as long as 80 years. further, a market for young-growth koa has yet to be established (pejchar and press 2006). the ability to market products made from young-growth koa will provide an incentive for active management in young-growth stands. bumgardner and bowe (2002) concluded that species perception is an integral part of consumer preference. it is thought that the name “koa,” by itself, has market recognition and creates desirability. the inability of many consumers to identify wood species was documented by bowe and bumgardner (2004) and bumgardner et al. (2007), which can be relevant in assessing the market potential of koa products derived from younger trees. for example, mahogany, cherry, and black walnut species that, like koa, are highly regarded for their rich and somewhat darker colors, were correctly identified only 22, 20, and 45 percent of the time, respectively, by consumers (bowe and bumgardner 2004). if the name “koa” evokes a positive image and desirability, even when figure 1. an acacia koa board depicting a curl pattern in the timber. photo credit: j.b. friday 44 bioproducts business 2(5) 2017 product origin, while basket price was more important to business buyers (chan-halbrendt et al. 2006). for both groups of buyers, price was the second-most important consideration. donovan and nicholls (2003) found that consumers would pay a higher price for an alaskan made end table over one that was manufactured in china. for secondary manufacturers using eastern white pine (pinus strobus l.), lumber quality and the region of origin had the largest influence on purchasing decisions (alderman et al. 2007). conjoint analysis is an approach used to discern consumer preferences among attributes that, when considered together, distinguish a product or service. choice-based conjoint analysis is a conjoint approach in which respondents are presented with a manageable number (often three) of product options to choose from at one time. the survey participant chooses the product having the bundle of attribute levels that they are most likely to purchase. green and srinivasan (1978) described conjoint choice analysis as having the ability to determine how certain product attributes affect whether a consumer is likely to purchase an item while also quantifying attribute significance to the purchasing decision. preference can be described as an additive function of attributes using the part-worth model (cattin and wittinek 1982). therefore, in designing the conjoint experiment, it is important to limit the number of attributes being measured, as higher numbers of attributes require respondents to make trade-offs among important attributes. green and sirinivisan (1978) found that if there are more than six attributes to decide among, people will have difficulties evaluating individual attributes. conjoint analysis does have limitations; as reported by cattin and wittinek (1982), results reveal respondents’ intent-to-purchase, not actual purchase behavior. nonchoice based conjoint approaches, in which potential consumers rate or rank different versions of a product with which they are presented, do not mimic actual consumer purchase decisions, and are therefore thought to be less reliable. conjoint analysis has been used to assess various attributes of wood furniture, including environmental attributes in purchasing wood products (aguilar and cai 2010, bigsby and ozanne 2002, anderson and hansen 2004, osburg et al. 2016). wang et al. (2004) assessed design, price, density of character marks, and guarantee policy; the researchers found that design was most important to consumers and price was second most important. a similar result was reported by liker et al. (2016), who found that kitchen furniture consumers were more concerned with design and manufacturer than they were with price. the major objectives of this study were to evaluate whether a potential market exists for a product manufactured from young-growth koa trees based on three attributes (color, figure, and price) using conjoint choice analysis for identifying consumer preferences and to describe attribute importance of different consumer groups. 2.0 experimental methods 2.1 sample design a choice-based conjoint experiment was used to measure preferences for koa attributes thought to differ between old-growth and young-growth wood products. the conjoint choice survey was designed using sawtooth software® (2014). this software was used to design the experiment and is capable of quantitatively measuring preferences for different attributes as well as their levels. based on the survey data collected, a set of preference scores (part-worth utilities) was generated for attributes of interest. this project specifically looks at the different characteristics of koa wood that drive consumer choices. three characteristics, or attributes, were identified: color, figure (the figure of interest is a curly grain pattern, referred to as “curl”), and price. an 8-inch diameter koa bowl was chosen to represent these attributes, as bowls are versatile and a common koa product that both hawaii residents and visitors would potentially purchase for personal use or as a gift. different levels of each attribute were determined after discussing the project with several koa wood products manufacturers. three levels of color (light, medium, and dark), two levels of figure (with and without curl), and four prices ($400, $500, $600, and $700) were used in the survey (see table 1), yielding 24 possible combinations. koa wood ranges in color, with older koa trees typically having a darker heartwood (see figure 2). levels of color and figure were based on the typical characteristics of each attribute. prices were based on retail value set by the woodworkers and the actual selling price of the bowls. a lighter bowl with no curl figure will sell at a low price (e.g. $400) while a figured bowl will sell at a much lowell et al. — consumer preference study of characteristics of hawaiian koa wood bowls 45 table 1. identified attributes and levels that drive consumers’ choices when purchasing a koa product attributes price per bowl color of bowl figure of bowl ($) levels 400 light not curly 500 medium curly 600 dark 700 higher price (e.g. $700). six 8-inch diameter koa bowls were produced from light, medium, and dark wood, either with or without curl, for display (see figure 3). from the 24 possible combinations of attributes, sawtooth software® (2014) created two sets of 12 efficient and unique profiles (sometimes referred to as tasks), each containing randomly selected combinations of the predefined levels of the three attributes. each profile set was printed on a laminated card and had three options (sometimes referred to as concepts or products) consisting of random combinations of levels for each attribute (see figure 4, for example). each option included a photograph of koa wood with different levels of color, figure, and price, and for each profile set, respondents could pick only one option in each task. the respondents did not rate or rank the options in each task. the choice each respondent makes requires a tradeoff among attribute levels. respondents were not given the option of “none” to choose when they did not like any of the three given options in a profile. this forces each respondent to make a trade-off on attribute preferences, thus providing more information on their preferences. this approach creates more data per respondent and requires a smaller sample size than a conjoint choice survey with the option of “none” in each profile. each respondent was given either profile set a, which consisted of tasks 1 through 12, or profile set b, which consisted of tasks 13 through 24 (see table 2). survey profiles were distributed alternately to get an equal number of respondents completing profiles a and b. in addition to the photographs used on the cards, respondents were also asked to pick their favorite bowl from the six on display without consideration of price (figure 3). 2.2 sampling surveys were conducted at six locations on o‘ahu. the island of o‘ahu was chosen because it hosts the largest number of visitors to hawai‘i annually (munekiyo & figure 2. heartwood color in (a) lumber sawn from a younggrowth tree exhibiting significant proportion of lighter heartwood color and (b) lumber sawn from an old-growth tree exhibiting significant proportion of darker heartwood color. photo credit: 2(a) j.b. friday, 2(b) e.c. lowell. a b figure 3. the six koa bowls on display at hawai‘i’s woodshow 2014 in honolulu, hi. photo credit: william weaver. 46 bioproducts business 2(5) 2017 hiraga, inc. 2014). a total of 372 people over the age of 18 were surveyed. incomplete surveys were removed, as the software cannot use partial data. missing data occurred in 34 surveys (approximately 9% of the total sample), resulting in a final sample size of 338 surveys. surveys took place in august 2014 and february through april 2015 at diverse locations: a shopping mall, a hiking trail (popular trail for both residents and tourists), a university, a military facility, and an event hosted at a public school, and hawaii’s woodshow 2014 in honolulu. our goal was to sample at diverse locations to obtain insights from a variety of respondents, including locations frequented by both residents and tourists. prior to taking the survey, the purpose of the research project was described to each respondent. there was also additional written material (handouts and posters) available to them. all respondents took the survey voluntarily. the survey consisted of the 12-question profile set with a follow up demographic section. the demographic section contained questions regarding age, gender, socioeconomic level, and residence, as well as consumerrelated questions, such as whether the participant had ever purchased koa products, how much they spend on gifts each year, and if they were a woodworker. these questions were used in the conjoint analysis to determine whether these demographic factors influenced respondents’ preferences. 2.3 analysis latent gold® software (statistical innovations 2014) was used for the analysis. this program uses an iterative approach for refining the estimate of respondent preferences with maximum likelihood implemented as the decision criterion. results were analyzed using a latent class analysis, which finds average part-worth utilities for classes, with classes (clusters) comprised of respondents that expressed relatively similar preferences. the criterion used to select the optimal number of preference classes within a sample is based on the bayesian information criterion statistic (bic). after running the latent class analysis, the model with the smallest bic is usually chosen. typically, no more than 5 classes are run in order to find the smallest bic, as more than 5 classes will produce some very small market segments with minimal differences in preferences. latent gold® was also used to evaluate which attribute level variables influence each consumer groups’ preferences. figure 4. example of a choice task created by sawtooth software® that was presented to respondents. each respondent must choose only one koa bowl, option a, b, or c, based on the attributes they prefer. table 2. profile sets used in data collection; sets 1-12 were used in version a of the questionnaire and sets 12-24 were used in version b. code definitions: n vs c – not curly vs. curly; l vs m vs. d – light, medium or dark colored wood; 4 vs. 5 vs. 6 vs. 7 -$400 vs. $500 vs. $600 vs. $700 per bowl. profile set i.d. option 1 option 2 option 3 1 nl5 cm7 nd4 2 cl4 cd6 nm5 3 cd7 cm4 nl6 4 nm7 cd5 nl6 5 cl5 nd7 cm6 6 nd4 nm5 cl7 7 cd5 cl4 nm6 8 nl7 cm6 nd4 9 nl7 nd6 cm4 10 cd5 nm4 cl6 11 cd7 cm4 nl5 12 nl7 nd6 cm5 13 nd5 cl4 nm7 14 nm4 cd7 cl6 15 cm5 nd6 nl4 16 cd6 nl5 cm7 17 cd4 cl7 nm6 18 nm5 cl6 nd4 19 nm6 cl5 nd7 20 nl4 cd5 cm7 21 nl7 cm6 nd5 22 cd6 cl4 nm7 23 cd4 nl6 nm5 24 nd4 cm7 cl5 lowell et al. — consumer preference study of characteristics of hawaiian koa wood bowls 47 the underlying test performed within the latent gold® analysis module is a standard normal probability test (z-test; statistical innovations 2014). this test assumes that parameters in the models for each of the identified clusters are approximately normally distributed. a neutral preference rating (also known as an attribute utility value) expressed for a tested attribute (e.g., curl vs. no curl) would have a mean of zero. the z-value indicates the number of standard deviations the zero, or neutral result, is from the parameter mean. in addition to using the z-test to identify attributes within different clusters that are significant, the sign of the z-value indicated whether the members of the cluster have a generally positive or negative orientation toward the presented attribute. the relative importance of different attributes for each cluster is calculated by determining the total range for each attribute’s utility value, summing these totals for all three attributes (color, curl, and price), and dividing each attribute’s range by the sum of ranges. this information is useful in identifying whether there may be ways to segment the market to meet the expressed preferences of specific consumer groups. 3.0 results and discussion 3.1 demographics the total sample of 338 respondents was 52% female and 48% male. of the 338 respondents, 119 respondents (35%) were visiting hawai‘i (see table 3). the majority of respondents had heard of koa before (76%) but only slightly more than half (52%) had actually purchased a koa product. the vast majority of respondents (95%) had at least some college education, with 42% holding a masters or higher academic degree. household income varied; only 12% of respondents made less than $30,000 per year while 39% of respondents made more than $90,000 per year. respondents ranged in age from 18 to 68+, with an average age of 44 years old. the 28 to table 3. socio-demographic profile of all respondents variable category n a percent respondents gender female 177 52 male 160 48 residence hawai‘i 219 65 other us 89 26 other country 30 9 age (years) 18-27 64 19 28-37 87 26 38-47 46 14 48-57 51 15 58-67 55 16 68 and older 35 10 education completed some k-12 7 2 high school graduate/ged 11 3 some college 58 17 college graduate 122 36 graduate degree 140 42 household income (us $) $29,999 and below 40 12 $30,000 $59,999 86 25 $60,000 $89,999 69 20 $90,000 and up 132 39 declined to answer 11 4 a total n may not add up to sample size of 338, as respondents were allowed to leave demographic questions blank if desired. 48 bioproducts business 2(5) 2017 37 year-old age group comprised the largest number of respondents when grouped by age. 3.2 latent gold® results the software used identifies consumer groups or clusters (called classes) that are distinct and have different preferences in koa bowl attributes. results for one to five classes are provided by the software. in this case, the model containing five classes was chosen as the best model for characterizing consumer preferences because it had the lowest bayesian information criterion (bic) statistic. each of the five classes demonstrated a distinct preference and represented at least 15% of the sample population. in unique cases, the model with the lowest bic is not selected because a class may be too small or may have preferences that are too similar to those of another class. in this case, 15% of the sample represented about 50 people, which we considered a meaningful number of respondents. there was not much difference among classes with regard to the proportion of respondents; the largest class, class 1, was made up of 24% of respondents, while the smallest class, class 5, was made up of 15% of respondents (see table 4). table 4 shows the reported z-values for all attributes in each class from the latent gold® analysis (statistical innovations 2014). a significant (0.05 level) and positive z-value (denoted by an asterisk) indicates a statistically significant preference for that attribute. if an attribute has a negative significance, then the respondent class did not prefer bowls exhibiting that attribute. nonsignificance denotes no preference for that attribute by that class. class 1, made up of the largest number of respondents (24%), significantly preferred lower prices, medium color, and bowls without curl. this class significantly did not prefer light colored bowls or bowls with curl. class 2, which included 22% of respondents, had no price preference but significantly preferred light colored bowls and bowls with curl. this class also significantly did not prefer dark colored bowls or non-curly bowls. class 3 had similar preferences to class 2. class 3, representing 20% of respondents, significantly preferred light or medium colored bowls and did not have a significant price preference. this class also preferred the bowls with curl. class 4, with a similar number of respondents to class 3, significantly preferred lower prices and light or medium colored bowls. this class significantly did not like dark colored bowls and had no preference in figure. class 5, with the least number of respondents (15%), significantly preferred lower prices, dark colored bowls, and bowls with curl. class 5 significantly did not like non-curly bowls. latent gold® also derives the importance of each attribute based upon respondents’ answers to the 12 profile questions. table 5 indicates the attribute importance (in percentages) for each of the five classes. figure was the most important attribute (explaining 48% of the measured preference) when choosing a bowl for class 1, followed closely by color (40%). color was, by far, the most important attribute for class 2 (82%). color, followed by figure, were both important attributes for class 3. price was the most important attribute for class 4, followed by color. figure was the most important attribute for class 5 (57%), followed by price. socio-demographic and consumer-related questions were analyzed using latent gold® to examine which, if any, variables influenced each class’s preference choices. based on respondents’ answers, only three variables significantly influenced preferences (see table 6). based on table 4. model estimates for consumer preferences as shown by z-values. (*) is statistically significant at the 0.05 level, (-) symbol indicates a negative preference attribute (class size) class 1 (24%) class 2 (22%) class 3 (20%) class 4 (19%) class 5 (15%) price -2.928* 1.418 -0.991 -9.484* -5.989* color light -8.042* 13.402* 9.242* 3.164* -1.858 medium 9.747* 0.851 8.027* 8.419* -1.393 dark -0.127 -8.485* -11.752* -10.024* 3.409* figure non-curly 13.929* -2.702* -11.551* -0.583 -10.465* curly -13.929* 2.702* 11.551* 0.583 10.465* lowell et al. — consumer preference study of characteristics of hawaiian koa wood bowls 49 z-test results, the three explanatory variables included: woodshow attendance, estimated annual expenditures on gifts, and respondent age. it is interesting to note that the previous purchase of a koa product and woodworking experience were not found to be significantly related to attribute preferences. table 6 indicates that significantly different attributes were associated with different classes. both age and expenditures (annual gift purchases) were treated as continuous variables. class 1 and class 2 respondents were significantly less likely to be attendees of the hawaii’s woodshow 2014. further, class 2 respondents were significantly more likely to be older respondents. this same trend with regard to age was also significantly associated with respondents in class 3. no other variables influenced this class’s preferences. class 4 had no significant socio-demographic variables associated with their preferences. respondents comprising class 5 were significantly more likely to have attended the hawaii’s woodshow 2014; these respondents also spent significantly more money on gifts each year. younger respondents were significantly associated with class 5’s preferences. education was not found to be a significant distinguishing variable for any of the classes. at the end of the survey, respondents identified which of the six displayed bowls was their favorite. figure 5 shows that there was not a majority favorite but that most respondents favored a curly bowl of any color. this mirrors the class results, as three of the classes table 5. attribute importance by percent for each class. bold text indicates the attribute of highest importance to each class attribute class 1 class 2 class 3 class 4 class 5 ---------------------------------------percent -------------------------------------------price 11.1 7.2 4.3 56.1 28.4 color 40.2 82.4 51.2 42.0 14.3 figure 48.7 10.4 44.5 1.9 57.2 table 6. significant explanatory variables influencing consumer preferences as shown by z-values. (*) is statistically significant at the 0.05 level. attribute class 1 class 2 class 3 class 4 class 5 attended woodshow1 -2.737* -2.072* 1.213 -1.779 5.146* gift expenditure2 -0.161 0.324 1.696 -1.974 2.674* age3 -1.523 2.942* 2.012* -0.701 -1.987* variable definition: 1coded 1 for respondents who did attend the hawaii’s woodshow 2014. 2continuous variable of how much money respondents spent on gifts per year. 3continuous variable of respondent’s age. figure 5. respondents’ favorite bowl based on color and figure excluding price. significantly preferred the figured bowl, one class had no preference in figure, and only one class did not prefer the curly figure. there was no statistical difference between residents and visitors with regard to which of the six displayed bowls respondents preferred. 4.0 conclusion five consumer groups with distinct koa characteristic preferences were identified in this study. class 1 preferred lower prices, medium color, and non-curly bowls. class 2 preferred light colored and curly bowls. class 3 did not have a price preference and preferred light or medium colored and curly bowls. class 4 preferred lower prices and light or medium colored bowls. class 50 bioproducts business 2(5) 2017 5 also preferred lower prices but they preferred darker colored and curly bowls. the results show that a small consumer group preferred the darker colored bowls while the majority did not prefer the darker color but preferred the lighter or medium color instead. these results indicate that variation in consumer preferences for different combinations of koa attributes exist. the anecdotal idea that consumers only want dark, figured koa products did not hold true in this study. most consumer groups preferred lower prices but price did not significantly influence two of the five consumer groups. this study also highlights how socio-demographic characteristics, such as resident versus visitor, and consumer actions, such as whether the respondent had previously purchased a koa product, may or may not influence consumer preferences. the two variables that were associated with certain class preferences included respondent age and whether the respondent had attended the hawaii’s woodshow 2014. respondents who attended the woodshow were associated with class 5 preferences: darker, curly bowls at a lower price. this demonstrates that this specific consumer group follows the woodworkers perception that darker, curly koa is more desirable. this class was the smallest of all the classes (15% of respondents) and indicates that only a minority of the market prefers darker, curly koa wood, thus contradicting previous perceptions of consumer preferences. young-growth koa, which is generally lighter in color and less figured, can be used to produce products, in this case bowls, and still appeal to consumers. this is encouraging news to land managers who wish to sustain koa on the landscape for ecological, cultural, and economic reasons. old-growth koa as a raw material source for woodworkers can be very expensive, if available at all. the ability of woodworkers to use less expensive, young-growth koa is a market advantage. by demonstrating that products manufactured from young-growth koa are marketable to a segment of the population, opportunities are created to pursue reforestation and management of koa stands and develop silvicultural programs for their sustainability. each product a consumer purchases has specific environmental impacts based on where the product’s raw materials originate. wood products range in their environmental impacts, based on the species and age of trees, location, and harvesting regime. consumer preferences for different wood characteristics can influence the magnitude of environmental impact associated with wood product markets. for koa, the environmental impacts are magnified, given how culturally and ecologically important the species is in hawai‘i. koa woodworkers can use these results 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highly sought and high-priced. essex, ct. retrieved from http://www.woodshopnews.com/news/ wood-markets/498038-koa-is-highly-sought-and-high-priced. last accessed november 16, 2016. abstract the forest sector is often characterized as mature, resistant to change, and lacking innovation. to address this situation, the forest sector literature is replete with calls to company managers to embrace innovation and foster innovative culture. however, the process of innovation, i.e., how innovation actually takes place within forest sector firms has not been previously described. we address this important knowledge gap. in so doing, we also aim to bridge the practitioner researcher gap through our novel methodological approach. our findings suggest that a committed and patient leadership is required to bring about the culture change needed for improved innovation. another critical element is the integration of business strategy and innovation strategy. finally, our results show that smaller operations, navigating in an intensely competitive sector, have the potential to experience significant success via innovation efforts. keywords: case study, forest sector, innovation, new product development process how innovation happens: practical insights from cox industries, inc. eric hansen1* and barry breede2 1 professor of forest products marketing, department of wood science and engineering, college of forestry, oregon state university, 119 richardson hall, corvallis, or 97331. 2 chief innovation and marketing officer, cox industries, inc., 860 cannon bridge rd., greenville, sc 29115. * corresponding author: e-mail: eric.hansen@oregonstate.edu. tel.: 541-737-4240. acknowledgements: the authors thank mikee johnson and greg campbell of cox industries, inc. for sharing their story and facilitating this work. in addition, we would like to recognize the insights for improvement to an earlier draft of this article from the forest business solutions team at osu. bioproducts business 1(3), 2016, pp. 32–41. http://biobus.swst.org. https://doi.org/10.22382/bpb-2016-003 1.0 introduction practical, experience-based insight into management processes are, unfortunately, highly uncommon in the forest sector literature. the gap between researchers and practitioners has seen extensive coverage in the general business literature, beginning in the 1950s with scholars increasingly advocating for a closer connection between the two in order to achieve both rigor and relevance (bartunek and rynes 2014, avenier and cajaiba 2012). understanding a complex reality is facilitated by seeking multiple perspectives (van de ven 2007) and joint work between “insiders” and “outsiders” is said to allow sense making of a setting and the knowledge that can be gained from it (bartunek and louis 1996). accordingly, in this work we embrace the academia/practitioner connection by combining the “insider” and “outsider” perspectives to explore a key topic in the forest sector literature, innovation. this allows us to provide a uniquely insightful piece profiling the experiences, successes, and challenges of implementing an innovation culture change within a medium-sized forest sector company. we shed light on the black box of innovation, providing deep insights into the experience of cox industries, inc., as it undertook a strategic innovation initiative. cox recognized an imperative to innovate, developed a process to create innovations, and now has concrete experiences with implementing those innovations. the text that follows documents the history of internal developments within cox; its experiences in attempting to innovate, including successes and failures; and provides lessons learned that other forest sector companies can consider as they attempt to ramp up their own innovativeness. when dealing with innovation and innovativeness of companies it is critical to consider the role of culture (rubera and kirca 2012). accordingly, we frame our insights around issues of company culture and include in our theoretical background and discussion issues of company culture and innovativeness because they are vividly illustrated via the cox experience. in the hansen and breede — how innovation happens: practical insights from cox industries, inc. 33 management. most of the top management has grown up with big mills and established customers, which require very little innovation. all new issues and ideas are horror for them.” (as quoted in björkdah and börjesson 2011). given this situation, there have been many calls for improved innovativeness within the sector with an end goal of improved firm performance (e.g., hansen 2010, bullard and west 2002). as innovativeness is an element of company culture, achieving enhanced innovativeness for most firms means culture change, an activity that, in the best of situations is highly challenging. in addition, while the literature is quite critical of industry with respect to maintaining its traditional culture and its need to be more innovative, that same literature often fails to provide managers with specific actions or tools that can be used in this quest (hansen and bull 2010). a concrete example of successful ongoing efforts within a forest sector firm can help fill this gap. 3.0 methods our approach is unique in forest sector research as it focuses on one extreme case in the spirit of the relevatory, single-case study (yin 2009), including an insider/ outsider approach (bartunek and louis 1996). case study research in the forest sector generally includes multiple companies or experts (e.g., spetic et al. 2016, han and hansen 2016, husso and nybakk 2010). in this situation, focusing on one company is justified by the fact that its experience is highly unusual in the sector. in yin’s (2009, p. 49) words the cox story represents, “a situation previously inaccessible to scientific observation.” to be sure, there may be firms that possess effective innovation management and new product development processes, the cox story represents a context to understand the process of culture change that the company adopted in order to become more innovative. initial data for the work comes from in-depth interviews of three firm executives: the chief executive officer, chief operations officer, and chief marketing and innovation officer. subsequently, the data comes from the experience of the co-author serving as the company’s chief marketing and innovation officer. this insider/ outsider approach (bartunek and louis 1996) is novel for the forest sector literature. the direct participation in the process by the “insider” allows insights into the experience of the company that could not otherwise be accomplished, even in the best designed and most wellremainder of the text we provide a brief theoretical background regarding innovativeness and culture, followed by a description of the methods employed in the study. following the methods is the story of innovation in cox industries, inc. finally, we provide a discussion that includes recommendations for industry managers. 2.0 theoretical background in the last decade, forest sector innovativeness has seen considerable research attention (hansen et al. 2014, leavengood and bull 2014, weiss et al. 2011) that includes many calls for industry to move away from its traditional production orientation and aversion to change to become more innovative and thus more competitive (roos and stendahl 2015, han and hansen 2015, leavengood and bull 2014, hämäläinen and pesonen 2011, björkdahl and börjesson 2011). an innovative firm is one that has the propensity to create and/or adopt new products, processes or business systems (knowles et al. 2008), and ultimately, is better able to create or otherwise produce innovations. research shows a strong connection between firm innovativeness and financial performance (kilic et al. 2015, crespell and hansen 2008, välimäki et al. 2004). deshpande and webster (1989) describe organizational culture as the pattern of shared values and beliefs that help members of an organization understand why things happen and thus teach them the behavioral norms in the organization. innovativeness is considered to be part of company culture (dobni 2010, augusto and coelho 2009, hurley and hult 1998). the forest sector literature also addresses innovativeness as an element of culture (hansen et al 2007, stendahl et al. 2007, välimäki et al. 2004) and generally recognizes the sector to be a low-innovation sector, or one lacking innovativeness (bull et al. 2015, leavengood and bull 2014, stendahl and roos 2008, crespell et al. 2006). considered as an entire body of work, the picture of forest sector innovativeness, painted by research across the forest sector value chain, and in a number of different world regions, is both highly consistent and un-complimentary (e.g., hansen et al. 2014, stendahl and roos 2008). some of the most compelling evidence comes from managers within the industry as they explain to researchers the situation within their company or sector (hansen et al. 2007). researchers in sweden provide perhaps the strongest evidence from an industry manager, “the biggest problem with this firm is its 34 bioproducts business 1(3) 2016 funded qualitative study. the background and research experience of the “outsider” author allows construction of an academic architecture to the “insider’s” views and insights. with that blend in mind, the data analysis departed from a conventional qualitative analysis and instead aimed at creation of this “cox story” which was essentially an iterative process between the authors, partially drawing on interview transcripts and partially on the resident knowledge of the company author. 4.0 cox industries, inc. cox industries, inc. is a medium-sized, family owned and operated company headquartered in south carolina. the company was formed in 1954 by wb and ej cox, two brothers who pioneered one of the earliest innovations in the treated lumber market, “kiln dry after treatment” or kdat wood. this manufacturing process resulted in a generally higher quality lumber product that remains an industry standard and has been widely adopted by others in the treated lumber market. currently, the company is managed by third generation family members. w.b.’s grandson michael johnson (mikee) serves as ceo. mikee’s academic background comes from outside the forest sector having studied political science and english at furman university. his prior business experience was also outside the company, having worked as a vice president at morgan stanley, a securities brokerage firm. cox maintains a flat structure with essentially three layers of management between mikee and the hourly production workers. while other competitors downsized during the global financial crisis, cox was able to persevere through this period in part because of the balance of markets it sells to including both residential lumber retailers, electric utilities and industrial customers. the diversity of cox’s product mix along with its ability to make strategic acquisitions in the utility pole business put the company in a growth mode during a period when many others were in decline. today the company employs 400+ people and consists of multiple sales offices, 15 manufacturing plants, and 22 distribution facilities. cox considers itself somewhat outside of the traditionally defined forest products industry and views its core business to be chemical application. as a treater of outdoor wood products, the company is organized around residential, commercial, industrial, and utility markets. cox has a long history of cooperating with chemical companies in the r&d process for new chemical applications. in practice this means that the company is often the place where pilot testing of new formulations takes place. once a chemical supplier has completed its lab-level testing, it then partners with cox to conduct industrial-scale, pilot testing. 4.1 historical approach to innovation for over 50 years, the culture of innovation at cox was predominately unstructured, intrepreneurially-led initiatives based on opportunities either developed by or presented to top level executives (e.g., acquisitions, new chemical treatments, new services). many of the most enduring innovations were those developed by the chemical companies themselves. new treatment formulations developed by these third-party companies provided cox additional sales opportunities, however because these same innovations were also often offered simultaneously to competitors, they failed to provide cox a true, long-term strategic advantage. internally generated innovations within cox were historically done with a ready-fire-aim mentality wherein perceived opportunities were adopted into the business on a transactional rather than strategic basis. many initiatives were undertaken based on either ad hoc customer comments (idea du jour) or on the perceived ability to capitalize on a near-term sales opportunity. in either case this resulted in a somewhat insulated and customer self-serving mentality to innovation, essentially reactive, instead of a broader strategic view of market dynamics. an idea was judged more on its ability to appease the needs of a particular customer or generate immediate sales than whether it addressed a long-term, strategic opportunity. the result was often an inability to sustain the innovation beyond the initial idea phase or specific customer and integrate into the business for the long term. an example included the short-term decision to open/staff a sales office in china to serve that market without having a clear understanding of the prospective market opportunity, cost structure or customer base which cox could profitably pursue (the effort was eventually abandoned). in addition to this ad hoc approach, resources that were required to implement an innovation generally went to the person with the most clout or the loudest voice. that person in most cases was reacting to the here and now. finally, there was no assigned individual to champion innovation day-to-day through a strategic lens, so if something did not succeed the company simply moved on to the next idea. because of these factors, a more structured approach was needed. hansen and breede — how innovation happens: practical insights from cox industries, inc. 35 4.2 the impetus for change in the mid 1990’s the cox family began formation of an outside board of directors (bod) to help bring both a different perspective to the business and to better formalize decision making on major company issues. the board itself is composed of five independent outside directors and one family representative. each is selected for a three-year tenure. initially, board members were primarily selected based on previous relationships they may have had with the family in some capacity and/ or their prior board experience with other companies. however, when mikee assumed leadership of the company, changes in the composition of the bod began to emerge as prospective new members were vetted based more on their ability to bring specific skills or experiences that the company deemed important to its future success (figure 1). two such areas were information technology and innovation. one of mikee’s and the board’s drivers for bringing stronger innovation skills to the bod was due to both the large number of, and dollar amount of, innovations being pursued by the company at that time. the chemical treating sector’s notoriously low margin structure made it important from a board perspective that innovation investments be done more selectively, within the context of a broader strategic framework, and with the ability to measure their return on investment (roi). undertaking this more structured evaluation of innovation at the board level led cox to abandon some prior innovations simply because they failed to deliver in terms of roi. in some cases these were simply poor business decisions and in others it was a function of market dynamic changes so severe that a project had little hope of long-term success. lifepine™, a high-end fire retardant shingle business using western red cedar is a good example. when prices for western red cedar jumped dramatically compared to the market for traditional wood shingles, and luxury housing starts stalled in 2008, the market opportunity diminished radically. cox was unable to profitably sustain the business and exited based on a board-level decision. more positively, as the company looked to better manage its internal inventory processes, an effort was undertaken to explore how radio frequency identification (rfid) could be adopted at the plant level to track product movement on a real-time basis. after evaluating the potential business and cost benefits of this technology, the company began a pilot test at two of its facilities. partially based on his own observations and partially through interactions with the board, mikee saw the need to establish innovation as a distinct discipline within the company. in mikee’s mind, formalizing the innovation process within the company was a critical business and cultural shift that had to take place for the company to realize its future market potential and to maximize shareholder returns. the company needed an approach that would combine strategy, process and, because of the company’s relatively small size, implementation of new innovations. cox could not afford to have an innovation program that operates simply as a “think tank.” it also had to house operational capability and authority to implement new innovations. as the company further engaged in the use of rfid technology, a separate and independent business opportunity in software/data services emerged that combined cox’s expertise in manufacturing utility poles with the ability to use rfid to track, inspect and maintain these same poles once deployed to the field. as the business model concept was developed it became clear that the board member leading this effort must make a decision to either remain a board member or leave and lead the development of this new software start-up. leading a figure 1: timeline of key events in the evolution of innovation at cox industries, inc. 1954 company formed 1999 formation of bod 2008 initial consideration of rfid tags for internal use 2012 ci&mo hired innovation strategy retreat 2013 creation of business case for cox recovery 2015 launch of cox recovery launch of ideastream, idea submission system 2009 launch of sms, rfid-based business 2007 mikee assumes ceo role newly formulated bod 36 bioproducts business 1(3) 2016 project as a board member and also being part of the decision-making body was a conflict of interest. ultimately, a decision was made to hire the board member (barry) as a full-time, permanent employee. this decision allowed mikee to achieve his goal of bringing innovation in-house as a distinct discipline of the company and it removed the inherent conflict of having barry serve as both board member and head of the new start-up. barry began his role of chief innovation and marketing officer (ci&mo) in late 2012. barry’s background includes extensive experience in marketing and innovation in consumer products. soon after this he hired a staff person that was an outside-the-box thinker with a background in archeology and landscape architecture. like many mid-size companies with limited resources who are considering adoption of a formal innovation process, cox also realized that the person leading this effort needed to have sufficient operational and sales background to be able to successfully commercialize new innovations into the marketplace, and not simply expect to hand the idea to someone else to implement. the reality of this situation makes innovation in a company like cox far different than that of larger businesses that can and do operate their innovation effort as a stand-alone entity without any direct connection to, or engagement in, the actual commercialization of the innovation. this somewhat hybrid approach to innovation works for cox because it still allows for day-to-day engagement and oversight of innovation while doing so within a relatively small overall investment. it also allows for better and faster market feedback on innovations as the individual(s) managing it are also involved in helping commercialize it. 4.3 current approach to innovation as the anointed “innovation champion” barry would be dedicating significant time and effort to the design of the innovation system within cox, unlike prior ad hoc innovation efforts. the goal was to design an approach to innovation that would result in a portfolio of wellconstructed, strategic innovations that would ultimately play a large role in future brand and financial success of the company. much like a solid stock portfolio, cox sought to include in this innovation portfolio ideas that were big and potentially highly disruptive to the marketplace (e.g., totally new business), as well as those that were simply incremental to the business (e.g., internal process improvements). formation of the innovation initiative was built around five primary steps starting with a view of the broader market cox participates in and culminating with a set of specific, strategic innovation targets. 4.3.1 where to focus first: early in the effort, executive leadership made the strategic decision that initial efforts would focus on cox’s industrial business (poles, pilings, and crossarms). primarily this was because this sector typically has higher margins compared to residential treated lumber. higher margins means an easier time financing innovations. also important was that in this sector cox sells directly to end users (utilities) whereas on the residential side it does not. in other words, being closer to the market ensured better feedback and faster market evaluation. 4.3.2 facilitated ideation: using an outside consultant, the company underwent a facilitated ideation process. the first step was to identify a set of “forward thinkers” in the company that was cross functional, geographically dispersed, and could look out 5-7 years in their business area. thirty-five company personnel were charged not with establishing a solution (or idea), but rather to clarify what was emerging in the market that might present an innovation opportunity. additionally, in order to prevent the potential for “leadership bias” to challenge early-stage thinking, a decision was made to remove both the ceo and coo from active participation in this group. instead these individuals would assume the role of “sponsors” ensuring that proper resources would be allocated to whatever innovations were ultimately selected for further development at a two-day, scenario planning-based retreat at furman university, the group was given 35 “prompts” such as “smart poles”, “pole producers are now responsible for all stages of use and disposal”, and “lots of old poles”. using these prompts they hypothesized what would happen in the next 5-7 years. in other words, the group created a scenario planning-informed view of the future. in practice, this creation represented 50-60 prognostications or so-called “assumptions” that collectively also helped to refine the industrial division’s future business strategy. eventually, these assumptions were reduced by the group to a smaller set of probable scenarios, opportunities that the group believed had the highest probability of occurring within the allotted 5-7 year time frame. further winnowing led to identification of five innovation targets. the team returned to the office hansen and breede — how innovation happens: practical insights from cox industries, inc. 37 with an assignment of writing the business case for each target. the business cases were created during several weeks following the retreat. each business case needed to be “complete and compelling” to win the attention and resources of company executives. in other words, the case needed to holistically consider the potential of the idea and give a strong indication of an acceptable roi. 4.3.3 developing a business case: the primary outcome of the retreat was identification of five concepts: three new product areas and two external processes or service solutions. currently, four of the original ideas remain as part of cox’s overall innovation portfolio. one idea that was eventually eliminated was incorporation of an herbicide in the treatment of utility poles. especially in the us south, vines such as kudzu can be very problematic. after carefully analyzing the region where this could be sold it was determined the market size was insufficient to justify investment in new product development. other business cases that remain an active part of cox’s overall innovation portfolio are driven from broader market assumptions including how best to respond to the increasing amount and strength of storm activity in key regions of the us through new products and services. 4.3.4 selection of business case: a pre-defined “ground” rule for cox’s innovation process was that the sponsors (ceo and coo) would only select one innovation for immediate development. the other business cases would be maintained and updated as needed, but due to available resources and a corporate history of moving perhaps too quickly from one idea to another, it was agreed that the likelihood of success would increase significantly with singular focus on one business case. the decision was made to pursue the area of pole/ wood waste disposal as a target area of innovation based on the original prompt and follow-on thinking regarding “lots of old poles”, and more specifically the development of a more environmentally sound method of disposing of poles than those predominantly in use (e.g., landfilling). the innovation team subsequently immersed themselves in months of study about this market to gain a better understanding of user needs, market dynamics, state and federal regulations, financial return, etc. ultimately, this led to the creation of a new business subsidiary, cox recovery, which focuses on removing and disposing of a utility’s wood waste stream through the use of waste-toenergy incineration. a longer-term opportunity for this business involves the ability to use this same material in the production of a biodiesel product. cox is a heavy user of diesel both for the wood treatment process and for transportation/logistics purposes. 4.3.5 implementation: cox recovery has now been in a commercial state since mid-2015, so while it’s still somewhat early to judge its success, the division has already exceeded all top and bottom line financial goals. interest from cox’s existing utility customer base, particularly larger, investor-owned utilities has been strong, leading cox to believe that one of the initial assumptions generated during their forward-thinker retreat is likely to become a reality for wood treatment companies like cox; each must have an end-of-life disposal option to complement their new pole manufacturing capability. 4.4 ongoing initiatives innovation at cox is characterized in part by regular and on-going interaction with the marketplace and with those outside parties that can bring value to cox’s innovation efforts. an important input into the process is regular market research. techniques include ethnographic approaches such as going to the field with utility line crews, online surveys of customer perceptions and preferences, and analysis of secondary data from trade associations and consulting firms. information from these efforts not only lead to potential new innovation opportunities but they also help to update and refine existing business cases. additionally, in part because of internal limitations, cox relies heavily on the value that non-industry partners can bring to their innovation efforts. this includes formalized relationships with significantly larger industrial companies who are involved in technologies that cox believes, with adaptation, may have value in their own business. for innovation to have the kind of long-term business value that mikee and the bod envision, a key next step is to embed innovation as a key cultural mindset at cox. ideally this means bringing the opportunity for innovation to all levels of the company, and consequently expecting that all employees will contribute to this process, not just the innovation function led by barry or others in executive leadership. this cultural transition is ongoing and as of this writing the company is in the midst of implementing a company-wide idea system designed to further embed innovativeness into the culture and allow all employees to experience the direct value of innovation. 38 bioproducts business 1(3) 2016 ideastream was launched in january 2015. every quarter employees are encouraged to submit an innovation for consideration using either idea submission forms located at each cox facility or on-line through the employee portal. employee ideas are competitively evaluated by a cross-functional evaluation committee. three ideas are awarded a prize of $1000, while the other top 25 ideas receive some sort of company swag. in the first quarter of 2015 only 10 ideas were submitted, but in the second there were already 60 ideas and by the end of 2015 more than 100 ideas were submitted in a quarter. many of the ideas have been generated by plant employees, those closest to the manufacturing processes cox employs. the range of ideas submitted touch on a variety of areas including new safety procedures, new methods of improving productivity, and new ways of improving communication between and within plants. individual ideas selected for awards are now being implemented company-wide with progress monitored by the respective general managers for each of cox’s divisions. 5.0 discussion and lessons learned generally, any managerial change of the magnitude described above must originate from the leadership level and it must be recognized that change takes time. as described by ceo mikee johnson in 2013, “…we have formalized the innovation process, but we are still new to the innovation process and it is far from the cultural norm here. it is new, and i am sure we still have critics within our own organization thinking innovation is just blowing money.” table 1 outlines a series of targeted changes that management aspires to accomplish via the innovation initiative. although still in a relatively early stage of development, there are a variety of lessons learned from the cox experience. below we outline those that can be considered the most significant examples of keys to success in the cox experience, using the following categories: 1. committed and patient leadership 2. culture change 3. structured approach 4. experience nets enhanced skills and capabilities 5.1 committed and patient leadership company leadership significantly impacts the success of innovation in an organization (elenkov and manev 2005). having committed and patient leadership is one critical factor in success of the cox innovation initiative. having served on the bod for some time barry already had high credibility with company leadership when he was hired to lead innovation efforts. in other words, his legitimacy was not something that was questioned as the company began its focused innovation efforts. 5.2 culture change an organization’s culture has a strong impact on employee behavior (hogan and coote 2014). tushman and o’reilly (1996) refer to cultural and structural inertia that make it difficult for companies to change, describing structural inertia as, “…resistance to change rooted in the size, complexity, and interdependence in the organization’s structures, systems, procedures, and processes table 1: changes within cox industries, inc. targeted via the innovation initiative standard procedure prior to initiative post-initiative ways of operating ad hoc innovation, ideas primarily originating with salespeople [“just throw spaghetti against the wall and see what sticks.” – ceo] strategic process designed for ideation, due diligence on concepts, and selection and implementation of most promising concepts [“...now we are really focused on doing 1-2 projects, do them very well, and have them tied direct to our projections in the market space.” – ceo] heavy reliance on chemical companies for innovation independent creation and implementation of innovation concepts following the whims of customers or salespeople strive to match innovation strategy with company strategy, strategic thinking no innovation champion, too lean for effective implementation innovation under management of chief marketing and innovation officer no market research regular market research conducted via multiple methods ad hoc idea generation systematic idea generation and inventory system, ideastream hansen and breede — how innovation happens: practical insights from cox industries, inc. 39 (p 18).” cultural inertia is the result of norms, values, and lessons that make up the accepted “way of doing things” within a firm. the more ingrained these norms and values become, the greater the inertia. cultural inertia was clearly present in cox, but the proactive decision to develop a new approach to innovation was the first step in breaking the inertia. appropriately, the call to change came from company leadership, as it is the leadership that has the ability to create new cultural norms (hogan and coote 2014). developing a proactive culture that is comfortable with risk is identified as a key step for companies pursuing an innovation agenda (leavengood et al. 2014). a wealth of research exists showing that when a company is highly effective at decreasing costs, and increasing efficiencies (typical of forest sector firms), it is not necessarily also endowed with the skills necessary to create new products. being effective at both is typically referred to as organizational ambidexterity (tushman and o’reilly 1996). by hiring what can be considered a quasi r&d group, mikee was able to begin the innovation initiative with people lacking the baggage of the existing low-cost, high efficiency culture within the company. hiring barry and his assistant was a way of buying a bit of ambidexterity for the company. in addition, research indicates forest sector firms run too lean for personnel to focus on innovation (hansen et al. 2014, nakamura et al. 2003), so bringing in new people bypassed the tendency to think people do not have time to innovate. stendahl and roos (2008) make a strong case for allocation of personnel resources specifically to product development work. in the cox case hiring a chief innovation and marketing officer as well as a marketing assistant was a critical step towards successful innovation. 5.3 structured approach no innovation effort will produce results if it is ad hoc or reactionary. the history of innovation at cox was exactly this, largely following the whims of customers or ideas from salespeople. while the literature is replete with recommendations to be market and customer oriented (e.g., narver and slater 1990, hansen et al. 2006), others argue that this can lead to incremental innovations to existing products (stendahl and roos 2008). this “tyranny of the market” is the situation cox was in prior to the innovation initiative. now the company focuses on matching innovation strategy with company strategy, and strategic thinking around future scenarios as it identifies potential innovations and its efforts to be market oriented and conduct market research are focused on informing these strategic efforts. cox utilized an outside facilitator to jump-start its innovation efforts and followed this with a project-based approach, much like that described in nordic sawmills (stendahl et al. 2007). lack of a structured approach to new product development is said to be one weakness of forest sector firms (hansen 2006). this does not, however, suggest that highly bureaucratic and tightly controlled systems are needed. 5.4 experience nets enhanced skills and capabilities as with most things in life and business, experience leads to improved knowledge and capabilities, especially when it takes place ahead of competitors (korhonen and niemelä 2005). stendahl et al. (2007) report a key outcome of product development projects in nordic sawmills is development of resources and capabilities. there is high value in learning from doing. the long-term experience of pilot testing chemical formulations from its suppliers may have positioned cox well for an easy transition to its own innovation initiative. the experience of collaborating on innovation with suppliers may have developed capabilities that were unrecognized by company management. perhaps more importantly this process helped reveal to cox that the only way the company could innovate with true market differentiating products and services was to undertake innovation on their own and thereby not be totally beholden to a supplier’s own business agenda. in another example, learning to correctly estimate the market potential for an innovation helped eliminate dead ends for cox, as in the example of the concept of utility poles incorporating herbicides. 6.0 conclusions the experiences gained thus far in cox’s innovation efforts provide important lessons for other companies endeavoring to pursue a similar agenda. perhaps most important is integration of business strategy and innovation strategy. an innovation strategy must be more holistic than simply idea development and must fit well with the overall strategy employed by the company. potential innovations should be carefully filtered through the business strategy when evaluating viability. without this strategic approach, innovation efforts can become unfocused and, at worst, random, dramatically reducing the potential for successful outcomes. 40 bioproducts business 1(3) 2016 similarly, business strategy itself should also undergo regular evaluation, particularly if the management consensus is that potentially disruptive market influences are likely to require changes to internal operations, product mix or even the base business model itself. this ebb and flow between strategy and innovation is something that must be constantly monitored, managed and updated to ensure the pursuit of innovation opportunities is focused both in terms of quantity and direction. pursuit of an innovation strategy is not a quick fix, but a long-term effort. in the case of cox, the effort was focused on moving away from being a commodity supplier. early results were often murky and the eventual outcome unpredictable. what is quite clear, however, is that if price is the only means of differentiating then the likely success of a business model is short-lived. for most operations a key aspect of the long-term effort must be culture shift. the ultimate desired outcome is a workforce that sees innovation as part of its day-today efforts. ideastream is the way cox is attempting to institutionalize a spirited culture of innovation. given the lean nature of the workforce in most forest sector operations, adding personnel dedicated specifically to innovation is likely a necessary ingredient for success. in the cox example, having an innovation champion with a license to operate from the ceo was a critical piece of the puzzle. without the strong support of leadership, most innovation efforts are bound for failure. at best, they will be unable to realize their full potential. learning by doing builds skills and capabilities, so the time to focus on innovation is now. only by strategically working to alter culture and develop new products, processes, and business systems will a company improve its innovation abilities. the cox example shows that smaller operations, navigating in an intensely competitive sector, have the potential to experience significant success via innovation efforts. choose to ignore innovation at your own peril! 7.0 literature augusto, m., & coelho, f. 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(2009). case study research: design and methods. sage publications. thousand oaks, california. 219 pp. abstract this article examines institutional structures of innovations in non-wood forest products (nwfps). we examine both the involvement and the role of institutions via three in-depth case studies in europe: a food label from nature parks in austria, a mushroom cooperation in spain, and a chestnut association in italy. our analyses show that in all three cases, specific conglomerates of different types of institutions had decisive impacts on innovations. innovations were developed by associations and cooperatives of producers that were supported by private consulting companies in the first two cases, and by a municipality in the third case. to date, scholarly literature on the role of institutions in innovations has focused on institutions as external support. in contrast, our results show that institutions can also be part of the innovations themselves. consequently, we claim that it is more fruitful to analytically examine institutions for innovation from two separate perspectives. first, from an external perspective because institutions may influence the development of innovations through their support. second, from an internal perspective because institutions may constitute part of the innovation development process itself, which we label as “institutional innovation”. institutional innovations are labour intensive and time-consuming. they take five to twenty years to evolve and require specific support from “outside” institutional actors. forestry focused primarily on wood-based products (rametsteiner and weiss, 2005) and links innovativeness to firm performance (hansen et al., 2014), which is also reflected in most forestry laws (laird et al., 2010). yet, there is large, unused potential for non-wood forest products (nwfps) to support rural development and income generation of land owners and rural enterprises (emery et al., 2006; niskanen, 2006; niskanen et al., 2007; nybakk et al., 2009; schulp et al., 2014). innovation processes are complex within companies and evidence suggests that little “structured” product development happens in the forestry sector (hansen et al., 2014). experience-based insights into management processes for innovation are still sparse in the forestry literature (hansen and breede, 2016). the realm of innovation in nwfps furthermore covers broader economic areas that go beyond the forestry sector to include food and agriculture, leisure, recreation and tourism activities in forests and woodlands, crafts decoration, chemical substances and health products. in general, the nwfp the practice of innovation: the role of institutions in support of non-wood forest products alice ludvig1*, giulia corradini2, marelli asamer-handler3, davide pettenella2, verónica verdejo4, silvia martínez4, and gerhard weiss1 keywords: institutional innovation, associations, cooperation, non-wood forest products (nwfp), innovation support 1.0 introduction innovation studies frequently denote institutions as an important element of support for innovations to occur (edquist, 1997). recent innovation research on 1 university of natural resources and life sciences, vienna and european forest institute – central eastern european regional office eficeec, peter jordan str. 82, 1190 vienna, austria 2 department of land, environment, agriculture and forestry (tesaf) of the university of padova, via dell’università 16, 35020 legnaro (padova), italy 3 öar-regionalberatung, alberstrasse 10, 8010 graz, austria 4 instituto de restauracion y medio ambiente-irma sl, av de la aviación, 70, 24198 virgen del camino (la), león, spain * corresponding author: e-mail: alice.ludvig@boku.ac.at. acknowledgements: the research was undertaken within the startree project (“multipurpose trees and non-wood forest products: a challenge and opportunity”), and has been funded by the european union’s seventh programme for research, technological development and demonstration under grant agreement no. 31191. we would like to thank the two anonymous reviewers for their excellent and most valuable comments and suggestions as well as all of our interview partners for their time and efforts. bioproducts business 1(6), 2016, pp. 73-84. http://biobus.swst.org. https://doi.org/10.22382/bpb-2016-006 74 bioproducts business 1(6) 2016 economic sector is less technology-intensive than others. nwfp innovations often take place on a small scale, yet development in these fields is beneficial for employment and development in rural areas (lawrence, 2003; nybakk et al., 2009; rametsteiner and weiss, 2006; weiss, 2013) and can also improve the economic value of small-scale forestry as complementary products in marginal areas (pettenella et al., 2007). as monetary policy is generally not targeted or prevalent for nwfps (ludvig et al., 2016), the development of regional brands and labels, including the fostering of excellence standards through specific sustainable features of products, can be a valuable way of strengthening such innovations. this is particularly important because nwfps often have “public good” characteristics (mavsar et al., 2008) and production and marketing practices are frequently connected to landscapes as “territorial goods and services” (slee, 2011). this raises the question, how are innovations able to succeed under adverse circumstances, such as those involving economically weak and remote rural areas? this article tackles two questions: first, what role do institutions play in the development of such regional innovations? second, what types of institutions and specific social configurations are likely to lead to successful innovations? challenges facing innovation in nwfps have been connected to institutional dimensions and a lack in cooperation (weiss et al., 2010). hence, we study three cases of innovations that either launched successful labels or formed cooperative associations around nwfps in three rural areas across europe. our cases include a chestnut association in trentino, italy, a mushroom cooperative in castilla y leon, spain, and a forest food products label from nature parks in styria, austria. while we investigated various instances of nwfp innovation, these cases were selected to demonstrate successful and exemplary innovations through a qualitative, small-n research design (yin, 2009). this sample allows us to provide an in-depth study of the combined efforts of many institutions. in the following sections, we first outline the concept of institutions in innovation theory. second, we shed light on the support mechanisms provided by institutions. third, we assess the support mechanisms that were most important in the cases considered. in conclusion, we draw attention to the specific combinations of collective effort that were prevalent in the cases considered, which supported institutional innovation. 2.0 state of knowledge: institutions for innovation innovation research is a broad field and most approaches consider the single firm the centre of interest (hansen et al., 2006; hansen et al., 2014). systemic approaches in the innovation literature emphasise institutions as well as the interaction between actors and institutions (edquist and johnson, 1997) as an important and central element. however, different meanings have been associated with institutions. some define “supporting institutions” of innovations as research universities, governmental laboratories and technology policies (nelson and rosenberg, 1993, p. 5, 9-13). lundvall denotes institutions as a type of rules or as “rules of the game”, where “institutions provide agents and collectives with guide-posts for action” and subsequently “[...] may be routines, guiding everyday actions in production, distribution and consumption [...]” (1992, p. 10). however, routines and “guide-posts for action” deviate from nelson and rosenberg’s definition, which includes research universities and governmental laboratories. thus, there are two seemingly different perceptions of institutions; one is rather “tangible” and refers to concrete, material actors, such as governmental and non-governmental organisations, while the other depicts these institutions as entities that influence and pattern behaviour, such as routines, norms, values, shared beliefs, expectations and morals. followers of the second stream of literature are also sometimes referred to as “neo-institutionalists”, such as meyer and rowan (1977) and dimaggio and powell (1991), who argue that “organisations” are deeply embedded in social and political environments, and therefore all organisational practices (i.e. the “acting” and the “acts” of organisations) are constantly shaped by outside practices such as public opinion, cultural traditions, social order and other norms. the latter are what these authors refer to as institutions. neo-institutionalists rather view organisations as “formalised structures” than only as norms. however, we must consider the distinction between organisation and institution when we wish to examine the role of institutions in empirical research. thus far, the new institutionalism has addressed the influence of institutions on human behaviour through rules, norms and ludvig et al. — the practice of innovation: the role of institutions in support of non-wood forest products 75 other frameworks, and by “other frameworks”, these scholars apparently mean organisations. moreover, to become “institutionalised”, such norms and “other frameworks” have to occur repeatedly. edquist and johnson (1997), both prominent innovation scholars, address two views on organisations versus norms. they distinguish between institutions that are formal (e.g. laws, regulations, constitutions, formal technical instructions) and informal (e.g. common law, traditions, work norms, practices). furthermore, they suggest referring to everything else as “organisations” (p. 49ff). in sum, organisations seem to be more established and tangible than institutions (powell, 2007, p. 1). we suggest distinguishing between • organisations (e.g. established and tangible institutions) • formal institutions (e.g. laws, regulations, programmes and formulated policies) • informal institutions (e.g. unwritten norms, values, beliefs and cultural practices) we denote the first as organisations and the second as formal institutions because these are both more tangible than the third form, that of norms and values. however, for our research focus, the role that institutions play in fostering innovations is the most important question to address. edquist and johnson tackle this question by first asserting rather loosely that institutions “regulate the relations between people and groups of people” (1997, p. 51). second, they describe the functions of institutions in support of innovation as such: institutions reduce uncertainty by providing information, they manage conflicts and cooperation, and they provide incentives (edquist and johnson, 1997, p. 51). thus, a conception of institutions presents many different features. also, the functions and activities associated with institutions in innovation processes have been described in many different ways for which a common understanding does not yet exist (edquist, 1997; kubeczko et al., 2006). as a first approach to describing the “functions of institutions”, we apply the edquist and johnson definition here. we classify the support provided by institutions as support through information, cooperation, and financing (weiss, 2011, p. 19). we examine the organisations, policies, regulations and institutional influences that played a role in support of the innovations observed and analysed. 3.0 research method and data 3.1 case study methodology we selected three cases out of a sample of 25 innovations in rural areas across 13 different european regions . the three cases selected for our in-depth study stood out because each was characterised by the involvement of surrounding actors and the formation of cooperatives, despite originating in different regions and around different products. one of the most cited researchers on the issue of case studies defines a case study as an “empirical inquiry that investigates a contemporary phenomenon within its real-life context” (yin, 2009, p. 18). this approach fit our research interests addressing three case examples emerging around nwfps. despite similarities and differences, each case demonstrated similar features which rendered comparison worthwhile in order to gain more detailed insights (lijphart, 1971). 3.2 data collection and analysis data sources consisted primarily of interviews but also included documents related to the cases, such as brochures, website information and press releases. data were collected between july and october of 2014 by our partners in each region. a total of 11 semi-structured interviews were carried out face-to-face with selected actors involved, such as the founders, producers, funding bodies, ceos of consultancy agencies or other relevant personnel pertaining to each case. a sample interview guide was developed from the three key themes (i.e. informative, financial, and cooperative support) and open-ended questions were formulated (see appendix). the interviews took approximately one hour, were all recorded, and subsequently transcribed. one hour of a transcripted interview resulted in approximately 30 typed pages. all transcripts were analysed deductively, applying a method of qualitative content analysis (mayring, 2000). in concrete terms, our deductive analysis of the literature on innovation support enabled the initial identification of four key themes for the analysis, including the involvement of instructions in general, as well as the three forms of support. in order to address the important “pilot phase” in innovation processes, the interviews also investigated the specific genesis of each case. 76 bioproducts business 1(6) 2016 3.3 the search for innovativeness the forestry sector has generally been described as showing few indications of being innovative (hansen et al., 2014). it would follow that the same would be true for nwfps. shakelton et al. (2011) have already outlined in detail the difficulty of comprehending nwfps because of their inherent variety and diversity. our methodological design is based on the assumption that the innovations in our example cases are non-technical and yet subsume innovative features. for a definition, we leant on schumpeter’s five types of innovation, to include the introduction of a new good, a new method of production, the opening of a new market, new materials or resources, and the creation of new forms of organisations (schumpeter, 1934). in a traditional sector such as forestry and in the realm of nwfps, innovation not only occurs when new products and services are offered for the first time but also when technical changes in pre-existing production processes or when organisational changes in labour relations or marketing approaches occur. such new products are connected to goods, such as mushrooms, christmas trees, berries, pellets or drinking water. innovation also occurs when traditional processes, services or products are used in novel forms in management or marketing, the foundation of cooperatives, the creation of specific labels, or the marketing of natural or organic products (weiss, 2010, 2011). the cases we have selected as examples for innovativeness in three european regions include the following: the label “nature park specialities” in the austrian region of styria, the gourmet mushroom cooperative “del monte de tabuyo” in león, spain and the italian chestnut association “associazione tutela marroni di castione” located in south-western trentino. our selection conforms to the scholarly standards for innovativeness because each case either introduces a new idea for a historical, traditional product (italy) or commercialises a product in a new way that is unique for the sector and the region (spain and austria) (edquist, 1997, pp. 11; nelson and rosenberg, 1993, pp. 5; weiss, 2011). moreover, these three projects involve several actors and institutions that are supported by associations. finally, all three involve a combination of several additional services linked to the traditional products. in the austrian case, the recreational and cultural functions of the regional nature parks are complemented by the traditional products produced and provided by local farmers living in the parks utilizing the label. in the spanish case, de del monte de tabuyo, which is both a cooperative and a limited society, includes a restaurant and the sale of processed and preserved gourmet mushroom products (sold in the restaurant as well as online) in castillia y leon, a region that had not previously utilized its mycological resources. in the italian case, 100 associated chestnut growers and supporters from the brentonico plateau organized activities, services and gourmet events around their chestnuts. 4.0 results 4.1 nature park specialities in styria, austria genesis of the case: the “association of austrian nature parks” (vnö) was founded in 1994 to incorporate 28 austrian nature parks. due to the founding of additional nature parks, there are currently 48 parks encompassing a total area of 500.000 ha. by definition, a nature park is a “cultural landscape” that has to fulfil four functions (four columns): nature protection, recreation, education, and local development. in 1999, amongst other projects, the vnö developed a christmas present “box” with locally produced food products from the parks. later, the members agreed on a common label for these products. they acquired funding and consulted with an austrian regional development consultancy company (öar-regionalberatung) that is still the managing executive for lobbying and applications for funding the project. according to our interviews, the idea came from several people in both the öar and the vnö. the label “österreichische naturpark-spezialitäten” (austrian nature park specialities) has gone through different phases of financing through national means, leader and eafrd. until 2003, the label embraced all members of the vnö, but with the leader monetary support (after 2004) only some members (15 in total) continued to participate because from that point on, they were required to contribute part of the costs. in its latest phase, from 2009-2012, the label included 20 nature parks. currently, all monetary support is acquired competitively through projects (partly via regional leader funding). the institutions involved include the 20 austrian nature parks that are active in the label, the umbrella organisation (vnö), the regional development consultancy company (öar), and, in separate stages of the project, the federal ministry and the länder governments, where the active nature parks are located. ludvig et al. — the practice of innovation: the role of institutions in support of non-wood forest products 77 forms of support information: information and know-how was provided by the öar to the nature park managers who held contracts with the farmers. finance: monetary funding was acquired from public sources through the association for developing and maintaining the label. these public sources for monetary support included an “innovation scheme” by the austrian ministry for agriculture, with subsequent financing from leader and eafrd. in its first phase, the project was funded for “innovation” and later for education and training measures, however, the authorities argued that after the first provision of funding, it was no longer considered an innovation because it was declared no longer “new”. the association later managed to acquire money for product design and marketing development from the producers. the products included varieties of juices, tea, jam, liqueurs, wines, honey, sweets, meat and herb products. some products stem from traditional domestic austrian species (pyrus communis, prunus spinose, and others). in particular, the period between 2006 and the following funding period, which began in 2009, was very demanding for the nature parks and the öar because it was not clear whether and how funding would be available. one of the interviewees from the öar who was involved from the beginning stated, “it was really so, that i was thinking 20 times, now what the hell, when they [the ministry] really do not want it, then we leave it. eventually and suddenly they [the ministry] said, ‘well ok, now we do it’”. (int i aut220914, p. 9). it was a difficult path, and the organisation was tempted to give up many times. cooperation activities took place between the nature parks and the farmers, between the nature parks amongst themselves, and between the association and the nature parks. negotiations and lobbying activities took place between the association and the public funding agencies. the vnö always worked in close contact with the public governments and funding sources. nonetheless, there were many bureaucratic hurdles, for instance, when the authorities decided after the first period that the project no longer qualified for the “innovation” scheme. informal institutions: the unifying factor for the label was the nature parks` branding as “cultural landscapes” with the production of its connected regional-specific products. the traditional forms of production and the use of these products provided the local population and producers with unifying possibilities for common identification. as such, the label sells successfully to national and international visitors to the nature parks. 4.2 del monte de tabuyo in léon, spain genesis of the case: this project arose amongst a group of five women in a rural area who were searching for employment. the forest in the area represents a public utility for communal use. in this area, there were no timber forest resources that could be exploited to generate a profit, but there was an abundance of mushrooms with no developed tradition of use and consumption. del figure 1: institutions involved in austrian nature park specialities 78 bioproducts business 1(6) 2016 monte de tabuyo is a restaurant with an attached gourmet shop. the women sow, cultivate, collect and cook almost all of the products by themselves, and they also buy raw materials from within the region. they perform the manufacturing and the packaging and also run the gourmet restaurant. they market the products directly and via their online shop as well as in gourmet shops in the city of león. the products include various types of jams, sauces, liqueurs and mushrooms prepared in assorted ways, from remoulade to patés. institutions involved: del monte de tabuyo was formed by two separate organisations. the first included the silvestres del teleno cooperative, which was created by the five women with the aim of commercializing the mushrooms as a primary resource and to provide a legal entity for this resource, which was required for billing. the second founding organisation included the del monte de tabuyo, which was based on the restaurant and the commercialization of the products that were manufactured and packaged by the five founding members of the company. the third involved organisation included the irma s.l., which is a regional development consultancy company that was the advisor for the project and that provided advice on funding. irma s.l. was paid for its services, but was not part of the company. the project mycology of castillia y leon (myas, 2008-2013) was also an important institution for networking and information for the project. it was funded by the regional government (jcyl-diputaciones) at the time. forms of support information: one of the women entrepreneurs stated that she received information from other examples of gourmet shops and restaurants that she knew about and that could be adapted to the project. “all information is important, but you have to shift, select and prioritise, and with this you are left. but from other things that we have seen and ... going to other countries in the european union, we saw other models of ... managing resources, although they had nothing to do with what we do in the forests ... but, of course, other experiences we had in other places.” information came from different sources, from people in the same town who had always lived in the mountains to people with more specialised backgrounds. “the information was ... very varying ... it was people from the village, people from the mountains, ordinary workers ... and then specialists, technicians. what helped us also was an intraregional cooperation project, ‘el myas’ (marketing project of mycological resources in castilla y leon, http://www.micocyl.es/); that was important.” finances: from the beginning of the project, the enterprise was funded with a bank loan from the ico (official credit institute), because the women needed to pay the bills for their start-up. thanks to irma s.l., the regional development consultancy agency, the women obtained a loan from the cdti (centre for the development of industrial technology), which is part of the spanish ministry of economy and competitiveness, figure 2: institutions involved in del monte de tabuyo ludvig et al. — the practice of innovation: the role of institutions in support of non-wood forest products 79 and received feder funds for r & d at regional, national and european levels. securing financing was a very important step for del monte tabuyo. cooperation: the most important coordination and cooperation took place between the project promoters and the consultant irma s.l. on various funding schemes and sources of information. there was also one regional political actor interviewed who was not directly involved in the project but who was familiar with it. he emphasised that depending on political changes, they [the politicians] could encourage, avoid, or even obstruct projects with innovative bases. this statement implies that irma s.l. was an important backup and served as an intermediary between the five female founders and the funding institutions. one decisive regional policy was the abovementioned “regulation and marketing project of mycological resources in castilla y leon” (myas), which was influential because it promoted mycology as a resource with great potential that, until then, had not been valued economically. later, the “mobilization program of forest resources in castilla y león 2013-2021» was described as important by the interview partners, as it went hand in hand with the national “plan of socioeconomic activation of forestry” of the spanish national agricultural ministry. informal institutions: the five founders all stemmed from the region and were close neighbours and friends for many years. in the interviews, they emphasised that the strong loyalty and shared values amongst them were a strong factor for the success of their mushroom cooperative. a second informal component was the fact that the woodland that they used for the harvesting of their products was “common municipal land” that could be used without formal contracts. 4.3 associazione tutela marroni die castione in trentino, italy genesis of the case: chestnut cultivation was historically an important source of livelihood for people living in rural areas of italy. in trentino, according to statistics compiled in 1852 by agostino perini, the chestnut was defined as a “fruit tree cultivated with more profit and greater extension”. due to the abandonment of rural areas and changes to other agricultural products, chestnut cultivation experienced a dramatic decline during the 20th century. the associazione tutela del marrone di castione restarted chestnut production through a chestnut association located on the brentonico plateau in southwestern trentino. since 1994, producers in the association have been working together to recover the natural heritage characterised by chestnut cultivation. first, producers restored the old chestnut stands that had not been used professionally for many years. today, the association has approximately one hundred associates (both chestnut growers and supporters). the chestnut trees are now well managed and represent both profitable production and an asset to the landscape. the association promotes chestnut cultivation, teaches people how to manage chestnut orchards, provides a conservation standard, and determines pricing. all of these elements help guarantee a high quality product that is then sold directly by the farmers. in 2013, an invasion of the chestnut gall wasp (dryocosmus kuriphilus yasumatsu) led to a dramatic decline from 500-2000 quintals per year to 10 quintals, and normally the association provides 35% of trentino’s total production. due to investments and initiatives of the association, a remedy was successfully developed (natural antagonist) and production is recovering. of the production, a portion is sold fresh, another is transformed into products, and another, usually the main part, is sold during the annual chestnut festival in the form of roasted chestnuts and sweets. at the beginning of the association, the leading role was managed by the producers with the aid of the municipality and the tourism sector in the area, although this arrangement later changed, as is illustrated below. institutions involved: the association was founded by a group of farmers who elected a president, fulvio viesi. according to the interviewees, there were no consulting agencies involved. the founders remembered the tradition of chestnut cultivation (from their parents and grandparents), and they gathered together with passion. the municipality of brentonico was involved in the sense that it sponsored the idea by providing funds (at the beginning of the project) as well as space and visibility. forms of support information: according to the interviewees, the “old” (historical and traditional) knowledge on how to maintain, grate and cultivate chestnuts never vanished entirely in castione, despite the huge decline in chestnut cultivation during the 20th century. thus, the farmers who 80 bioproducts business 1(6) 2016 founded the association had obtained knowledge from their parents. however, they organised training and information courses during the growth phase of the project for other farmers and producers, not only in the area of castione but also in other areas of trentino. over a period of time, they invented new products, such as the liqueur “marroncino di castione”. this product was invented through discussions with people in other sectors – in this case, the sector of grappa and wine production. in addition, for chestnut creams, farmers had relationships with people from other regions who already produced similar products. an important source of information was the national association of chestnut cities, which is a national network of chestnut grower associations that was important for sharing experiences and learning from others. some information was searched for by the producers themselves via internet sources. finances: the association is primarily funded through volunteer work. revenue from the annual chestnut festival and local products and handcrafts are used to maintain the association. the chestnut farmers obtain their profits from the sale of fresh chestnuts. at the beginning, the association was co-financed by public bodies and, in particular, by the autonomous province of trento, the municipality, the valley community, and the apt (association for the promotion of the tourism). together, these initiatives were able to provide 50% of the necessary funds. currently, this contribution is less consistent, not because the territorial bodies do not trust the association anymore, but because there is less money available. the vice-president, viesi, said that the association never asked for european union funds. he stated that there was a possibility of applying for additional funding but that no one had yet started the process. however, the chestnut farmers have applied for eu rural development programme funds and provincial funds to restore their orchards for cleaning and pruning. currently, according to the interviewees, the association receives 54% of its maintenance from revenue from the annual chestnut festival, 23% from private sponsors and “banks of cooperative credit” (casse rurali), and approximately 18% from public bodies (mainly the autonomous province of trento). the remainder comes from members of the associations and from local restaurants. cooperation: from the beginning, the chestnut growers in the association recognised the importance of working in cooperation with the tourist sector, both figure 3: public and private institutions involved in the funding of the associazione di castione at the beginning (box to the left) and currently (box to the right) ludvig et al. — the practice of innovation: the role of institutions in support of non-wood forest products 81 with the association for the promotion of tourism (apt) and private actors, such as restaurant and hotel owners. in collaboration with the restaurants on the brentonico plateau, the association promotes menus based on chestnuts. the need to improve the growers’ knowledge led the association to start discussions with other organisations in the province of trento and with actors at the national level. as a result of this process, the municipality of brentonico, which includes the village of castione, became an active member of the national association of chestnut cities, which is a network in which experiences and innovations related to chestnuts are shared. when asked about the bodies that helped them, the respondents listed them as follows: the vice-president stated that the association did not receive funds from europe, but almost all of the individual producers applied for and received funds for chestnut recovery and maintenance, both from the province and the eu rdp. in particular, in trentino, article 23bis of the provincial law no4/2003 specifically targets chestnut orchards, and is entitled “demand for contribution for the conservation and amelioration of the chestnut orchards”. the aid is paid to the owner or lessee of areas planted with chestnut trees, who is committed to their recovery, maintenance and management for a period of at least five years. informal institutions: in the beginning of the project, the main motivation for the activities was a non-commercially oriented preservation of the old tradition. in addition, there was an interest by public political actors to revive a typical activity or product of the region, in light of “regional marketing”. still today, the regional specific aspect is very strong in the activities and selfrepresentation of the association. 5.0 discussion: the role of institutions the functions of institutions (edquist and johnson, 1997; kubeczko et al., 2006; weiss, 2011) denote the support functions for innovation from the surrounding innovation systems. indeed, these three cases found success because of the continuous efforts of a range of various associations, consulting firms and municipalities. ros-tonen and kusters (2011) have emphasised the importance of institutional frameworks as decisive factors for success (and failure) of the use of nwfps in cases of developing contexts. they also underline the importance of partnerships and participatory action for this process. in the austrian and the italian case, larger associations were formed. in the spanish case, a smaller cooperative was initiated by five producers. the main support for the larger austrian association and the smaller spanish cooperative came from consulting firms. the italian case gained its primary support from the municipality and the provincial administration. in each of these cases, the formation of conglomerates of organised structure and cooperation was no coincidence. each formation was necessary to build capacity, as no single entrepreneur could have achieved the desired outcome alone. first, all of the cases involved collaboration and cooperation, where people invested time and effort in the structures because they believed there would be a benefit for the group, including themselves. to develop the innovations (i.e. by bringing novel products to the market), the institutions (in this case, organisations, that is, the associations and cooperative) had to be founded. in other words, the innovative new products and the attached services could only be created with the simultaneous creation of the organisations. thus, the product and service innovations required an “institutional innovation” for their realisation. an institutional innovation includes new or adaptations of existing organisations, new or significantly modified rules, regulations and policies, as well as new or significantly modified procedures to implement such policies (weiss et al., 2010, p. 43). second, all of the cases have a regional marketing strategy that refers to the specific regional landscapes (nature parks), municipalities (luyego), or plateau (castione) in common. their brands and methods of regional marketing also attract consumers from outside their respective areas. all of these cases are embedded in broader regional areas and involve more people at larger scales than a single entrepreneur could reach, as each brand or label required coordination efforts and mutual trust among numerous participants. these characteristics are what render the innovations institutional; they are characterised by repeated practices and organisational formations. their expertise is rooted in a conglomerate of commitment and personal connection that has been claimed to be crucial to forestry expertise in general (lawrence, 2009). the additional institutional features in support of these cases, such as formal institutions (policies) or 82 bioproducts business 1(6) 2016 organisations, are external in character. in the spanish case, a new regional policy programme was influential when combined with the leader and eafrd funds, the same funds that supported the austrian case. the italian case was supported by local public administrations. individual producers received some additional funding for maintenance of their orchards. in all three cases, institutions were most prevalent in the perceptions of the interviewees, especially when they recalled organisations and people who helped them develop their idea, and when they recalled the policies or regulations that were most helpful for their projects (formal institutions). in addition, it seems that informal institutions played an important role in the success of each of these cases. each project was embedded in the local and regional identities that surrounded the products, yet also assisted in creating or enhancing such identities. forms of interrelated loyalty and trust amongst the founders of the projects were also important informal factors for success. these formal and informal institutions influenced innovations considerably. according to peters, it is institutions that “guide and shape individual behaviour” (peters, 2012, p. 2). yet, the initial ideas stemmed from specific innovators who figure 4: institutional framework to foster innovation ins�tu�onal innova�on: forma�on of associa�on, coopera�ve and/or founding of label or brand by entrepreneurs, producers, and innovators funding support: funding and support schemes through regula�ons and policies with their implemen�ng organisa�ons (eu, na�onal, and regional levels local ins�tu�onal capaci�es: support through local public and private organisa�ons (know-how and exper�se through consultants, associa�ons, municipali�es)  coordina�on, informa�on and financing informal ins�tu�ons  local & regional iden��es, trust & mutual support had the will and energy to carry the ideas through. in all of these cases, the entrepreneurs and producers first gave the decisive stimulus and were only subsequently supported either by a consulting agency (e.g. the irma s.l. in spain and the öar in austria) or by direct support from a public entity (e.g. the municipality and the other organisations in italy). in addition, in all three cases, institutions were part of the innovation, as new cooperatives, associations, and branded labels were founded for each project. in other words, at the core of the innovations was the foundation of organisational institutions. it is therefore fruitful to distinguish between external institutional influences and the shaping of institutions within the innovations. the following figure illustrates the institutional framework found in our results. the uppermost rectangle in figure 4 (funding schemes) involves the political programmes and funding (“formal institutions”) as well as private and public organisations, banks and public agencies (“organisations”). the external private and public organisations involved in these cases, such as the consulting firms and the supporting municipality (local institutional capacities), form an additional institutional layer around the bottom circle of the core institutional innovation. ludvig et al. — the practice of innovation: the role of institutions in support of non-wood forest products 83 6.0 conclusions without institutional support, these projects would not have been realised, nor would they have been successful. however, the classical conceptualisations of “institutions in support of innovations” are not sufficiently differentiated for the practical settings of institutions when scrutinized at the empirical level. it turns out that according to these definitions, institutions “always have a say”, as they are present at many levels. in the three examples we have explored, first, there is a combination of three types of institutions (organisational, formal, and informal) that become prevalent, and second, two pathways are possible: an existing organisation may found an association of producers (e.g. the vnö), or creators may found a cooperative or association (e.g. the tabuyo del monte or associazione tutela marroni di castione). the founders have a decisive influence in stimulating and developing the project. it is this institutionalisation, the formation process of forming associations and cooperatives in the first place, which renders the innovation institutional. in the next step, together with intermediate organisations (e.g. the öar; irma s.l., or a municipality) that provide necessary information (on funding) and know-how (technological or infrastructural), the founders then garner financial support from other institutional infrastructures and funding schemes (e.g. the eu, national, and/or regional development organisations). this process takes place within the institutional framework (figure 4). in sum, the founding of an association and the branding of a label is an “institutional innovation” and thus should be denoted as such. institutional innovations are necessary among small structured projects that involve a label or a brand. the label is a necessary pool for the producers, both in terms of produced amounts and the marketing of their products. in this way, customers can be better reached through the intentional founding of labels. for the association, both agreements between the founders and support from intermediate institutions were necessary. infrastructure and capacity are likely necessary to grow and realise success in succeeding stages. to understand these processes, we argue that it is important to distinguish between the institutional aspects of the innovations themselves and the surrounding institutions that support them over time. the study of institutional innovations underlies, first, the challenges within the sector of nwfps and, second, the attempts to create economic benefits within a region. further, these cases demonstrate the collective effort required to produce an umbrella label to be used by various actors in order to achieve benefits for all. it is a collective exercise that gives the innovation a special, “extra” meaning. some actors group themselves, while others are placed together. using a participatory approach, actors negotiate a common production standard, associate the standard with a label, and then promote the label amongst potential buyers. this is a step-wise approach and our article has shown that although the roles are sometimes played by different local compositions of institutions, both public and private, in very different regions within europe, the mechanisms behind these steps and the necessary functions for the success of such labels (information, networking, and financial support) are quite similar in each of these cases. furthermore, in all three cases, it took five to twenty years to achieve commercial success. a step-wise approach suggests scholarly examinations across longer time-spans. the same goes for the improvement of support schemes. in all three cases, the innovations occurred on an ad-hoc basis and were not planned systematically. funding was particularly difficult. in the austrian and spanish cases, funding required many years and efforts were only successful after the inclusion of specialised consulting firms for regional development. in the italian case, the founders did not even attempt to obtain funding but instead trusted long-established community connections with the local administrations. thus, it appears advisable to 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(ed.) encyclopedia of creativity, invention, innovation and entrepreneurship, pp 964-971. weiss g, salka j, dobsinska z, aggestam f, tykkä s, bauer a, rametsteiner e (2010) integrating innovation in forest and development policies: comparative analysis of national policies across europe. in: rametsteiner e, weiss g, ollonqvist b et al (eds) eur 24163-cost action e 51 -policy integration and coordination: the case of innovation and the forest sector in europe. luxembourg, publications office of the european union, pp 41-85. yin r (2009) case study research, design and methods, thousand oaks and london, sage [4th edition]. abstract to increase our understanding of corporate responsibility (csr/cr) in the forest sector in the context of an emerging economy, we analyze how cr managers in brazilian forest companies perceive iso 26000, which is an international standard to implement csr. we also enhance the understanding of how corporate responsibility managers perceive the future contribution of the forest sector to the united nations (un) agenda 2030 and the implementation of sustainable development goals (sdgs). our findings indicate that forest sector management in brazil is focused on environmental issues when implementing their sustainability agenda, but social issues are increasingly being included, especially in the agendas of smaller companies. large-sized companies play a particularly important role in influencing the value chain, and iso 26000, among other initiatives could be one way of reaching this goal. the managers interviewed identify combatting climate change impacts (sdg number 13) as potentially contributing the most towards sustainable development. keywords: brazilian forest sector, forest industry, pulp and paper industry, corporate responsibility, sustainable development goals, qualitative interviews towards corporate sustainability under global agenda 2030: insights from brazilian forest companies julia tauszig1 and anne toppinen2* acknowledgements: we thank feedback from two anonymous reviewers. financial support from academy of finland grants 268363 and 307480 is gratefully acknowledged. 1 independent consultant, rua caminho do lago, 110, 13.282-556 vinhedo sp, brazil. email: julia.tauszig@gmail.com. 2 professor, department of forest sciences, latokartanonkaari 7, university of helsinki, finland. email: anne.toppinen@helsinki.fi. * corresponding author bioproducts business 2(7), 2017, pp. 65-76. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-007 1.0 introduction in 2015, as part of agenda 2030, the un launched 17 sustainable development goals (sgds) that are largely concerned with climateand poverty reduction-related topics. the set of goals can be divided into five themes: people, planet, prosperity, peace, and partnerships, and these will guide national policies and international cooperation activities over the next 15 years. according to the president of the world business council for sustainable development (wbcsd), peter bakker, “…the sdgs will not be realized without business. with an annual $5 trillion to $7 trillion needed to finance the goals, business has a critical role to play as a source of investments and as a driver of technological development and innovation, not to mention as an engine for economic growth and employment” (wbcsd 2016). according to better business, better world (bsdc 2017), sustainable and inclusive business models may represent economic opportunities worth at least us$12 trillion a year by 2030 and generate up to 380 million jobs, mostly in developing countries, in four different areas, i.e. food and agriculture (e.g. forests ecosystem services, technology in smallholder and large-scale farms, restoring degraded land, reducing food and packaging waste), energy and materials (e.g. renewable energy, carbon capture and storage, and energy grid interconnection), cities (e.g. use of timber in tall buildings) and health and well-being (e.g. the use of advanced genomics). the implementation of corporate (social) responsibility (csr/cr) as a firmand industry-level strategic issue has become increasingly relevant within natural resource-dependent sectors. the forest industry has always been an environmentally sensitive sector, due to its heavy reliance on natural resources and the profound impact it can have on vital ecosystems, and this has not changed (toppinen et al. 2016). a structural change is 66 bioproducts business 2(7) 2017 occurring in the forest products trade and investment sector due to saturation of the traditional main markets in north america and europe, while the emerging economies of brazil, india, and china have opened up with much higher demand growth prospects (hetemäki et al. 2016). the internationalization of large-scale forest industry firms has led to the expansion of plantation area and pulp production in the global south, which has raised concerns regarding the threat of forest resource overuse and inherent sustainability challenges (malkamäki et al. 2016, toppinen et al. 2010). the adoption of internationally recognized standards is a growing phenomenon through which businesses might be able to increase their transparency and improve their legitimacy in the face of stakeholders. among these, certifiable international organization for standardization (iso) environmental management standards have become highly common tools for legitimation across businesses, and the adoption of sustainability reporting standards, such as the global reporting initiative, have also recently begun gaining ground, particularly in europe and north america (toppinen et al. 2015a). iso 26000 is a recently launched standard, which aims at providing information on understanding the role of sustainability in various organization types and sizes, helping to find practices for integrating the standards throughout the organization, and promoting communication on sustainability issues, thereby independently improving organizational practices related to cr. the literature base on cr in the forest sector is fairly abundant (see, e.g. panwar and hansen 2007, hansen et al. 2013, li et al. 2014, or, for recent reviews, li and toppinen 2011, ranängen and zobel 2014), but has been strongly focused on analyzing companies from developed countries. to increase understanding on the meaning and future of cr in the forest sector from an emerging producer country perspective, our study intends to explore the meaning of corporate responsibility for managers in forest companies in brazil regarding the emerging sustainability guideline iso 26000. our analysis is based on managerial interview data and company documents from selected brazilian forest companies. our paper will analyze cr implementation, especially through iso 26000 and the potential to contribute to sdgs, across selected case companies. we begin by introducing the contextual background, data, and our empirical approach. next, we aim at discussing the practical challenges that organizations face in promoting a standardized view of their social responsibility and overall contribution to sustainable development. we end with conclusions and recommendations for practical sustainability management in the forest industry, along with providing insights for future research. 2.0 contextual and conceptual background over the last 50 years, corporate social responsibility (csr), the concept and its practice, has flourished. it has expanded from its focus on a few stakeholders to be more far reaching and inclusive, and more global in scope. today, csr in many companies is becoming fully integrated with strategic management and corporate governance. recognition of a company’s stakeholders is an important element of iso 26000, as are the shortand long-term objectives in terms of pursuing corporate responsibility (hahn 2013). the list of seven core subjects of iso 26000 (i.e. organizational governance, environment, human rights, fair operating practices, labor practices, consumer issues, and community involvement and development) presents the most essential areas of cr that an organization should consider to maximize its contribution to sustainable development (iso 2012). according to hahn (2013), iso 26000 is useful in being holistic and providing a starting point for implementing organizational sustainability strategies. it can also be helpful in conducting internal and external analyses. thus, it is plausible that when combined with an existing sustainability assessment system (such as the global reporting initiative), the core topics of iso 26000 can support benchmarking the key topics in companies’ sustainability processes (sethi et al. 2017).1 it is also worth noting that the iso 26000 guideline encompasses all the sdgs issues, and thus, may be considered a potential tool to support and facilitate the achievement of such goals for the organizations interested in contributing to it (iso 2016). 1 the iso 26000 content covers a very similar range of topics to that of the global reporting initiative (gri) reporting guidelines and its guidance provides a structure for companies to organize their activities, which can then be measured and presented in the company’s report. besides, the gri actively participated as a stakeholder in the international multi-stakeholder iso 26000 development process from the start (gri 2010). tauszig and toppinen — towards corporate sustainability under global agenda 2030: insights from brazilian forest companies 67 regarding criticism towards iso 26000, hemphill (2013) considered the guideline to be too broad in scope, resulting in an inability to capture the important environmental contexts of industries and sectors. when implementing cr, the iso 26000 scheme mainly indicates ‘what’ to achieve instead of ‘how’ to achieve it. according to sethi et al. (2017), iso 26000 provides a structural approach to help companies in the preparation of their csr reports, but specific measures to assess either the quality of companies’ sustainability disclosures or assurance as to the accuracy of the information provided are lacking. therefore, the actual implications for social and environmental improvement or company strategic management practices via the iso 26000 guidance standard remain largely unknown. the focus of our study on brazilian forest companies is merited by the strong expansion of pulp production in south america, especially in brazil, uruguay, and chile. a number of new pulp mills have been built over the past decade due to domestic and foreign investment, and consequently, the region’s share in global pulp production has steadily risen. in 2015, these three countries accounted for 14 percent of global pulp production and 74 percent of export volume (fao 2016). brazil by itself additionally ranks fourth among the world’s largest pulp producers, ninth among the largest paper producers, and eighth among the largest wood panel and laminated flooring producers (ibá 2016). brazil is an interesting emerging country also from the sustainability point of view. according to a country-wise cr ranking study by halkos and skouloudis (2016), engagement with civil society, regulatory effectiveness, and competitive conditions are the most significant factors influencing the merger of cr with macroeconomic conditions, while industrial self-regulation plays a less significant role in the spreading of cr at the national level. in their crosscountry comparison, brazil ranks as a leader in the south and central american region, and the first among emerging countries, while globally holding the 22nd position. previous literature on the brazilian forest sector has emphasized critical case studies of conflicts around international pulp investments, especially focusing on the question of local land tenure arrangements and associated community impacts. for example, myllylä and takala (2011) analyzed indigenous community perceptions in joint venture pulp investment in the bahia region in a case where an international company faced substantial challenges in gaining societal legitimacy. focusing on a veracel pulp mill investment, kröger and nylund (2012) applied an ethical analysis in the assessment of conflict dynamics, and found the conflict was marked by politics of power. from the corporate responsibility management view, vidal et al. (2010) studied how information concerning cr practices is diffused in the forest sectors of brazil, canada, and the united states, and found that context plays a key role. companies operating in brazil, where the socio-political context is less stable than in north america, were driven to adopt cr practices, at least in part, to improve the conditions of their own operations. this resulted in mutually beneficial outcomes for both the companies and the communities within which they operate. in a comparative setting, a managerial interview-based study on north american and european forest companies (toppinen et al. 2015a) found that in terms of iso 26000 elements, companies tend to focus on environmental issues and organizational governance when implementing cr, while consumer issues and human rights receive very little attention.2 however, a gap exists in the literature on understanding the scope and state of cr strategies and implementation of standards and international guidelines, especially from the emerging country perspective, to which this paper aims to provide some new insights on. 3.0 material and methods the interview guide designed for this study consisted of a set of nine questions (see appendix), which were designed after conducting the literature review and were largely based on a previous study of european and north american managers (toppinen et al. 2015a). interview questions focused on themes that were formed from iso 26000 guidelines as (a) recognizing and implementing social responsibility (questions 1–3), (b) decision-making and integration of social responsibility throughout the organization (questions 4–6), and (c) social responsibility guidelines and core subjects (questions 7–8). finally, we inquired about respondent familiarity with the un’s agenda 2030 and the sdgs, and his/her perception on the 2 using the iso 26000 framework and data for the top 100 pulp and paper companies, toppinen et al. (2015b) also found that the emphasis on environmental sustainability appears to dominate in both ceo letter-based communication and social media communication over other sustainability-related issues. 68 bioproducts business 2(7) 2017 contribution of the forest sector to the implementation of this sustainability agenda for the next 15 years. the selection of companies in brazil was intended to include the leading players in the field, concurrently providing differences in terms of production portfolios. five brazilian companies from the forest sector participated in our study in 2016. although this is a small number, these companies represent 58% of the pulp production and 29% of the paper production in the country (paper 360o 2016). all interviews were conducted in 2016 in portuguese by a native speaker. six corporate responsibility experts from these companies were interviewed in person, over skype, or by telephone (two representatives of company br3 participated in the same interview). the interviews lasted between 30 and 75 minutes. interviews were recorded, recordings were transcribed and translated into english, and a detailed summary was composed. in addition, a compilation of secondary data (i.e., companyand sector-level documents and publicly available information such as websites, annual reports, and research reports) were screened. company profiles and respondent background are provided in table 1 and the acronyms from br1 to br5 will be used throughout the text for the respective companies. based on table 1, four out of six interviewed experts have worked at their current company for less than 10 years, while the remaining two have worked in their respective companies for approximately 20 years. their professional role and responsibility areas varied from company to company. for example, the main role of respondent br1 was to “align and combine sustainability into the business strategy with focus on strategy and daily sustainability, internal and external education, and communication to generate value through integrated report by business,” while expert br2 focused on “transparency and accountability, and sustainability projects development.” yet, the roles of the two experts in company br3 were mainly related to “supporting the definition of parameters and establishing a foundation for the sustainability area in the company, in a formal way.” they also highlighted that “the first cycle of a continuous improvement process has just begun.” respondent br4 was responsible for forest operational area and sustainability, all socio-environmental portfolios, and all social and environmental programs. last, interviewee br5 was in charge of controlling, maintaining, updating, and improving all management systems implementation, and from the sustainability perspective, the expert is responsible for iso 26000 guideline project implementation within the company. the covered professional expertise can be judged to be sufficient for our research purposes from the viewpoint of internal data validity. we used qualitative interviewing, as the aim of this primarily qualitative analysis was to explore underlying csr perceptions (rubin and rubin 2005). the content table 1. background information on the case companies and interviewed managers/experts. id main product segments company size (employees, averaged to thousands) primary market areas respondent position respondent working experience (years) br1 forestry, fiberboard, mdp and mdf wood panels, wood and vinyl flooring, sanitary ware and metals, valves, and electric showers and faucets 12 000 (direct) brazil sustainability and communication manager 22 br2 forestry, eucalyptus pulp (hardwood pulp) 17 000 (direct and indirect) north america, europe, and asia sustainability advisor 12 br3 forestry, hardwood pulp, softwood pulp, fluffy pulp, paperboard, kraft paper and recycled paper, corrugated cardboard, and industrial bags 17 000 (direct and indirect) brazil sustainability analyst senior and analyst (sustainability and communication management dept.) 10 and 7 br4 forestry, pulp and paper 18 000 (direct and indirect) north america, europe, and asia executive manager for sustainability and certifications 26 br5 decorative papers line of products (special paper), cartonboard, and industrial papers 700 (direct and indirect) brazil management systems manager (iso 26000) 28 tauszig and toppinen — towards corporate sustainability under global agenda 2030: insights from brazilian forest companies 69 analysis of the interview material focused on latent content, and therefore, not just words and single terms were investigated but potential interpretations were considered as well. essentially, our analysis used data thematization; the observed sub-categories of cr practices were grouped into seven core theoretical categories related to iso 26000 and un sdgs. both authors read the transcribed data independently and formed preliminary ideas of the core materials, and the ultimate consensus over key content was reached iteratively through their mutual discussions. to further improve the reliability of our analysis, authentic quotes from the interviews are also provided in the text. despite our data being fairly limited in the number of companies and experts interviewed, the solid and rich expertise of the interviewees and their willingness to openly share their insights on company-level implementation and the future development areas of cr increases the internal validity of our data and analysis. in addition, during the analysis phase, it was possible to conclude that the collected interview data was saturated in terms of the key concepts, especially on the core content of iso 26000 among companies. naturally, any larger generalization of results beyond the case companies should be avoided. 4.0 results and discussion 4.1 meaning of corporate responsibility when the interviewees were asked about their perspective on the meaning of a (socially) responsible company, the most common expressions or concepts included “taking into account the aspects of all stakeholders,” “stakeholder legitimacy,” “[engagement with] internal and external stakeholders,” “improving [stakeholder] relationships to gain a social license to operate,” “integrating social responsibility and the environment,” “leaving a positive legacy,” “creating shared value,” “diversity,” “gender,” “communities,” “ethics,” “employees,” “private social investments,” “supporting the development of public policies for common benefits,” “transparent communication,” and “recognition of human rights.” yet, it is interesting that the interviewee in br5, the only small to medium-sized company (sme), emphasized that “[sustainability] is initially complying with regulation and preserving the working conditions and health of our employees is another point.” when analyzing this information together with the sustainability-related projects mentioned by the interviewees as being sources of pride in their companies, it appears that the most important issues for all companies were related to internal (such as employees) or external stakeholders (such as community), or the promotion of local and territorial development. developing stakeholder relationships and engagement, or the promotion and participation of dialogues were also brought up. experts from br2 and br4 mentioned that their longterm goal is for the “community projects to become self-sustainable or autonomous,” i.e. that after the initial investment cycle the company could leave without need for another company to replace them or even for the government to support local development. it appears that words such as “sustainability” or “self-sustainable” are a key goal on both sides of the value chain, i.e. not only is it important that communities should be selfsustainable, but their suppliers should be as well. this was also mentioned as the reason why company br1 has actively promoted the development of their suppliers, so as not to be fully dependent on them. interestingly, it is worthwhile to note the similarity of our results and the findings by vidal et al. (2010), which showed that seven focal areas, as per the top 25 brazilian firms, create value for stakeholders. these seven focal areas include: better stakeholder relationships, better work environment, environmental preservation, increased customer base, local development, reputation, and stakeholder dialogue. yet, our results also further show that some level of synergy exists between what cr actually appears to mean for brazilian forest companies and all seven iso 26000 core elements. this points out the relevance of the iso 26000 elements for the sectoral sustainability agenda, even if all actors would not formally recognize the standard. respondents were also asked about the specific sustainability standards their companies were using (for a summary, see table 2). according to the background documents, all five companies utilized forest certification. however, only four out of the five interviewees mentioned the forest stewardship council (fsc) and/or cerflor/pan-european forest certification (pefc) among their “key sustainability standards.” some even highlighted the importance of these certifications for sector development over the years, and how the certifications increasingly began encompassing aspects of the triple bottom line (elkington 70 bioproducts business 2(7) 2017 1994). furthermore, the interviewed representatives stated that stock market sustainability indexes, more precisely djsi and ise, are motivating companies in terms of improving their sustainability performance. gri was also mentioned by two interviewees, despite it being applied by four out of the five companies in our study, with the exception of br5, the sme company. 4.2 perspectives on the role of iso 26000 standard although the interviewees from all five companies voiced that they implement some kind of internal sustainability guideline, e.g. either as a code of conduct, ethical guideline, or health and safety guideline, only one company explicitly mentioned their company’s sustainability policy as a kind of internal sustainability standard. this was based on the company’s governance system to sustainability and its materiality assessment, reflecting the organization’s economic, environmental and social impacts vis-à-vis perceptions of its stakeholders (gri 2013). interestingly, the iso 26000 standard was not considered at all by the bigger actors in the brazilian pulp and paper sector (br2, br3, and br4), despite all of them concurrently recognizing that their businesses are largely in-line with the recommended practices of iso 26000, as it encompasses similar practices required by other standards, certification schemes, and indexes considered by these companies. indeed, our results indicate that only the interviewee from br5, the sme company, recognized the explicit benefits of using the iso 26000 social responsibility guideline, and the company has even decided to implement it. as an example, the expert from br4 stated: “none of our policies, documents or management guidelines refer to iso 26000. we only refer to sa8000.” according to the representative from br1, a company which uses iso 26000 as a reference in their internal social responsibility policy, “iso 26000 is more an inspiration than anything else, ...it is a guideline, as it is not certificated. if you take our social responsibility policy you will find iso 26000 in the references.” on the other hand, their motivation to implement iso 26000 was driven by market demand as one of the br5 company representatives expressed: “our main clients have specific requirements concerning social responsibility issues, so we have made a project using iso 26000, which is an international standard that covers all these clients´ demands, as a baseline.” the representative from br5 also stated that the company has initially focused on only 20% of iso 26000 issues. however, he said that they plan to cover 80% of the clients demand for sustainability with these topics, while concurrently the improved system will help the company organize its activities under the umbrella of social responsibility issues in a more structured way. also observed in previous literature, the practical benefits of adopting iso 26000 as sustainability frontrunners have been rather vague, and the advantages of the standard may lie more with smes, often lacking resources for developing environmental management systems and auditing services (toppinen et al. 2015a). yet, this may also reflect that managers do not necessarily fully comprehend the role of iso 26000 in practice. however, potentially differing levels of familiarity of iso 26000 guidelines by each of the interviewees was not directly measured in our study. as per our study results, one can foresee the value of incorporating (any) iso 26000 elements in the sustainability policies and requirements of brazilian companies. by including sustainability requirements, in this case through iso 26000 guidelines/elements, large companies will help to create table 2. summary of sustainability standards in use by the companies. respondents’ perception on specific sustainability standards their companies are using at the moment br1 índice de sustentabilidade empresarial ise-bm&fbovespa, dow jones sustainability indeces – djsi (voluntary) and iso 26000 br2 company’s sustainability policy 2015, pefc/cerflor and fsc, accountability and transparency gri, djsi, ise – bm&fbovespa* br3 no specific sustainability standard ise-bm&f bovespa, djsi, cdp, iso 9000, iso 14018, gri, fsc, wwf environmental paper company index 2015 among others. br4 fsc and cerflor/pefc, sa8000 br5 fsc (coc), implementing iso 26000 and fssc 2200 * ise corporate sustainability index (ise). tauszig and toppinen — towards corporate sustainability under global agenda 2030: insights from brazilian forest companies 71 a market demand. suppliers, in part smes, will have to comply with the requirements and follow or implement the guideline, otherwise they could be excluded from supply chains of the larger companies. in other words, only the smes that are in line with iso 26000 guideline would be acceptable suppliers of big companies, thus there will be more smes interested in implementing and following iso 26000. this will cause a domino effect on the value chain, leveraging the implementation of better organized social responsibility practices through standards and guidelines such as iso 26000. our respondents were further asked to elaborate their perspectives concerning the most important areas of the seven core elements of iso 26000, and to discuss underlying reasons for their prioritization. experts from two out of the five companies (br2 and br3) stated that they could not prioritize or define the most important issues. however, according to them, all of these issues are part of their materiality analysis, thus all are relevant for their company and to its’ stakeholders. more explicitly, the interviewee from br2 stated: “…all issues, except one, i.e. consumer issues, are in the company’s material aspects. this might be because of the company’s position in the value chain,” and the interviewed expert also mentioned an example of fsc certification to emphasize the growing importance of consumer issues and their influence as a driver to the company business development. interviewee br4 also considered all seven subjects to be important, but highlighted three of them considering the company’s perspective: labor issues, environment issues, and community involvement/relationships. in contrast, interviewees from companies br1 and br5 highlighted fair operating practices, consumer issues, and human rights. some diversity thus exists when examining which iso 26000 themes are prioritized by brazilian managers. when these answers are analyzed in combination with other parts of our interview data, such as question two on the meaning of cr and question three on implemented social responsibility programs, the results clearly emphasize community involvement, environment, labor practices and stakeholder engagement as the most important issues. with a very similar point of view, interviewees from br2 and br3 revealed the importance of all core elements for company operations, and the relation of these elements with their materiality analysis, which is complemented with information from the stakeholder panel. interviewee br2 in particular stated, “…some issues are more generic, such as stakeholder engagement, others more specific, such as community involvement, but in one way or another each are included in the company’s materiality assessment, which points out, according to [both] the company and its stakeholders, what is most important for the company.” following the same logic, interviewee br3 voiced, “…we cannot say which elements are the most important ones. they are all part of already established processes, so through stakeholder engagement you work on labor practices, environmental issues, human rights, etc. all these themes are present in the materiality assessment of the company.” these results are of interest when comparing them with earlier research on international pulp investments in chile and uruguay, in which ehrnström-fuentes and kröger (2017) found that corporate-community relations tend to be dynamic and contentious, and certain stakeholder voices tend to become marginalized. to reach a wide-level social license to operate, it is clearly important to understand how local people engage with their various livelihood alternatives in communities impacted by large-scale pulp investments (see also malkamäki et al. 2016 on the related case of uruguay). in br4, for example, the interviewed manager pointed out that “the company is still creating tools to deal with its social issues, because they are different from environmental ones. the environmental issues have a lot of procedures, resolutions, norms, etc. and are well defined while the social part varies from region to region, and the company has still a lot to improve. we have been trying to improve the [stakeholder] relationships to be able to get the social license.” this example illustrates that although csr in the brazilian forest sector has improved a lot over the years, work is still ongoing. along with these commonalities, it is worth mentioning some differences related to the core elements of iso 26000 collected from our interviews, and some examples from these are shown in table 3. for example, all interviewed experts first and foremost recognized environmental issues as a relevant element for the company, even if confirmed only implicitly as a material aspect for the company, as per the statement from the br2 expert, who stated, “hard to say what is the most important [element], because all, except one, are part of the company´s materiality assessment. consumer practices is the only exception.” instead, only two experts (br1 and br5) mentioned consumer issues as relevant. interestingly, these two companies have differing product portfolios compared to the others, which 72 bioproducts business 2(7) 2017 table 3. examples of quotes concerning company experts’ perceptions of the role of iso 26000 core elements. iso 26000 examples of perceptions of iso 26000 core elements stakeholder engagement br1 – “…stakeholder engagement is being included in the agenda.” human rights br2 – “…among the themes mentioned, one unique bad practice can affect the business of the company. for example...human rights. violating human rights inside any value chain will generate huge attention…and will generate great scrutiny, and will affect the reputation of any company involved in that value chain, and through this logic…it is a question of who we hire.” labor practices br1 – “labor practices are in the vein of the company.” br4 – “...the company has invested a lot in labor issues in all aspects, also in terms of quality of life.” environmental issues br1 – “this is very important within the company, also because of the nature of this industry.” br4 – “environment issues also are highlighted, because they are important for the whole sector…this includes large responsibility and the companies know it.” fair operating practices br1 – “fair operating practices are at the top, there is nothing more important. the company is concerned about loyal competition practices, etc.” br5 – “the company is working on the issue of anti-corruption practices.” consumer issues br1 – “we are looking more and more at product innovation considering the eco-design point of view, which is not only to bring sustainable solutions in terms of environmental issues, but also considering social aspects.” community involvement and development br4 – “now, if you go to our sustainability area, this relationship with communities is at its peak, because we see how important it is... to have actively participating communities.” may directly affect their business strategies and the relevance of each iso 26000 core element. in addition, only companies br1 and br5 have introduced iso 26000 in their business as an important guideline for structuring social responsibility in the company, while none of the other interviewed managers officially recognized iso 26000 as a key reference to their sustainability work. another interesting viewpoint among the interviewed experts, but arising from the social dimension, is their perception of the role of human rights. the issue is clearly part of all company agendas, even if implied by their company policies, compliance with regulation, adoption of standards or support to initiatives such as the un global compact. yet, only the sme company highlighted human rights as one of the four iso 26000 elements that they chose to work with through their iso 26000 implementation project. this finding indicates that human rights are not only an issue for large players, but are also becoming part of the agenda of smaller businesses, most of which associate with market demand. previous literature on the implementation of iso 26000 in the forestry context is scarce, but to an extent we can draw reference to an earlier study on guideline implementation in north american and european companies (toppinen et al. 2015a). both studies suggest that the benefits for systematizing csr activities through the iso 26000 guidance standard are typically minor for the big players. however, in terms of iso 26000 elements that are of the highest priority to the companies, our findings are fairly similar in that forest companies are more strongly focused on environmental cr issues. yet, in brazil, the boundaries of environmental issues and social ones are so closely related that they are treated, most of the time, as socio-environmental issues and as an integrated concept. in terms of the less relevant issue, consumer issues receive little attention in comparison to the other iso 26000 elements in both studies due to the pulp and paper industry’s orientation in the value chain. in the case of north american and european companies, toppinen et al. (2015a) concluded that the iso 26000 standard is unlikely to bring much added value to sustainability frontrunners already implementing gri reporting practices, and our findings from brazil are in line with theirs. also in our study, the sme which does not report according to gri, was the only one visibly implementing the iso 26000 standard. 4.3 perceptions on the forest sector contribution to the un sustainable development goals the third section of our analyses (based mainly on question number nine in the questionnaire), was related to respondent perceptions on how the forest sector contributes to the implementation of the sustainability agenda, based on un agenda 2030 and the 17 sdgs. interpretation of the full set of sdgs and agenda 2030 tauszig and toppinen — towards corporate sustainability under global agenda 2030: insights from brazilian forest companies 73 may naturally differ among the experts, which may affect the results. once again, the interviewees rather optimistically emphasized the potential contribution of the forest sector holistically in terms of all the goals. the interviewee from br1 stated, “…we are now mapping what we have and what we will have that make sense in terms of sdgs.” in addition, the interviewee from br5 mentioned, “many of these systems [iso standards etc. that the companies currently implement] have dealt directly with these [sdgs] issues.” from the data, we noted that few brazilian companies have recognized the need for internal analysis for aligning their strategies and goals to the un sdgs, and express their expectations for maximizing their potential contribution to sustainable development and the longevity of their businesses. based on the interview results, climate action, i.e. sdg number 13, was observed as the most potential contribution area of the forest industry in four of our study companies. this may be due to the nature of the industry, in which the raw material base is renewable, recyclable, and biodegradable, and which emphasizes superior environmental friendliness over other materials in line with the trend of a “greening economy.” the interviewee from br3 emphasized this aspect in the following way, “…climate change could be highlighted due to its role in carbon sequestration of the sector, and perhaps the sector could speak with more knowledge and lead this issue.” in addition, the interviewee from br4 stated, “we are working directly with climate change, eucalyptus plantations are huge carbon sequesterers… and the pulp and paper industry in the country is by itself very innovative.” other sdgs commonly emphasized in our study included sdg number 17, which is related to creating partnerships for meeting the sustainability goals. the interviewee from br1 stated, “we have been increasingly discussed this internally, e.g. partnerships with universities, partnerships with start-ups, partnerships with the world! nowadays you cannot do everything by yourself.” according to the interviewee from br2, “these 17 challenges that the sdgs pose on us are only solvable if various global sectors work together… at a certain point, over time and difficulties, the [forest] sector has created a commitment and a routine, which have worked [well], evidenced by initiatives such as the forest dialogue (tfd), and certain wbcsd platforms that point to a sector more capable of searching for solutions in an integrated way.” instead, sdg number 14, related to life below water, was one of the sdgs that respondents considered least relevant to the brazilian forest sector and in which the sector would least contribute to. for example, the interviewee from br4 expressed, “…aquatic life suffers less interference from us.” the interviewee from br1 also bluntly stated, “i don’t see a link with the oceans.” overall, insights on sdgs were fairly unanimous, though the agenda 2030 is clearly shaping up in the practical business world. the brazilian coalition on climate, forests and agriculture initiative, motivated by cop21 negotiations during 2015, is a good sector-specific example that combines both sdgs “climate action” and “partnership for the goals,” and shows their trend and relevance in the brazilian forest sector context. this movement was formed by business associations, companies, the civil society, organizations, and individuals interested in contributing to the advancement and cooperation of brazil’s agenda related to the protection, conservation, and sustainable use of forests, sustainable agriculture, and the agenda of mitigation and adaptation to climate change in brazil and worldwide. both short-term, focusing on cop21 in paris, and medium/long-term agendas, focusing on sustainable development and low-carbon economies, were defined for the period from 2015 to 2030 for the specific sectors (brazilian coalition on climate, forests and agriculture 2015). 5.0 conclusions and future research our findings indicate that case company management in brazil is focused on environmental issues when implementing their sustainability agenda, but social issues are increasingly being included, especially in the agenda of smaller companies. translating sustainability principles into best practices and effective actions in the forestry context is fairly applicable when looking at iso 26000 in the context of sme company sustainability management systems, but less potential is available for large-sized companies. nonetheless, large-sized companies do play an important role in influencing their value chain, and iso 26000, among other tools, could be one way to reach this end, by demanding or including iso 26000 elements in their sustainability policies and requirements. yet, large companies could also promote the implementation of iso 26000 guidelines by smes within their business environment by organizing trainings for smes that are part of their value chains and this type of partnership is something that could be explored more in-depth. 74 bioproducts business 2(7) 2017 as pointed out by rasche (2010), responsibility standards alone can never be a complete solution to the plethora of social and environmental problems experienced today or to the challenges we will face in the future. in any case, further research on smes is suggested in terms of csr agendas and practices along with the impact of iso 26000 implementation for their businesses. in future research, stakeholder views on the implementation of iso 26000 should also be investigated from a global setting, and not restricted to a single sector. according to our case company interviewees, the forest sector appears to have great potential in contributing to climate action (sdg number 13), at least in brazil. it would be interesting to study in more detail how the sector will contribute to this goal, along with tracking its steps and following the activities taken towards the goal. from this aspect, individual industry actions/cases could be studied in comparative geographic settings. this can also be extended to partnership-related sdg 17, to better understand the relevance of sdgs for individual industry actions/cases, to explore the potential synergies of work under various sdgs, and to follow the path of forest and other industries for achieving these synergies. although the forest sector may contribute to all sdgs in some manner, our study findings from brazil indicated that this sector has recognized its potential contribution to climate action due to its carbon sequestration potential, as well as to renewable energy production or in terms of stewarding sustainable forest management. in addition, the forest sector may also have a role in contributing to the implementation of sdgs related to building partnerships, as this is something the sector has already done for a long time, as a part of corporate community engagement, and is aware of its importance. in the case of brazil, stakeholder engagement and community development emphasized by forest companies, as a means of obtaining a social license may still be a challenge, as indicated by myllylä and takala (2011) as well as kröger and nylund (2012). as a limitation, our study addressed managerial perceptions – not actual csr practices or performance – in the case of a single, but a very large country, brazil. it is therefore possible that the experts willing to participate in the interviews were more familiar with a certain sustainability theme or may represent companies with comparatively higher corporate social and environmental performance compared to the industry average. therefore, any generalization of our results beyond the case companies should be avoided. in addition, it is important to note that the interpretation and perception of the sdgs by each single respondent may have varied or a lack of awareness may even occur in some cases, and therefore these findings are to be considered as very tentative evidence, but pointing towards a need for conducting larger-scale future research. 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(eds): forests, business and sustainability. chapter 5 pp. 70-90. routledge, new york. isbn 978-1-138-77929-7. vidal, n, bull, g, kozak, r 2010. diffusion of corporate responsibility practices to companies: the experience of the forest sector. j bus ethics 94: 553–567. world business council for sustainable development (wbcsd). 2016. the sdgs, one year in: where do we stand? insights from the president. accessed in 16/01/2017. http://www.wbcsd. org/overview/news-insights/insights-from-the-president/thesdgs-one-year-in-where-do-we-stand 76 bioproducts business 2(7) 2017 appendix interview guide with questions primarily focused on in our paper marked in bold. 1. how long have you been working for the company, and in what kind of role? 2. from your company’s perspective, what does it mean to be a socially responsible company? 3. regarding social responsibility in your company, what steps or programs are you proud of? please provide 2–3 practical examples that describe the best practices of operation and their implementation. 4. based on your experience, is there something unique your company does regarding social responsibility that other companies do not do? 5. please describe which level of the company are decisions related to social responsibility made at, and how the decision-making process works? 6. how does your company ensure that decisions and actions regarding social responsibility are integrated throughout the entire organization? 7. what kind of specific sustainability standards does your company currently implement? based on your experience, please describe the strengths and weaknesses of each of the implemented social responsibility standard? 8. stakeholder engagement, human rights, labor practices, environmental issues, fair operating practices, consumer issues, and community involvement are among the core elements of iso 26000. which ones are the most important elements from your company’s perspective, and why? 9. are you familiar with un agenda 2030 and sustainable development goals? how do you perceive the contribution of the forest sector to the implementation of this sustainability agenda in the next 15 years? abstract cross-laminated timber (clt) is emerging as a promising building system that could help revitalize a dwindling forest sector. however, little research has been conducted about clt, particularly in the marketing realm. our paper helps bridge this gap. specifically, we aim to identify research areas that are important to successfully advance clt as a building material in north america. our findings, based on a survey of experts, suggest that the level of awareness about clt among building professionals in general is low. however, architects are considered knowledgeable about the product. experts consider that the most important barriers to the adoption of clt are(a) misperceptions held by building industry professionals about wood and clt, (b) compatibility of building codes with clt, and (c) the availability of technical information about clt as a construction system. in terms of most pressing research areas for advancing clt, experts consider that it is important to shed more light on its seismic and fire performance, and also on proper connectors and fasteners used in clt-based construction. keywords: cross-laminated timber, clt, engineered wood products, awareness, research needs identification of research areas to advance the adoption of crosslaminated timber in north america 1 department of bioproducts & biosystems engineering, university of minnesota, 2004 folwell avenue, st. paul, mn 55108 2 department of sustainable biomaterials, virginia tech, 1650 research center drive, blacksburg, va 24061 3 barcelona tech, universistat politecnica de catalunya, architectural innovation and technology laboratory, barcelona, spain * corresponding author: e-mail: espinoza@umn.edu † society of wood science & technology member acknowledgements: the authors would like to acknowledge the participants to this study who kindly volunteered their time and thoughts to better understand this timely topic. bioproducts business 1(5), 2016, pp. 60–72. http://biobus.swst.org. https://doi.org/10.22382/bpb-2016-005 omar espinoza1*†, urs buehlmann2†, maria fernanda laguarda mallo1†, and vladimir rodriguez trujillo3 1.0 introduction 1.1 cross laminated timber cross-laminated timber (clt) is a building system composed of large-format wood-based panels that can be used as building segments (lattke and lehmann 2007). these panels are configured in similar ways that plywood is configured (figure 1), but with much thicker individual layers. thus, boards are glued side by side in a single layer into large, individual panels and then glued onto another pre-glued panel placed at right angles with the adjacent layers. this cross-lamination improves rigidity, stability, and mechanical properties of the product (evans 2013), thereby increasing the range of applications for which wood can be used as a material. clt panels are made with lumber that has been kiln dried, graded (visuallyor machine stress-rated), finger-jointed, and glued together cross-wise to form the final clt panel. then, panels are further processed and openings for windows, doors, and service channels, as well as connection spaces and ducts are cut using computer numerical controlled (cnc) routers, which allow high precision and speed. finally, prior to shipping, the clt panels are and transported to the construction site, and put into place with cranes. clt elements are typically connected using metal connectors such as steel angles and metal splines, which are attached to the panels with self-driving screws and dowels (crespell and gagnon 2011). the structural characteristics of clt allow for considerable architectural freedom during the design process, allowing for different building configurations in terms of openings (numbers, sizes and locations) and providing flexibility to cover long spans without intermediate support or without compromising the structural integrity of the structure, something that would be too complex or impossible to attain using wood in traditional espinoza et al. — identification of research areas to advance the adoption of cross-laminated timber in north america 61 in the u.s., skidmore, owings & merrill, an architectural firm, has developed a conceptual 42-storied building, built in part with clt (som 2013). the attractiveness of clt as building material is not only based on its favorable mechanical properties and environmentally preferable characteristics described herewith. the material also allows builders to erect the building with great speed, reducing the disturbances to a site’s surroundings and minimizing the cost of labor. also, clt offers better insulation properties than competing materials and great ease in adding additional insulation layers to walls and ceilings (crespell and gagnon 2011). 1.2 production trends the production capacity of clt has grown rapidly since its introduction in the early 1990s, and is expected to reach one million cubic meters (m3) by 2016 by some estimates (muszyński 2015,plackner 2015a). while production is currently concentrated in central europe (austria, germany, and switzerland represent 80% of global clt production), most of the growth over the next 10 years will occur outside this region (plackner 2015b). in north america, as of january 2015, two producers of clt in canada exist with a combined production capacity of 110,000 m3 per year (personal communication with company representatives, march of 2015). in the u.s., three manufacturers exist as may of 2016, and only one certified under the ansi/apa standard for performancerated clt (prg 320, ansi 2012) to produce clt panels for construction. estimates exist that, for the u.s. alone, the market potential for clt could be between 2.1 to 6.4 million m3 annually, mostly for non-residential construction (karacabeyli and douglas 2013), which is equivalent to several times the current global production. however, this potential is unlikely to materialize if some conditions are not met, among them the inclusion of clt into current building codes. today, the 2015 version of the ibc includes clt as allowable material to be used for type iv constructions (e.g., heavy timber constructions; bland and coats 2013). however, the adoption of the 2015 version of the ibc by state and local codes is a lengthy process that will likely take several years before this most recent version is implemented. changes to regulations were recently announced in québec that will allow the use of lumber can be for buildings up to 12 stories high (construction canada 2015). another necessary condition for clt to achieve its full potential is for the industry to dedicate considerable, focused effort toward increasways. for example, a clt panel with 7 layers (9 inches in thickness) can be used to cover spans of up to 25 feet (karacabeyli and douglas 2013, malczyk 2011)with variations of traditional clt panels, such as “folded” and “cassette” floors, allowing to cover up to 65 feet-long spans while decreasing the weight of the construction (crespell and gagnon 2011,fountain 2012,silva et al. 2013). regarding fire performance, clt possesses burning properties akin to wood structural elements with large cross-sections. thus, when exposed to fire, wood forms a layer of char at a predictable rate that acts as a retardant against further degradation of the unburned core, thus slowing down the reduction of load-carrying capacity (forest products laboratory 2015). clt also has performed well in several studies under seismic conditions (ceccotti et al. 2013,quenneville and morris 2007). being a wood-based product, clt also presents advantages from an environmental perspective (corrim 2010, hubbard and bowe 2010, lippke et al. 2004, wilson et al. 2005). assuming that forests are managed sustainably, using wood as raw material reduces carbon emissions and creates carbon sinks (bowyer et al. 2011) and clt performs well if compared to other building materials. for example, studies that compare environmental performance of clt and concrete (chen 2012,durlinger et al. 2013,john et al. 2008,robertson 2011) suggest that buildings built with clt have lower embodied energy than concrete-based buildings and they also performed superior to concrete and steel in respect to ozone depletion, global warming potential, and eutrophication (chen 2012, durlinger et al. 2013, john et al. 2008, robertson 2011). clt has been used to erect tall buildings, such as the stadhaus in london(9 stories,hopkins 2012,lattke and lehmann 2007), the forte in melbourne (10 stories,lend lease corporation 2013)or the wood innovation design center in british columbia (9 stories,partnership bc 2013). figure 1. clt panel sections. 62 bioproducts business 1(5) 2016 ing awareness of the material among the construction community (engineers, architects, developers, builders) and the public in general. research carried out in 2014 among architectural firms in the u.s. has shown a low level of awareness among architects, with only 4.2% reporting to be “very familiar” with clt (laguarda-mallo and espinoza 2014, laguarda-mallo and espinoza 2015). 1.3 research centers for clt in north america growth in research activity about clt has increased considerably along with the material’s increases in market adoption. the first research symposium on clt in north america held in vancouver, british columbia in 2011 included 17 presentations on clt research (canadian wood council 2011), whereas the joint 2014 world conference on timber engineering and the forest products society international convention in quebec city, canada, listed 8 sessions and over 56 presentations on clt research (wcte 2014). in march2016, the massive timber conference took place in portland, oregon, with an attendance of more than 500researchers, construction professionals, wood utilization experts, and other stakeholders (baker 2016), showing the rapidly growing interest in clt in north america. in fact, today, all major north american wood research entities are actively pursuing clt research. table 1 lists institutions involved in clt research in north america. 1.4 clt from a product adoption lens a number of authors have addressed the process of product adoption (harvey 1979,urban and gilbert 1971); and several models have been proposed (beal et al. 1957;king 1966,rogers 2003). beal et al. (1957) for example, proposed the following five-stage product adoption process: awareness refers to the moment when the consumer first becomes aware of the new product’s existence and develops preliminary perceptions about the product attributes. this step greatly depends on communication and education (beal et al. 1957,king 1966,rogers 2003). once the potential consumer is aware of the new product, the second step is the development of an interest in the product, during which the consumer seeks information and details about the new product (armstrong et al., 2013). in the next step, application, the consumer evaluates the product’s perceived benefits and drawbacks, and assesses if it fits their wants and needs. a positive evaluation potentially leads to the next step, the product trial and possible later adoption of the product. innovation is seen by wagner and hansen (2005) as a source of competitive advantage that can benefit the construction industry, providing the critical compotable 1. research institutions in north america conducting research about clt.* institution location reference canada fpinnnovations pointe-claire, québec and vancouver, british columbia (fpinnovations 2015a) department of wood science; university of british columbia vancouver, british columbia (ubc 2015) department of civil and environmental engineering; university of waterloo waterloo, ontario (university of waterloo 2015) département des sciences du bois et de la forêt, université laval québec, québec (universite laval 2015) the canadian wood council ottawa, ontario (cwc 2015) united states department of wood science and engineering; oregon state university corvallis, oregon (osu 2015) department of forest biomaterials; north carolina state university raleigh, north carolina (ncsu 2015) department of sustainable biomaterials; virginia tech university blacksburg, virginia, (virginia tech 2015) department of bioproducts and biosystems engineering; university of minnesota saint paul, minnesota (fpmdi 2014) forest products laboratory madison, wisconsin (fpl 2015) the engineered wood association tacoma, washington (apa 2015) * not claimed to be exhaustive. based on internet searches, peer-reviewed journals, and consultation with experts espinoza et al. — identification of research areas to advance the adoption of cross-laminated timber in north america 63 nent for a company’s long-term competitive strategy (slaughter 2000). however, the adoption of innovations is a highly complex process, with limited research having been conducted so far. the risks associated with the adoption of an innovative material or process has been stated by slaughter (2000) as one of the most important factors that can affect the rate of adoption of a new product. in the construction industry, liability risk is seen as one of the barriers that may hinder the adoption of new materials and technologies in this sector (u.s department of housing and urban development (hud), 2005). according to mccoy et al. (2009) the complexity of the adoption process in the construction industry is caused, in part, by the large number of actors (suppliers, manufacturers, design professionals, final users) involved in the decision of adopting an innovation. given the emerging nature of the clt market in north america, market success of this building system will depend to a considerable degree on increasing awareness among stakeholders, particularly construction professionals. likewise, research and testing is needed to provide these professionals with the design values required to comply with building codes and to assess clt’s performance. this study investigates stakeholders’ awareness and views on the research needs about clt. 2.0 research objective the main purpose of this study was to identify major research needs for the advancement of cross-laminated timber in north america. to accomplish this objective, key stakeholders in united states and canada were surveyed to learn about the perceived awareness, barriers to adoption, and research needs for clt. this study follows a similar effort recently conducted for the european market (espinoza et al. 2015). 3.0 methods to collect key stakeholders’ opinions on clt, a web-based survey was conducted. dillman’s tailored design method guidelines for survey design and implementation were followed (dillman 2009). 3.1 questionnaire development a first draft of a questionnaire was developed, based on a previous study conducted in europe (espinoza et al. 2015). the questionnaire was then reviewed by four experts from academia and industry and was incorporated into a web-based survey platform (qualtrics 2014). after incorporating the feedback obtained from this review process, the final version of the questionnaire was ready for distribution. the questionnaire’s main characteristics are presented in table 2. 3.2 sample development the population of interest for this survey included all north american experts involved with cross-laminated timber (clt). thus, the sample included researchers, consultants, industry representatives, and engineers from all over north america. a non-random sampling strategy, or convenience sampling, was used; specifically, several sources of public records were consulted in search for potential participants, namely journals, conference proceedings, industry association directories, industry-supporting organizations’ webpages, company websites, university faculty directories, and research grant documents. experts were also contacted table 2. a summary of survey questions. topic question type of response / scale demographics please select your profession multiple selection (9 options and “other”) awareness what is, in your opinion, the level of awareness about cross laminated timber (clt) in north america among the following professionals? 4-point scale: “very low,” “low,” “high,” and “very high” barriers to adoption which do you think are the most important barriers to the adoption of crosslaminated timber (clt) in north america? 3-point scale: “large barrier,” “may be a barrier,” and “not at all a barrier” research needs please rank the following areas of research about cross laminated timber (clt) according to their importance (1= most important, 10=least important). select only one ranking position for each research topic. ranking 10 research areas in order of importance please list other research topics about clt that you consider need addressing to support its further development, and that were not included in the previous question. open question additional comments other comments you may want to add about initiatives or actions that are needed for the advancement of clt in north america? open question 64 bioproducts business 1(5) 2016 and asked for names and contact information of potential participants. a final list of 105 names was compiled and used for the distribution of the survey. 3.3 survey implementation and data analysis the survey was implemented according to dillman’s tailored design method (dillman2009). an email with an introductory message and invitation to participate was sent to all names in the address list in july of 2015. two reminder emails were sent after one and two weeks, respectively. the survey was closed in august of 2015 and responses were downloaded for analysis. data analysis was carried out using microsoft excel and spss. descriptive statistics were calculated, and qualitative responses were coded and categorized for analysis. 4.0 results and discussion 4.1 survey implementation and response rate the survey was conducted during july and august of 2015. after the initial email inviting addressees to participate, two reminder emails were sent with one week between each communication. in total, 47 usable responses were received out of 105 in the initial distribution list. a 46.1% adjusted response rate was calculated after accounting for three undeliverable emails. no incomplete responses were received; therefore, all responses were included in the analysis. 4.2 respondents’ demographics table 3 lists the self-reported occupations and professions of respondents. respondents were allowed to check more than one profession. most indicated “engineer” or “researcher” as profession (42.6% of all respondents), followed by “educator” (21.3%), “manufacturer or distributor” (19.1%), and “consultant” (10.6%). only one entry was received for “architect” and one for “builder.” this question also allowed participants to enter “other” profession not listed in the questionnaire; three entries were recorded, namely “non-residential wood promotion,” “research management,” and “sawmill expert.” ten respondents reported two professions, with “engineer” and “researcher” the most frequent pair (4 respondents); and six reported three professions, with “engineer,” “research,” and “educator” the most frequent combination (4 respondents). the geographical distribution of respondents and the distribution of the names in the address list can be seen in table 4. while the initial distribution list was nearly evenly distributed between canada and the united states (48.0% and 52.0%, respectively), a proportionally higher number of responses were received from participants in the u.s. (66.0% of all respondents). also, the response rate was much higher in the u.s. (58.5%) than in canada (32.7%). looking at specific regions in canada, a proportionally greater number of responses were received from quebec province (50%), while no responses were received from ontario. in the united states, the geographical distribution of responses resembled more closely the original distribution list, however, slightly higher response rates were achieved from the south (virginia, south carolina, washington dc, north carolina, and tennessee) and the midwest (montana and wisconsin) regions. table 3. respondents self-reported professions (n=47). occupation count percent engineer 20 42.6% researcher 20 42.6% educator 10 21.3% manufacturer/distributor 9 19.1% consultant 5 10.6% architect 1 2.1% builder 1 2.1% other 3 6.4% * multiple responses were possible table 4. geographical distribution of respondents. region number on distribution list number of respondents response rate canada british columbia 22 4 new brunswick 7 4 ontario 4 quebec 16 8 canada total 49 (48.0%) 16 (34.0%) 32.7% united states midwest 16 11 northeast 1 south 18 12 west 18 8 u.s. total 53 (52.0%) 31 (66.0%) 58.5% total/percent 102 47 46.1% espinoza et al. — identification of research areas to advance the adoption of cross-laminated timber in north america 65 4.3 perceived level of awareness respondents were asked about their perception of the level of awareness about clt among developers, contractors, construction managers, engineers, and architects. responses received are summarized in figure 2. overwhelmingly, respondents regarded the level of awareness about clt among professionals as “low“ or “very low“ for most professions. architects are perceived as the professionals most aware of clt, with 42.6% of respondents indicating that they believe architects have a “high” or a “very high” level of awareness; followed by engineers with 14.9%. contractors are perceived as the least aware of clt (78.7% of respondents indicating a “very low” level of awareness), followed by construction managers (70.2%). these answers are consistent with results by laguarda-mallo and espinoza (2015), who surveyed u.s. architecture firms, and reported that 37.9% and 4.3% of 351 architects indicated being “somewhat familiar” and “very familiar,” respectively. the difference between the level of awareness between architects and engineers observed in this study (42.6% of architects and 14.9% of engineers are perceived by respondents as having a “high” or a “very high” level of awareness, respectively) could in part be attributed to the different curricula to which architects and engineers are exposed in degree and continuing education programs, as the typical national engineering curriculum does not include information on wood as a building material (laguardamallo 2014, laguarda-mallo and espinoza 2015). respondents were given the opportunity to add a professional category and rate the level of awareness among members of the category added. seven participants suggested additional categories, including “owners,” “investors,” “building officials,” “foresters,” “builders,” and “authorities.” all these occupations were perceived as having a “very low” or “low” level of awareness about clt according to the individual respondents, respectively. for the forest products industry, which may see clt as a way to grow their market, the level of awareness among all professions indicated must be of major concern (figure 2). while one can always make efforts to overcome apprehensions that an individual in charge of selecting a building material has over a specific material, one cannot influence somebody who is not aware of that material. yet, respondents to this study perceived that a “very low” awareness about clt for contractors (78.7%), for construction managers (70.2%), and for developers (66.0%) exists. even for architects and engineers, more than half of the respondents perceived their awareness of clt as being “low” or “very low” (57.5% of architects and 85.1% of engineers were attributed to having a “low” or “very low” awareness by respondents). thus, increasing the level of awareness about clt to gain momentum in its adoption as a building material is a high priority for the forest products industry. in fact, first efforts have been initiated by the canadian and united states governments and industry associations (table 5). these efforts aim to increase awareness and adoption of emerging wood-based products and building systems, including clt. 4.4 perceived barriers for clt adoption the second question in the survey asked respondents to rate a list of potential barriers to increased adoption of clt in north america. according to clt experts, major barriers for clt adoption are the “misperceptions about wood or clt,” the “compatibility of clt with building codes,” and “availability of technical information,” which were considered potential barriers or large barriers by 95.7%, 93.6%, and 91.5% of respondents, respectively (figure 3). the “availability of clt in the market” and “cost” were, with 87.3% and 86.7%, respectively, considered potential barriers or “large barriers” by respondents and were thus the next highest ranked categories in the list of perceived barriers for clt adoption. it is interesting to note that “cost” was the only category that was classified as “may be a barrier” to clt adoption by more than half of respondents. this may reflect the fact that, while constructing with clt may be perceived as costlier than with other materials, clt offers other advantages that potentially offset the relatively high costs. on the other end of the spectrum of “perceived barriers to clt adoption, the “performance of clt as building material” figure 2. perceived level of awareness among different occupations (n=47). 8.5% 4.3% 66.0% 78.7% 70.2% 76.6% 53.2% 34.0% 19.1% 29.8% 12.8% 38.3% 2.1% 2.1% 4.3% engineers architects developers contractors construction managers percent of respondents very low low high very high 66 bioproducts business 1(5) 2016 and the “volume of wood required” for its manufacture were seen as the least worrisome barriers to the success of clt in the market place by respondents. contrasting this study with experts on clt with laguarda-mallo and espinoza’s (2015) survey of u.s. architecture firms, reveals similarities. u.s. architects agreed with north american clt experts in that building code compatibility, availability of clt in the market, and the availability of technical information were large barriers (94.1%, 88.4%, and 77.2% of architects, respectively, considered that these were “large barriers” or “may be barriers”). similarly, architects did not see the amount of wood required for clt manufacture as large barrier (only 5.9% considered this as large barrier). however, a larger proportion of architects (e.g., respondents in the study of architecture firms, laguarda-mallo and espinoza (2015), than clt experts participating in this study, considered cost to be a large barrier or potential barrier (90.9% of respondents). this may be related to the intrinsic characteristics of the architectural profestable 5. examples of programs and organization that work to increase awareness and adoption of wood-based products and building systems, including cross-laminated timber.* program funding/organization major focus reference u.s. tall wood building prize competition united states department of agriculture, softwood lumber board, and the binational softwood lumber council competition to design, specify and construct a wood-based building of at least 80 feet in height. (anonymous 2015) woodworks wood products council technical support and education for the design of non-residential and multi-family wood buildings. (woodworks 2015) wood first program british columbia government funding for projects that increase the use of wood in public and private projects (forestry innovation investment ltd. 2015) fpinnovations canadian government and forest products industry research and development to support canadian forest sector (fpinnovations 2015b) the engineered wood association (apa) industry association develop and maintain performance standards, promote use of wood (apa 2015) american wood council (awc) industry association develop building codes and standards for wood design and provide professional education to support implementation (awc 2015) * not claimed to be exhaustive. based on internet searches, peer-reviewed journals, and consultation with experts figure 3. perceived barriers to clt adoption (n=47). 74.5% 51.1% 13.3% 12.8% 8.5% 6.4% 4.3% 23.4% 29.8% 55.6% 36.2% 48.9% 40.4% 38.3% 2.1% 19.1% 31.1% 51.1% 42.6% 53.2% 57.4% volume of wood required clt's performance as a building material cost availability in the market availability of technical information compatibility with building codes misperceptions about wood or clt percent of respondents not a barrier at all may be a barrier large barrier espinoza et al. — identification of research areas to advance the adoption of cross-laminated timber in north america 67 sion, in which economic considerations play a critical role on the feasibility of a building project (hendrickson and au 1989). respondents were given the opportunity to indicate other barriers not listed, in an “other” category. twentythree participants entered suggestions, diverse in scope, and some that were already included in the question. suggested barriers were grouped into the following broad categories: “fire-related barriers,” “availability of clt panels,” “seismic performance,” and “others.” table 6 shows the statistics of these answers. nine respondents’ suggestions were related to fire performance of clt construction, and were further broken down into “fire performance,” “misperceptions about fire performance,” and “building code issues related to fire performance (table 6).” summarizing the findings concerning potential barriers to increased adoption of clt in north america shown in figure 3 and table 6, we argue that they represent a favorable story regarding the future adoption of clt in north america. a majority of respondents (51.1%) indicated that clt’s “performance as a building material” is not a barrier at all; indicating that they believe the material has no inherent flaws that cannot be addressed. also, almost four-fifths of respondents (74.5%) do not see the “volume of wood required” as a barrier. thus, for the sake of this argument, the two central requirements for potential success, “performance as a building material” and “volume of wood required” are not being seen as dominant barriers. however, much work is required to overcome the items ranked as “large barrier” by respondents such as “misperceptions about wood or clt (57.4% ranked this as “large barrier”), “compatibility with building codes (53.2%),” or “availability in the market (51.1%).” 4.5 research needs to investigate the research needs that experts judge to exist, participants were presented with a list of 10 potential research topics and asked to rank these topics in order of importance. the questionnaire was set up in a way that forced respondents to select one topic per ranking exclusively (e.g., only one topic could be ranked #1, only one #2, and so forth). results for this question on research needs are summarized in figure 4. since there were 10 table 6. other barriers suggested by respondents. barrier frequency fire-related barriers 9 fire performance 4 misperceptions about fire performance 2 building code issues related to fire performance 3 availability of clt panels 4 seismic performance 2 others: “education,” “engineering firms expertise with clt,” “construction industry inertia,” “field support,” “acoustic performance,” “connections,” “building officials’ confidence,” and “lack of cost analysis.” 8 22.2% 20.0% 9.3% 14.0% 11.6% 31.1% 44.2% 46.7% 6.7% 24.4% 13.3% 19.5% 16.3% 32.6% 4.7% 31.1% 20.9% 13.3% 31.1% 20.0% 33.3% 12.2% 16.3% 18.6% 27.9% 22.2% 18.6% 15.6% 20.0% 20.0% 22.2% 26.8% 39.5% 16.3% 16.3% 8.9% 14.0% 20.0% 15.6% 13.3% 11.1% 41.5% 18.6% 18.6% 39.5% 6.7% 2.3% 4.4% 26.7% structural performance of clt panels (45) moisture performance (45) environmental performance (41) thermal performance (43) acoustic performance (43) market/customer research (43) connectors and fasteners (45) seismic performance (43) fire performance (45) vibration performance (45) percent of respondents very high priority high priority medium priority low priority very low priority figure 4. ranking of research needs. rankings were grouped into 5 categories: “very high priority” (ranked 1st and 2nd), “high priority” (34), “medium priority” (5-6), “low priority” (7-8), and “very low priority” (9-10). in parentheses is the number of respondents for each item. 68 bioproducts business 1(5) 2016 ranking positions available, these were grouped into five categories, from “very high priority” for the first and the second ranking, to “very low priority” for the ninth and the tenth ranking positions. following this rationale, the research topics with the highest priority, according to respondents, were “seismic performance,” “connectors and fasteners,” and “fire performance;” which were ranked as “very high” or “high” priorities by 65.1%, 62.2%, and 60.0% of respondents, respectively. the research areas with the least need for research are, according to participants, “environmental performance,” “thermal performance,” and “market/customer research;” which were ranked as “very low” or “low” priority by 68.3%, 58.1%, and 55.8% of respondents, respectively. a separate field was added to allow respondents to enter other research topics about clt not included in the previous question that they considered a need addressing to support its further development. in fact, participants could enter as much information as they wanted. the response rate to this question was high, with 27 respondents (close to 60% of total respondents) contributing 54 suggestions. these suggestions were grouped into research areas by the authors and are listed in table 7 in order of decreasing frequency. notably, several topics that were included in the previous question (ranking of research needs) were mentioned again by respondents, perhaps with the purpose of adding emphasis and further explaining their positions. for illustrative purposes, examples of specific topics within individual research areas are also listed. table 7 lists a vast array of research topics that respondents identified. this may not be surprising, given that clt is more than just a “new” building material, but in fact represents a new construction philosophy in that it enables the relocation of many tasks from the building site to the factory and in that it requires a new way of thinking when designing loads and forces. thus, this new construction material requires research in all aspects of building construction and it is, therefore, no surprise to realize the wide array of topics raised by the respondents. however, the prioritization of these needs to achieve the most beneficial outcome for the industry and society is table 7. other research areas and topics suggested by respondents. the frequency column contains the number of times that each specific topic was mentioned by individual respondents. research area frequency specific topic examples hybrid systems 7 lateral load resistance, reinforcement of clt in high-shear areas, planar shear properties of cross layer(s), and full-scale diaphragms design and testing. shear walls and diaphragms 6 hybrid systems, such as wood/concrete slabs, and mixing clt with post-frame and light frame construction. fire performance 5 fire performance of connections, need for original research in the u.s., and building code issues related with fire. installation/construction 5 clt construction methodology, and long span applications, construction management. seismic performance 3 need to develop r-factors consistent with asce 7 seismic design procedures (robert bachman, 2007), and ductility of clt panels in seismic applications. cost and economics 3 cost comparisons with other building systems, cost optimization, and economic feasibility. durability 3 repair of clt panels after water-related damage, protection against condensation and plumbing leaks. adhesives and gluing 3 performance of new resins, performance under moisture cycling and fire, and environmental issues of adhesives. procurement 2 supply chain issues, logistics. raw material 2 material specification and reliability of raw material sources. tall buildings 2 high-rise building with clt, building code issues. connection systems 2 connection systems, connection details others 11 changes needed in building code to enable clt compliance. product optimization for different applications. standardization of clt panels. prefabricated clt houses. costs and performance of clt-based building core (e.g., elevator shafts, stairs, mechanical rooms). curtain and window walls. pre-installation coatings. business development. espinoza et al. — identification of research areas to advance the adoption of cross-laminated timber in north america 69 challenging and somewhat unorganized. only the future will tell how well this task has been managed. 4.6 other comments the last item in the questionnaire provided space for respondents to add any additional comments they had about initiatives or actions needed for the advancement of clt in north america. twenty participants offered their comments, which are summarized below. education and promotion. most comments were related to educating north american construction professionals about clt. according to respondents, professionals to which these educational efforts should be targeted were engineers, architects, contractors, authorities, building officials, fire departments, and investors. topics suggested were fire performance, short construction time, the airtight nature of clt buildings, energy benefits, acoustics, and benefits to the room climate. one respondent suggested education of contractors is particularly needed on installation issues, specifically on running utilities (e.g., electrical, plumbing) through clt panels. also, educational efforts should be spent on how to properly insulate clt structures. demonstration projects. some respondents suggested that the best promotion of clt construction is to complete building projects in different parts of the continent. one respondent suggested that building sites or zones across north america should be identified, where a clt super-structure may have a foundation/sub-structure cost advantage over a reinforced concrete solution. performance demonstration tests (e.g., fire, acoustic) were also suggested. research. some respondents used the opportunity to suggest additional research topics. one respondent suggested that research is needed for mid-rise buildings in clt, where this material could become cost-competitive with concrete and steel buildings. at least three comments suggested that interdisciplinary research and collaboration between the different north american institutions is needed. one respondents cited as an example the work that the forest products laboratory is doing in collaboration with other institutions (dovetail partners, north carolina state university, and fpinnovations) to evaluate the environmental performance (by conducting life cycle assessment, or lca) and economic feasibility (life cycle cost assessment, or lcca). this effort also includes studying the construction costs of building a clt plant and an assessment of regional economic benefits through implan(an economic impact assessment tool,mig inc. 2013). another contributor suggested that the long-term durability and structural stiffness for midrise buildings needed to be investigated, while still another one suggested that the implications of open floor plans in buildings for ease of reconfiguration without major structural upgrades needed to be investigated. government support. several respondents suggested that government support is needed to grow the north american clt industry. since businesses are hesitant to invest in clt until solid demand exists, government could offer financial support for manufacturers. two respondents cited canadian government efforts as examples to follow, such as the “wood first initiative” (forestry innovation investment ltd. 2015). one respondent suggest that federal funding is needed to broaden university programs in wood engineering and building science. others. one respondent stressed the importance of clt getting building code recognition. another indicated that the wood industry needs to overcome its risk-aversion and must start investing into clt. this participant also mentioned that there is a risk of losing momentum to steel and concrete products. two respondents suggested that some research areas are related to others, for example connector, vibration and seismic performance. as visible from the broad array of topics mentioned, the participants of this study hold a wide set of opinions about how to best advance clt (by research and by other means) in north america. while these opinions are valuable, it may be beneficial for the success of the north american forest products industry that priorities are established. however, how such a list of priorities can be set up and implemented is hard to envision other than the governments allocating funding to specific areas. focus can also be expected from the entrepreneurs who are pursuing viable businesses, as their allocation of investments and their support of external efforts will be dictated by what makes their business successful. 4.7 future research this survey on the status of clt in north america is the second such survey following an almost identical study done in europe earlier in 2015 (espinoza et al. 2015). a third such study is currently in preparation covering the remaining parts of the world where known efforts to advance clt exist. also, contrasting the opinions ex70 bioproducts business 1(5) 2016 pressed by the experts on the different continents and searching for explanations for the differences found is warranted. longer term, it will also be rewarding to holistically study the actual actions that are undertaken to address some of the issues discovered by these studies. cross-laminated timber (clt) promises the possibility of a revolution in the building construction industry by reorganizing the way buildings are constructed. in fact, the authors can recall no occasion where the forest products industry, over the last quarter century or so, had an opportunity of this magnitude. thus, plenty of research topics should emerge. 5.0 limitations this study used a non-probability sampling strategy. thus, generalizations cannot be made based on the results from this survey(rea 2005). also, it is acknowledged that researchers in marketing and in other businessrelated fields were under-represented in the sample. thus, the results obtained reflect the highly technical focus of the respondents. this focus on engineers and engineering related professionals is partly due to the fact that at this early stage of development of clt, the population of clt experts is comprised to a large degree by technically-oriented professionals. readers also must keep in mind that most of the professionals included in the sample for this survey are involved in one way or another with wood-based materials, and thus might have a natural bias toward wood over other materials. lastly, limitations pertinent of surveys and stemming from the survey methodology, such as recall bias or the subjective nature of responses given, also apply to this research (alreck and settle 2004; dillman 2009). 6.0 summary cross-laminated timber (clt) is a promising engineered wood material, based on massive, large-format panels that can be used as walls, slabs or roofs. clt’s environmental advantages and design flexibility have generated considerable interest in north america as a material for the construction of commercial and non-commercial midand high-rise buildings. hence, research activities on various aspects of clt as a building material have been increasing at a rapid rate during the years. this study surveyed north american experts on the most pressing research priorities for the advancement of clt in north america. a web-based survey was conducted in the summer of 2015 among 105 clt experts in north america. a total of 47 usable responses were received, resulting in a response rate of 46.1%. the major findings from the study include: • in general, respondents rated the level of awareness among building professionals as “low” or “very low.” only for two (architects and engineers) of the five professional groups listed (construction managers, contractors, and developers, respectively) more than 10% of respondents ranked their awareness of clt as “high” or “very high.” architects were ranked highest, with 42.6% of respondents considering their level of awareness as “high” or “very high.” • the three largest barriers to the adoption of clt in north america, according to the respondents to this survey, are the misperceptions about wood or clt, building code compatibility, and the availability of technical information. more than 90% of the respondents rated these three issues as either large barriers or potential barriers. clt’s performance as building material and the amount of wood required for clt manufacture were not considered large barriers for the adoption of this building system in north america, with less than 50% of respondents ranking them as being “may be a barrier” or “large barrier.” • when given the opportunity to list their own barriers to clt adoption, almost half of the respondents (23) entered their own topics which ranked from “fire related barriers (9 respondents listed issues related to this topic), availability of clt panels (4), seismic performance (2), and others (8). • the research areas most in need of attention, according to respondents, are the seismic and fire performance of clt, and the connectors and fasteners used in the erection of clt buildings. the environmental and thermal performance of clt, and market or customer research, were ranked as low research priorities. • more than half of the respondents (27) listed their own research areas when given the opportunity. areas listed include “hybrid systems (7 respondents entered research areas falling into this topic),” “shear walls and diaphragms (6),” “fire performance (5),” and “installation/construction (5)” were all mentioned by at least 5 respondents. espinoza et al. — identification of research areas to advance the adoption of cross-laminated timber in north america 71 the results of this survey suggest a need to increase educational efforts to raise the level of awareness about clt in north america. raising the level of awareness among building professionals would appear to be the first step towards a wider adoption of this novel building material and system on the continent. in this sense, education is essential for the process of public acceptance of clt, as has been learned with the introduction of other construction materials and systems. it takes time and effort to get professionals and end users to trust new materials and technologies. however, trust can only be gained with proven success stories, thus the importance of successful demonstration projects. such stories will certainly serve as the best reference for those considering clt for future applications. references alreck, p.l., & settle, r.b. 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(2015). retrieved march 8, 2015 from http://woodworks.org/. abstract the range of value added decking and cladding products currently available on the swedish market is probably greater than ever. although, there are also both opportunities and threats for further development in this industry sector, the extant research has not addressed this topic. the present paper fills this gap through conducting a qualitative exploratory case study undertaken to describe the structure and macro factors influencing the industry. the study integrates pestel (political, economic, social, technological, environmental and legal) framework with porter’s five forces of competitive position. data for the pestel analysis were collected from industry experts and triangulated through secondary sources. data for the five forces analysis were collected through qualitative interviews. the findings indicate that pestel factors have neutral or positive influences on the industry, while the five forces analysis indicates that the strength of buyers’ power and threats from substitutes may pose future challenges. furthermore, the findings indicate that the industry has potential for further growth and warrants attention from various players that are not yet involved. keywords: decking products, swedish market, porter’s five forces, pestel, value-added value-added decking and cladding – a case study of the swedish market acknowledgements: the author wants to thank the kk-foundation and sca timber ab for their financial support of this work. furthermore thanks to two anonymous reviewers for their valuable and helpful comments and thus improving the paper. * department of information systems and technology, mid sweden university, storgatan 73, 851 70 sundsvall, sweden. email: jonasj@student.miun.se. jonas johansson* bioproducts business 2(4), 2017, pp. 29-41. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-004 1.0 introduction changes including population increases, poverty, urbanization, globalization, climate change and overexploitation of finite resources are posing major global challenges (unesco, 2010; worldbank, 2015). thus, it is increasingly essential to develop and sustainably use renewable resources, such as wood, which have played a key role in human survival for millennia and is probably used more widely than ever as fuel and raw material for both traditional and modern products (e.g. textiles). wood has several advantageous properties, such as high strength to weight ratios, and easiness to process, shape and join (saarman, 1992). however, it also has some disadvantages, notably susceptibility to humiditymediated dimensional changes, biodegradation, and weathering in external environments (hill, 2006). these susceptibilities have been intensively researched, and various strategies to reduce them have been developed (hill, 2006; rowell, 2006c). the most widely used technique to prevent biodegradation is treatment with wood preservatives. in the eu roughly 6.5 million m3 of timber products are annually treated with preservatives (salminen et al., 2014). of this, approximately 1.5 million m3 is treated in sweden (ntr, 2015), which equals about 8 % of the annual swedish sawn timber production volume that currently stands at 16 million m3. however, use of wood preservatives has been subject to increasing restrictions and regulations (preston, 2000). for instance, the commonly applied preservative cca (copper, chrome and arsenic) was prohibited in sweden in 1994 (larsson-brelid et al., 2011), in the eu in 2004 (commission directive, 2003), and is no longer allowed for residential use in the usa (rowell, 2013). hence, there are both limitations and opportunities for product innovation, not only to protect wood from biodegradation but also to enhance other properties. 30 bioproducts business 2(4) 2017 the timber industry is gradually moving away from the traditional commodity view (hugosson & mccluskey, 2009), and there are a substantial body of innovationrelated research in the forest sector conducted from 2000 (hansen et al., 2014). however, there is limited forest sector literature on new product development despite that the field is widely covered in general literature (hansen et al., 2014). thus, new product development particularly requires further analysis, partly because the lack of research attention and partly because product development is highly important for a company to be competitive and create a positive self-image (stendahl et al., 2006). furthermore, during the last two decades diverse kinds of new forest products have emerged, including wood that been modified thermally, chemically, or by impregnation (hill, 2011) and the north american decking industry has seen a growth and dramatic change in types of decking materials (eastin et al., 2005). accordingly, in the swedish decking market (the focus of the present study) there are now probably more commercial alternatives to traditional pressure-treated pine products than before. these include (inter alia) acetylated wood, thermally modified wood, furfurylated wood, silicon-modified wood, royal-treated wood, and wood-plastic composites (wpc), in addition to natural durable species as larch, and tropical hardwoods. some of the technologies and alternative durable species used to produce these materials are not new, for example tiemann (1915) reported effects of heat treatment, while fuchs (1928), horn (1928) and suida and titsch (1928) all reported effects of acetylation. since then there has been substantial further technological development, some of it based on the early work by stamm and co-workers in the 1930s-50s at the forest products research laboratory in madison, wisconsin, usa (hill, 2006). among other options, the potential of numerous reagents to enhance wood through chemical modification has been tested during the last century. however, most commercial developments have occurred in the last decade, particularly in europe (hill, 2011), and militz and lande (2009) concluded that many challenges must be overcome when bringing new technologies and new wood products to the market. the decking material segment has previously been explored in various studies e.g. customer value (holopainen et al., 2014), perception and preference studies of treated wood in us (vlosky & shupe, 2002, 2004a, 2004c, 2005), and perceptions of decking materials in scandinavia (nyrud & höibö, 2008; nyrud et al., 2008; riala, et al., 2013; roos & nyrud, 2008a, 2008c). further, studies have explored decking advertisement (hamner et al., 2012; mcgraw et al., 2015) and the willingness to pay for natural durable wood products (donovan & hesseln, 2004). other studies have considered certain aspects of the decking sector from a market perspective, e.g. characterization of the u.s residential market (shook & eastin, 2001), status and future perspectives of the chinese treated wood market (cao et al., 2011), assessment of market potential for alaska yellow cedar (eastin et al., 2005), position and market analysis of the us decking materials market (ganguly et al., 2011), and trends in the us market (ganguly & eastin, 2009). notably, majority of these studies have examined the us market and the european (particularly scandinavian) decking market has received much less attention. as the decking industry grows, so does the need for applied economic research. thus, various studies have considered certain aspect of the sector from a market perspective e.g. assessing acceptability parameters for chemical modified timber decking (killerby et al., 2007a), present and future aspects of chemical modified timber decking (killerby et al., 2007b), the commercialization and production of modified wood in portugal (esteves et al., 2014), commercialization development of modified wood (jones, 2007), and modified wood production and markets in russia (kiseleva et al., 2015). some have also considered the commercialized technologies, e.g. homan and jorissen (2004), hill (2006), hill (2011), and rowell (2013) (rowell, 2006a). others have described current production status or general experiences, although many such papers have focused on the technologies per se, e.g. franich (2007), ala-viikari (2007), and kattenbroek (2007). brynildsen and myhre (2007) described external market factors and purchasing criteria influencing the business, particularly regarding furfurylated wood. roos et al., (2002) noted (based on previous authors’ findings) that for success an industry needs to adapt products to meet the market needs, and a market orientation is required to improve wood industries’ profitability. individual firms competing within the industry often have considerable insights regarding their markets. however, despite the abundant research on technological and economic aspects of this industry, few studies have addressed the competitive forces within an industry johansson — value-added decking and cladding – a case study of the swedish market 31 and external factors that may influence it. thus, further research is required to improve understanding of the industry and the key factors and competitive forces affecting it. accordingly, the aim of this study is to characterise the industry’s market situation, in sweden, by addressing the following research questions: i. what macro factors may affect the industry, and what are their likely effects? ii. what are the industry’s structural characteristics? the study focuses on industry actors producing timber products enhanced by modification or impregnation for decking or cladding applications (excluding products pressure-treated with creosote, solvent-based reagents and water-borne copper-based preservatives) for (inter alia) the swedish market. the products included are acetylated, thermally modified, furfurylated, silicontreated, and royal process-treated wood (including copper, but is a two-step process). the products can be used for several applications but in this study decking and partly cladding applications are emphasized. first, the conceptual framework for the study is developed, consisting of the six sets of pestel (political, economic, social, technological, environmental and legal) external macro factors and the five forces of competitive position proposed by porter (1980). the framework is then applied in a case study of the swedish market. an overall qualitative approach is adopted. results are then presented in relation to the conceptual framework, and finally the findings are discussed. 2.0 framework for the study 2.1 the framework as mentioned above, the theoretical framework consists of pestel macro factors potentially affecting any industry and the five forces identified by porter (1980) as shaping an industry’s structure: the rivalry among competitors, the horizontal power of suppliers and buyers, and vertical threats from new entrants and substitutes. this section describes these two sets of components and their integration as the overall theoretical framework for this study, as illustrated in figure 1. 2.2 pestel factors any industry may be affected by a vast numbers of factors, which can be divided according to grant (2008) into “source” factors (political, economic, social and technological) and “proximity” factors (internal for a firm or sector). the four sets of source macro factors are included in an integrated model of marketing planning, developed at the university of helsinki and applied in several forest product-related scientific publications (hansen & juslin, 2005). in some conceptual frameworks the four sets are complemented with environmental and legal factors, resulting in the acronym pestel. both of these sets of factors appear to be highly relevant for the focal industry, thus they were included in the framework. as noted by bovaird and löffler (2009), no pestel analysis can be fully comprehensive, it is only possible to consider broad effects of some of the main factors of each category that may influence an industry (as listed in table 1). pestel factors are included here since they may substantially impact the focal industry, while it may be difficult for the industry to influence them. 2.3 porter’s five forces the second part of the theoretical framework in this study, the five forces model proposed by porter (1980), which previous forest sector studies have applied generally (gold et al., 2005; husso & nybakk, 2010) but table 1. examples of pestel factors and those considered in the study. macro factors examples considered in the study political public opinion political views of governing parties lobbying efforts by interest groups political views of governing parties economic gdp interest rates spending patterns interest rates social income distribution population distribution culture and values culture and values technological patents r&d r&d environmental climate pollution sustainability climate sustainability legal laws regulations public policy laws regulations public policy 32 bioproducts business 2(4) 2017 also specifically in studies involving decking products (hamner et al., 2012) and modified wood (kiseleva et al., 2015). the strengths of these forces (rivalry among competitors, horizontal powers of suppliers and buyers, and the vertical threats from new entrants and substitutes) can be used to define an industry’s structure and the competition within it (porter, 1980). despite its wide recognition and application, the model has received both criticism and suggestions for development (porter, 2008). grant (2008) suggested inclusion of a sixth force, which he called the complement force. this refers to a product or service that is used together with an industry’s products and increases the value of the industry’s products when it is available. thus, the supplier of a complement product has substantial bargaining power (grant, 2008). however, porter (2008) perceived this conceptual construct as a factor rather than a force. grundy (2006) noted three limitations of porter’s framework: excessive attention to industrylevel phenomena, oversimplification of industries’ value chains, and apparent independence of the model from other parameters. prahalad and ramaswamy (2000) describe an evolution in perceptions of the role of customers, from passive buyers in the 1970s-90s (when porter published his framework) towards their current role as collaborators, co-developers and competitors. furthermore, they claim that there is a transformation from clearly defined formal roles that customers are changing the marketplace, and that firms’ communication with their customers is becoming a dialogue between equals. although these changes diverge from porter’s framework for analysing industries in current settings, the model is still widely used. in addition, dobbs (2014) has developed a set of operationalization templates based on porter’s five forces, which is also applied here. 2.4 integrated framework in accordance with proposals by grundy (2006), porter’s five forces model was combined with the pestel factors in the theoretical framework to consider broad macro factors influencing the industry in addition to sectoral forces (figure 1). the division seems logical, because it can be very difficult for a single actor or even an industry to influence pestel factors, while decisions and actions of a single actor can influence porter’s five forces more easily, especially in a small, niched industry such as the one considered in this paper. 3.0 data and methods this section includes a description of the research methodology adapted, the sampling strategy used, the data collection approach and finally the analysis approach of the study is presented. to investigate the current situation of the swedish value added decking and cladding products market a qualitative approach (creswell, 2014) was adopted, focusing on companies using the five non-traditional technologies. case studies are particularly suitable for in-depth exploratory analyses of a particular sector or situation, enable the researcher to take a holistic view (denscombe, 2014), and have been previously used in industry structure analyses (yin, 2009). 3.1 sample two separate sampling strategies were used to select respondents for the pestel analysis and the five forces analysis. for the pestel analysis, industry experts (e.g. representatives from universities, institutes, industry organisations, companies etc.) were selected using a snowball sampling, i.e. one industry expert refers to other industry experts (atkinson & flint, 2001). all experts had relevant knowledge of the studied market, the industry and its development. figure 1. schematic illustration of the conceptual framework applied in this study, consisting of the five forces model (porter, 1980) and pestel macro factors. johansson — value-added decking and cladding – a case study of the swedish market 33 the participants in the five forces analysis, were selected by purposive sampling, i.e., the firms were chosen to cover producers of the range of relevant products available on the swedish market, while their representatives were hand-picked due to their experience of the topic and their relevant and privileged knowledge. thus, they formed an exploratory rather than a representative sample (denscombe, 2014). the interviewees were representatives of five companies, each supplying the swedish market (inter alia) with products generated using one of the technologies covered in the study, and one representing several producers associated with one specific technology. the majority of these producers are not integrated with sawmills and they all have manufacturing operations in europe. 3.2 data collection data for the pestel analysis was collected by conducting interviews with industry experts. these interviews were conducted between february and june 2015, and triangulated with data from secondary sources, such as scientific papers, electronic sources, news articles and reports. notes from interviews as well data from secondary sources were saved digitally for the analysis. data for porter’s five force analysis was collected through six in-depth interviews conducted from march to june 2015. the interviews were semi-structured using a questionnaire based (with slight modifications) on the templates presented by dobbs (2014), which provide interviewees opportunities to indicate the strength of threats or forces on an incremental scale from low to high, in addition to making comments related to each question. the questionnaires were sent to the interviewees prior to the interview. the interviews were tape recorded when possible, but for some only field notes were taken because of noisy surroundings. the interviews were transcribed and interviewees were invited to approve the transcripts (none of the interviewees refused). the interviews lasted between one to three hours and were face-to-face, except the one that was conducted over the phone. in one of the interview sessions two interviewees were present; but all other interview sessions had one interviewee each (table 2). total six interview sessions were conducted. 3.3 analysis in this study the data from industry experts and the secondary sources as well as the transcripts from the six interviews were categorised in broad nodes and sequentially analysed accordingly to the theoretical framework, e.g. the six sets of macro factors (see table 1) and the five forces, using nvivo computer-assisted qualitative data analysis software. the categorised data was then further divided into sub-nodes and analysed in more detail to distinguish condensed themes and both similarities and differences in the data. in addition to the analysis of the data from the six interviews, the five forces incremental scale in the questionnaire was divided into four equal sections (low, moderately low, moderately high and high) in order to categorize and summarize responses. 4.0 results this section first presents the summarized results in the integrated framework, see figure 2, then following the partitioning of the theoretical framework, the results from the pestel analysis (as summarized in table 3), and finally the results from the interviews in terms of porter’s five forces (as summarized in table 4). 4.1 pestel factors 4.1.1 political factor the following three main political factors were distinguished. firstly, the swedish government has 16 environmental quality objectives, one of which is “a non-toxic environment” (i.e. to ensure that all parts of the environment in sweden are non-toxic or, more strictly, free of anthropogenic toxins). as a step towards achieving this objective, recommendations are previously made that include additional taxes on some consumer products containing potentially hazardous chemicals. also costs of table 2. respondent firms (a-f), numbers of interviewees attending each interview, and applications of their products (decking and/or cladding) respondent firm number of interviewees applications a 2 decking & cladding b 1 decking & cladding c 1 decking & cladding d 1 decking & cladding e 1 decking & cladding f 1 decking 34 bioproducts business 2(4) 2017 building repairs, conversions and extensions have been tax deductible in sweden since 2004, but the level of deductions are reduced from 2016. thirdly, the european commission has initiated a review of the best available techniques (bat) reference document regarding wood preservation with chemicals (commission, 2016). 4.1.2 economic factors from 2015-01-18 to date there has been a negative repurchase agreement rate in sweden, for the first time, due to low inflation. this has led to generally low interest rates for both consumers and companies, prompting increases in consumption and investments. during the last five years annual sales of swedish building merchants and hardware merchants have increased significantly, notably sales increased by 12.3 % during 2015. these observations indicate that political and economic factors have a positive or neutral overall impact on the focal industry. 4.1.3 social factors sweden has a long tradition of using wood in diverse applications. however, softwoods are mainly used, which may potentially limit the market for suppliers of products intended to be substitutes for tropical hardwoods. nevertheless, social factors are assessed as having a neutral impact on the industry due to the high general approval for the use of wood. 4.1.4 technological factors there is some research and development activity related to the studied industry at several universities and one institute in sweden. a result of this activity is the patented and now commercially available product organowood, invented by researchers at stockholm university and the swedish university of agricultural table 4. results from the interviews regarding porter’s five forces, their strengths and brief explanations of the interviewees’ perceptions (rationale). force perceived strength rationale rivalry among competitors low to moderately low other actors in the studied industry are not perceived as competitors power of suppliers moderately low there are many potential timber suppliers, but slightly fewer fulfil requirements power of buyers moderately low to moderately high awareness of these products has been low but is now increasing threat from new entrants low to moderately low the respondents want their own business to grow but have nonhostile attitudes to new entrants threats from substitutes moderately low to moderately high perceptions of substitutes, from pressure-treated wood to fibrereinforced concrete, vary widely figure 2. assessed impacts of the pestel factors (indicated by solid arrows if positive, open arrows if neutral, and stippled arrows if neutral or positive) and reported strengths of the five forces (as described in table 4). table 3. the macro factors included in the conceptual framework and their assessed impact on the studied industry. factor categories factors included assessed impact on the industry political political view of governing parties positive or neutral economic interest rates positive or neutral social culture and values neutral technological r&d positive environmental climate sustainability positive legal laws regulation public policy positive johansson — value-added decking and cladding – a case study of the swedish market 35 sciences. however, it was reported repeatedly that the swedish research on methods to improve wood’s durability is decreasing. furthermore, the market is global and innovations from other countries will reach sweden eventually (and vice versa) hence the technological factors probably have a positive impact on the industry because if wood’s disadvantages can be overcome, its renewability and carbon-neutrality could give it a very strong market position relative to alternative materials. 4.1.5 environmental factors the eurobarometer (2011) indicates that swedes are more concerned about the climate and environmental issues than the average european citizen. the forest area in europe and asia is increasing, but decreasing in the rest of the world. in sweden the standing forest volume is also increasing. in addition, the eurobarometer (2011) reported that 89 % of swedes claimed they were willing to pay a little more for environmentally friendly products, a higher share than in any of the 27 countries surveyed. for these reasons environmental factors are assessed as having a positive impact on the studied industry as its products are made from sustainable resources. 4.1.6 legal factors the traditional wood preservative (pressure-treated) industry has been subject to both specific legislation, such as the prohibition of cca in 2004, and general industrial laws, such as national, eu and global requirements for safe waste disposal. another legal factor that affects the industry is public policy since (for instance) several municipalities, e.g. sundbyberg, just outside stockholm, recommend avoiding use of pressure-treated wood in kindergartens (sundbyberg, 2015). similar policies have been imposed elsewhere in sweden, and/or advocated in media articles on pressure-treated wood. however, legal factors may have a positive impact on the studied industry if the competing products or substitutes are subject to stricter regulations. 4.2 the five forces the results from the interviews regarding porter’s five forces are summarized in table 4 and described in more detail in the following text. 4.2.1 rivalry among competitors generally, the interviewees’ comments indicate that they did not perceive the other actors in the studied industry as competitors, partly at least because they perceived distinct differences in each other’s products in terms of features, properties, price and (hence) both applications and customer segments. this is illustrated by the following comment from interviewee a: “comparing wood against wood there’s a big difference between the products, but naturally not as big as between wood and steel”. some of the interviewees perceived pressuretreated wood as a competitor due to its large market share and low price as a decking product. naturally durable species, such as cedar, tropical hardwood and larch were also repeatedly mentioned as competing wood products, and other cellulose-containing products, such as wood plastic composites (wpc), as additional main competitors. these products are considerably more expensive than pressure-treated wood (although their prices vary substantially), but several of the interviewees mentioned that this was a factor of decreasing importance. overall, their comments indicate that investments in the technologies they apply are increasing and overall their sector is growing (although not necessarily the respondent companies). the findings indicate that rivalry among the studied actors is low to moderately low. 4.2.2 power of suppliers the findings clearly indicate that the number of timber suppliers considerably exceeds the number of chemical suppliers. the technologies used by the respondents’ companies differ, and their needs for chemicals or other equipment vary accordingly, but often there are relatively few suppliers of these resources in relation to the number of timber suppliers. this indicates that the timber suppliers have less power than other suppliers. thus, discussion about the power of suppliers is mainly based on the timber suppliers, but partly because all the companies need timber. the findings suggest, unsurprisingly, that there are vast numbers of potential timber suppliers, but far fewer practical options. several interviewees mentioned difficulties in having quality discussions with their timber suppliers, e.g. “the understanding of our needs as customers varies between suppliers” (interviewee b) and “it has been, and is, quite difficult to get the suppliers’ attention regarding the timber quality we need” (interviewee f). the timber species used are mainly scots pine (pinus sylvestris) and monterey pine (p. radiata). the interviewees regarded suppliers’ opportunities for forward vertical integration 36 bioproducts business 2(4) 2017 as ranging from impossible to fairly likely, but the interest is perceived as increasing. overall, the findings indicate that the power of suppliers is moderately low. 4.2.3 power of buyers responses regarding the power of buyers indicate that sales and numbers of customers are rising, as is customers’ awareness of the existence of the niched products (albeit from a low level), as expressed by interviewee d: “i think the general awareness has been very low but the situation is continuously improving”. typical buyers are described as the specifiers or architects who decide what materials will be used in certain projects, particularly where price is not a major priority and the specifier is looking for something distinctive. end customers are also not concerned primarily about price and want something different from traditional or ordinary products, according to participants who target end consumers. several interviewees noted that environmental aspects are considered more by specifiers than end customers. the interviewees perceived little likelihood for buyers to pursue backward integration. overall, the findings indicate that the power of buyers is moderately low to moderately high. 4.2.4 threats from new entrants when discussing the threat from new entrants the interviewees expressed a desire for their own business to develop and expand. however, they also perceived benefits of an increased number of actors due to the accompanying increases in opportunities for joint lobbying efforts, marketing and market processing to increase awareness of the industry. as interviewee c commented: “if a new actor wants to invest in a plant, we can help each other to increase the market for our products, we are colleagues rather than competitors”. several of the interviewees reported that any future legislation most likely would have a positive impact on the industry. the capital requirements needed for entering this industry vary, depending on the technologies applied, and for some there are patent restrictions while others are more accessible. the findings indicate that the threat from new entrants is perceived as low to moderately low. several interviewees reported that the swedish market differs from others, remarking (for example): “sweden is a market that has not yet decided where to go, it has a little bit of everything” (interviewee b), and “other markets are more willing to try new products” (interviewee a). this is interesting as pre-painted cladding products have been highly successful in the swedish market. 4.2.5 threat from substitutes the respondents’ perceptions of both substitutes and the threats they pose varied substantially, precluding any general description. the main substitutes mentioned by some were materials such as concrete or fibre-reinforced cement for cladding applications, while others largely mentioned wpc and tropical hardwood. however, several of the respondents perceived the industry’s products as substitutes for untreated wood, pressure-treated wood, and tropical hardwoods. due to the variations in their perceptions of substitutes, they perceived their own products as being cheaper than substitutes in some cases, and more expensive in others. similarly, they perceived the performance of substitutes as being slightly better than that of their industry’s products in some cases, and slightly worse in others. overall the findings indicate that the threat from substitutes is moderately low to moderately high. 5.0 discussion the results from this study indicate that the external pestel factors have neutral or positive influences on the industry. they also indicate that three of porter’s five forces (rivalry among competitors, power of suppliers, and the threat of new entrants) have low to moderately low strength, while the other two (power of buyers and threat from substitutes) have moderately low to moderately high strength. the findings are discussed in more detail in this section. 5.1 pestel factors generally, economic factors (notably low interest rates and construction tax deductions) may have a positive impact on the industry by promoting increases in investments and consumption. repair and replacement by homeowners has previously been pointed out as an important driver for the demand of decking materials (eastin et al., 2005; ganguly et al., 2010). however, such effects should apply to most industries rather than being unique to the focal industry. the introduction of the government’s objective to ensure that the swedish environment is non-toxic and the associated inquiry have not directly affected the studied industry or the wood preservative (pressure-treated) industry as yet, but may in the future due to the chemical agents involved. johansson — value-added decking and cladding – a case study of the swedish market 37 similarly, revisions to the eu best available techniques reference document regarding wood preservation with chemicals may have consequences for some actors in the industry that cannot yet be reliably predicted. several interviewees perceived pressure-treated wood as a substitute and/or its producers as competitors. hence any factors that have a negative impact on the pressuretreated wood industry should increase opportunities for the focal industry to gain market share. such factors could include further legislation, changes in public opinion and policy changes resulting in taxes on pressure-treated wood, subsidies for the studied products, or recommendations to use solid wood products without any toxic agents. notably, if public policies like the one adopted in sundbyberg become more common, interest in products such as those considered here will likely increase. lundmark et al. (2014) reported benefits of using solid wood products in terms of optimizing the swedish co2 balance, which could also promote a positive perception of solid wood products. however, in some parts of the world the forest area is decreasing, which (together with ongoing concern and debate regarding biodiversity) may lead to a negative perception of the use of solid wood generally. the sustainability aspect is highlighted in the marketing material of the studied products, which is an important message to send, particularly to the environmentally conscious swedish population. however, it is not clear whether the studied products are perceived as more environmentally friendly than the competing products or substitutes. furthermore, hansen and juslin (2005) stress the importance of avoiding overemphasizing environmental aspects of products derived from the forest industry meaning that environmental aspect is added on top of the basic attributes of a forest related product. sometimes actors in the modified wood sector (not necessarily those considered here) market their products as substitutes for tropical hardwood. for such companies, markets with a history of using tropical hardwoods may be more relevant targets than markets with a strong softwood heritage, like the swedish market. however, significantly penetrating the market in sweden may be challenging due to the strong position of pressuretreated wood products (unless, as mentioned, public policy or legislative changes intervene). overall the macro factors are assessed as having either no or a positive impact on the industry, and hence being unlikely to hinder future expansion. this is in line with previous studies e.g., kiseleva et al. (2015) which conclude that thermally modified timber is growing and has potential for further growth. also brynildsen and myhre (2007) conclude that external market trends (in combination with the products properties) indicates a promising future for the industry. however, if this currently small industry expands, it might attract attention from not yet considered agents. 5.2 the five forces the actors in this industry are generally small companies that do not own sawmills, and focus on this very specific segment of the value-added wooden product sector. some larger sawmill-owning companies beyond the geographic scope of this study apply some of the relevant technologies, but the rivalry among competitors is reportedly low to moderately low. porter (1980) proposes that if rivalry is high, competition is usually expressed through price, service or marketing. furthermore, he notes that price competition generally leads to reductions in profitability for all of the actors in an industry, while marketing competition often has a positive impact on the industry by fostering increases in demand. hence, when the industry expands, actors within it should ideally compete through marketing rather than price wars, and hence at least potentially increase demand for the whole industry. this possibility was implicitly acknowledged by the interviewees, who reported that marketing was one way to increase customers’ awareness of their products. since the rivalry among the competitors is reportedly low there may be opportunities for joint lobbying and communication efforts to increase overall awareness of the industry. jones (2007) also notes that potential business benefits can be gained by working together with other actors within the industry. actors who exploit a technology applied by several producers reported that pressure on prices has increased, but this is not yet a major issue. the rivalry will most likely increase when the industry expands, but if the actors focus on competing through marketing rather than price the whole industry can potentially gain (while the pressure-treated wood industry provides an example of price competition resulting in low profitability). generally, the respondents did not perceive each other as competitors, probably at least partly because this is still a small industry and each 38 bioproducts business 2(4) 2017 actor contributes to establishing and increasing general awareness of the products. this might also explain why the industry perceives stronger competition from other materials, i.e. treated wood and natural durable wood species (both tropical and non-tropical), and nonwooden materials, such as fibre-reinforced concrete (for products used in cladding applications). hence the challenge is to gain market shares from other industries. jones (2007) proposes that the industry should address non-wood material markets thus these are the competing materials. the price range of the studied products varies considerably, but can be roughly divided into two benchmarking price segments: one in the range of larch and one in the range of tropical hardwoods. the enhanced properties also vary between the products. lack of perceived rivalry may indicate that actors within the studied industry have found strategic niches, and hence do not perceive each other as competitors. this is supported by jones (2007) mentioning that some technologies are targeting specific product segments. the interviewees regarded the power of suppliers as moderately low. high power of suppliers can result in increased prices, or reductions in either service or quality (porter, 1980). the interviewees did not report any price or service issues, but mentioned a lack of quality discussions with their suppliers. however, the relations with the material supplier are important (brynildsen & myhre, 2007). as this industry is relatively small it is surprising that the suppliers’ power is not considered stronger, but this might be due to the large number of timber suppliers. furthermore, if the industry keeps growing the power of suppliers may decrease even further, because its value for the suppliers will increase. the interviewees’ perceptions of the power of buyers varied from moderately low to moderately high. if the power of buyers is high, they can bargain on price or demand better service and/or quality (porter, 1980). the interviewees did not mention any quality or service issues, but reported that price was of decreasing importance. overall, their main reported concern was low general awareness of their products among potential customers. as noted by brynildsen and myhre (2007) there is no use in having premium products if the customers are unaware of them, although they notice an increased awareness of the industry’s products. the awareness might rise if the industry expands, and further rises can be promoted through increased marketing-based competition and joint marketing efforts. in addition, the nordic wood preservation council recently decided to extend their classification scheme to include a class for modified wood. as the classification scheme is widely known, this may help to increase awareness of modified wood and assist comparisons of the products by end customers. however, it is not clear if actors in the modified wood sector are interested in this development. the threat from new entrants is low to moderately low according to the interviewees. a new entrant brings new capacity to the industry and might use price pressure to gain market share, thereby affecting the incumbents’ profitability (porter, 1980). however, the threat from new entrants depends on the entry barriers and incumbents’ responses (ibid). it is also influenced by technological factors since there are three main ways to enter a market: inventing a new technology, buying a license to apply a patented technology, or investing in a technology that is no longer patented. the first option is difficult in the focal sector, as enhancing the durability of wood or other attributes requires expensive, long-term investments. the second option may also be challenging as the incumbents have opportunities to decide if, who and where a new actor may enter the industry. the third option might be the easiest, but raises risks of price competition, and it may be difficult to compete with incumbents using newer patented or licensed technology. in any industry, as the price/performance ratio of substitutes increases they increasingly limit the potential profitability for incumbents (porter, 1980). the interviewees’ responses indicate that the threat from substitutes is moderately low to moderately high in the focal sector, but there were considerable variations in their expressed perceptions of substitutes. this variation may be related to variations in the actors’ niches, as some (for example) focus on traditional wood distribution channels while others target specifiers. some may also be related to variations in the actors’ target applications. several interviewees mentioned wpc as a substitute or competitor. however, wpc products have gained higher market shares in decking applications (and thus may pose greater threats) in markets in other countries. as some of the reported substitutes are wpc and fibre-reinforced concrete, they pose challenges not only for the focal industry but for solid wood product industries in general. johansson — value-added decking and cladding – a case study of the swedish market 39 5.3 general opportunities and challenges two notable features of the studied sector are that the actors, generally, do not originate from sawmilling industries, and swedish sawmilling companies have not yet shown any interest in it. however, the swedish pine sawmills could potentially counter the strong perceived power of buyers as they have well established distribution channels and strong customer relations. they could also address quality issues relatively easily, through internal communication channels. thus, the focal sector may provide attractive opportunities that very few swedish pine sawmill companies have considered as yet, despite the value of product innovation noted by authors such as stendahl et al. (2006). furthermore, the interviewees perceive a general reluctance for the swedish market to try new products. this may be at least partly due to the strong presence and history of pressure-treated wood (which may also explain why some interviewees perceived pressure-treated wood as a substitute or competitor). approximately 8% of the annual volume of timber produced in sweden is pressure-treated, and some of the largest sawmilling companies participate in this activity. thus, the sawmilling companies may be focusing on their pressure-treated timber production and may not yet have seen the potential of the studied industry. however, pre-painted cladding is regarded as a new product with rapidly growing market shares. thus, it seems possible to introduce new products to the swedish market successfully. this study should be viewed as a preliminary exploration of the possibilities and constraints of this emerging industry. further, although the participants cover at least most of the range of applied technologies, the results should be interpreted and generalized very cautiously due to the small, purposively selected sample. in addition, as a case study the recorded opinions can only reflect the situation when the interviews were conducted and will most likely change over time (denscombe, 2014), especially as this is an small but emerging industry. the method, combining external factors and internal forces, has proven to be useful to illuminate an industry. this was expected since the combination were proposed to reduce the independence between the five forces and other parameters (grundy, 2006) and they have previously been combined e.g. kiseleva et al. (2015). since the respondents did not perceive the other actors in the studied industry as competitors the study may not have been optimally delimited and a broader perspective (including pressure-treated timber, larch wood and wpc for example) may have been beneficial, at least for probing the competitive environment. however, the primary objective was to obtain perceptions and opinions of actors in the defined industry. the results may also reflect a general issue regarding porter’s five forces: difficulties for respondents to define and identify competitors and substitutes. analyses based on the five forces and the questionnaire created by dobbs (2014) can provide a comprehensive view of an industry’s structure, but the terminology might be too formal, resulting in a need for explanations in some cases. historically, there have been several attempts to commercialize wood modification technologies, some of which are still being used while others are not. it would be valuable to identify the factors contributory for past successes and failures in further studies, to increase chances of future success. the power of buyers was perceived as moderately high, so the customers’ perceptions of value also warrant future academic consideration. the findings reveals that external factors are expected to have limited restraints on the industry, hence unlikely to hinder future growth. however, they are complex and difficult to predict, therefore the assessment should be cautiously interpreted. despite the complexity and challenge for an industry to influence external macro factors they can potentially be influenced proactively. therefore, the industry can address relevant macro factors (e.g. political and environmental) and work proactively through joint lobbying efforts and cooperation with counterparties to promote and develop sustainable bio-products. the analysis of the industry structure indicates that the power of buyers and threat from substitutes will pose challenges. accordingly, it’s relevant for the industry to consider and manage both external factors as well as the internal forces. the overall findings indicate that the industry has potential for further growth and warrants attention from various players that are not yet involved. due to the author’s employment as an industrial phd student at one of the larger forest industry companies in sweden ethical aspects of the study also need to be addressed. all participants in the study were clearly informed about the employment of the author, and in all email correspondence the corporate email address has been used instead of a university address to avoid 40 bioproducts business 2(4) 2017 any uncertainties. it should also be noted that (as in any study) participants’ responses may have been incomplete, skewed, biased or self-censored (creswell, 2014), despite attempts to minimize such problems by ensuring anonymity and asking broad questions about the industry rather than specific questions about customers and production costs etc. that might stoke bias. 6.0 references ala-viikari, j. 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(2009). case study research: design and methods. thousand oaks: sage. abstract the forest sector and the global financial crisis (gfc) provide a unique setting for investigating the relationships among market orientation, innovativeness and firm performance. while most of the extant literature suggests that market orientation helps a firm build its innovativeness, we suggest that in the production oriented forest sector, especially when reacting to the crisis, being innovative allows a production oriented firm to develop a market orientation. using data from 142 us-based forest sector manufacturing firms, we find that some types of innovativeness have a positive effect on the dimensions of market orientation. process & business systems innovativeness positively impact firm performance suggesting that this relationship holds regardless of business cycles or the general state of the economy. we also find that market orientation does not positively impact firm performance, which is in contrast to the majority of the extant literature. keywords: market orientation, innovativeness, firm performance, recession, manufacturing firms innovativeness is widely lauded as a means for increased firm performance and maintenance of competitive advantage (tsai & yang, 2013; rosenbusch et al., 2011; gibb & haar, 2010; hult et al., 2004; han et al., 1998), contributing to performance through creating or adopting new products, processes and business systems. closely connected to innovativeness is market orientation, which positively impacts firm performance through an improved understanding of customer needs, better reacting to competitor actions, and integrating knowledge of customers and competitors throughout the firm (kirca et al., 2005; pelham, 2000; han et al., 1998). in a decline situation, such as that represented by the gfc, firms tend to respond in one of two ways, either innovating in an attempt to develop new products or markets or retrenchment and cost cutting. these two approaches have been referred to as the mother of rigidity versus the mother of invention (mckinley et al., 2014). in the rigidity approach, firms focus on restricting information processing, centralizing authority, increasing formalization, and increasing operational efficiencies (staw et al., 1981), or riding out the storm (o’malley et al., 2011). in the invention approach, innovation is the reaction to decline, where managers engage in greater risk to try to “hit a home run” to recover (latham & braun, when innovativeness determines market orientation: the forest sector and the great recession eric hansen1* and erlend nybakk2 1.1 introduction the global financial crisis (gfc), which peaked in 2008, provides a unique context within which to explore the relationship among different characteristics of firms and to examine how these characteristics facilitate firm performance in a time of economic decline. in this study, we choose innovativeness and market orientation (e.g. han et al., 1998), the two characteristics that have previously been linked to improved performance in times of economic stability. our central motivation is to examine whether a focus on innovation prior to a recession helps a firm achieve higher market orientation following a recession. additionally, we examine if pre-recession innovativeness and post-recession market orientation positively impact post-recession financial performance. 1 professor of forest products marketing, department of wood science and engineering, college of forestry, oregon state university, 119 richardson hall, corvallis, or 97331. 2 associate professor, department of creativity and innovation, oslo kristiania university college, oslo, norway. * corresponding author: e-mail: eric.hansen@oregonstate.edu. tel.: 541-737-4240. acknowledgements: the authors would like to thank rajat panwar from the university of british columbia and silja korhonen-sande from the norwegian university of life sciences for their thoughtful feedback during development of this manuscript. bioproducts business 1(1), 2016, pp. 1-12. http://biobus.swst.org. https://doi.org/10.22382/bpb-2016-001 2 bioproducts business 1(1) 2016 2009). the gfc has motivated considerable new work on marketing and innovation in recessionary periods (rollins et al., 2014; huhtala et al., 2014; mckinley et al., 2014), and yet how a firm’s focus on a key characteristic during a pre-recession period affects other key characteristics during a post-recession period is not well-understood. to partially address that gap, we investigate the role of market orientation and innovativeness in a decline situation. the most important contribution of our work is the idea that in this industry and economic context, pre-recession innovativeness is what allows companies to achieve a post-recession market orientation. this conceptualization is in contrast with much of the market orientation literature, yet consistent with the entrepreneurship literature thus illuminating an inconsistency in management scholarship. we also explore impacts of pre-recession innovativeness and post-recession market orientation on post-recession financial performance. we conduct this study in the us forest sector, an industry especially impacted by the gfc. the primary market for many forest sector firms is housing. when us housing starts fell by nearly 80% between the peak years prior to, and the depths of the gfc, this industry sector was extremely hard hit with employment in the sector falling from 1.1 million in 2005 to only 645 thousand in 2011 (us census, 2013). the remainder of the manuscript is organized as follows. we begin with a brief theoretical background focusing on market orientation and innovativeness. this is followed by explanation leading to our hypotheses. next, we provide details regarding the methods used in the study. we combine results and discussion in order to more fully explain our findings in relationship to past literature. we summarize by providing our thinking regarding implications of the findings for future research and for practitioners as well as acknowledging key limitations of the work. 1.2 theoretical background in the text that follows, we provide a summary of the concepts of market orientation and innovativeness. both constructs are argued to be part of firm culture (hurley & hult, 1998). deshpande and webster (1989) describe organizational culture as the pattern of shared values and beliefs that help members of an organization understand why things happen and thus teach them the behavioral norms in the organization. there is strong evidence supporting market orientation as an organizational culture (gebhardt et al., 2006; kohli & jaworski, 1990; narver & slater, 1990) and hurley and hult (1998) suggest that the deepest manifestation of market orientation is at the cultural level. others emphasize that innovativeness or innovation orientation is also manifested at the cultural level (dobni, 2010; augusto & coelho, 2009; hurley & hult, 1998). although the literature predominantly pursues a line of reasoning where market orientation facilitates innovativeness as elements of a firm culture, the directionality of this relationship is not as settled as described in much of the existing work. in fact, woodside (2005) argues for a potential circular relationship where at least one component of market orientation, interfunctional coordination, and innovativeness build on each other over time. the potential for this dynamic may be especially relevant in a modern, highly competitive environment given findings indicate a decreasing return on investment in market orientation over time (grewal & tansuhaj, 2001). since innovativeness and market orientation are both seen as elements of firm culture, their interrelationship may well be more complex than the commonly accepted maxim that market orientation positively impacts innovativeness. 1.2.1 market orientation a market orientation is the focus of a firm that treats marketing as a cross-functional responsibility where meeting customer needs is an overriding priority for the entire organization (narver & slater, 1990). the literature is replete with descriptions of the narver and slater (1990) versus kohli and jaworski (1990) approaches to market orientation, so we will not further expound on the issue. instead, because of its basis in firm culture, we subscribe to the narver and slater approach. according to narver and slater (1990), market orientation consists of three dimensions: customer orientation, competitor orientation, and interfunctional coordination. focusing on customer needs allows a firm to provide superior value and leads to higher levels of customer satisfaction. concurrently concentrating on competitors and routinely discussing competitor strengths and weaknesses allows for rapid responses to competitive threats. interfunctional coordination refers to sharing of customer and competitor information across the firm and the integration of all members of the firm in meeting customer needs. the outcome of this multi-dimensional approach is the increased likelihood of the provision of superior value to customers, widely considered key for maximizing long-term profitability (kumar et al., 1998). hansen and nybakk — when innovativeness determines market orientation: the forest sector and the great recession 3 1.2.2 innovativeness innovation and innovativeness are too often used interchangeably in the literature (e.g. gibb & haar, 2010) and the definition of innovativeness is often overlooked, leading to confusion regarding its meaning (tajeddini et al., 2006). as an example, han et al. (1998), in a seminal piece in the field, refer to “innovation” in the title of their article and then measure “innovativeness” via various levels of technology adoption and refer to innovativeness throughout the manuscript. while interchangeable use is undoubtedly due to the proximity of meaning between the terms, here we emphasize the difference where an innovation is a new or improved product/ service, manufacturing process, or business system and innovativeness is a function of adoption (rogers, 2003) or creation (gebert et al., 2003) and is considered a trait or characteristic of a firm that is embedded in culture (pallas et al., 2013; liao et al., 2011; tajeddini et al., 2006; calantone et al., 2003). innovativeness has been referred to as openness to new ideas, products, etc. (hurley & hult, 1998). the term innovation orientation is often used synonymously with innovativeness (e.g. rosenbusch et al., 2011; augusto & coelho, 2009). stock and zacharias (2011) refer to an innovation orientation as creating an innovation mentality where members of the organization are pushed toward innovation. to summarize, an innovative firm is one that has the propensity to create or adopt new products, processes or business systems (knowles et al., 2008) and is better able to create or otherwise produce innovations. 1.2.3 hypotheses the literature consistently demonstrates a positive impact of market orientation on innovativeness (liao et al., 2011; nasution et al., 2011; grinstein, 2008; kirca et al., 2005). it is argued that a firm possessing a strong market orientation maintains a close relationship with its customer base and is agile in meeting changing demands. similarly, a market oriented firm consistently monitors the actions of competitors, thereby positioning itself to imitate those actions deemed critical for meeting customer demands. finally, a market oriented firm also maintains interfunctional coordination which means that knowledge gained from customers and competitors is efficiently distributed within the firm, thus equipping it with the knowledge and information necessary to facilitate innovation (tajeddini et al., 2006). this market orientation to innovativeness connection is well-supported in the literature with hundreds of studies supporting the conceptualization (e.g. han et al., 1998). however, the entrepreneurship literature paints a different picture. innovativeness is commonly treated as one of several dimensions of entrepreneurial orientation (e.g. matsuno et al., 2002; lumpkin & dess, 1996) where proactiveness, risk taking and innovativeness are the ingredients that contribute to a market orientation and thereby positively impact firm performance (raju et al., 2011; matsuno et al., 2002). there are few studies that attempt to treat innovativeness as a distinct construct from entrepreneurial orientation (rhee et al., 2010). raju et al. (2011) suggest that future research should attempt to isolate the impact of entrepreneurial orientation on market orientation. a synthesis of 158 entrepreneurial orientation articles shows that across a broad range of fields and journals that innovativeness is consistently considered to be part of an entrepreneurial orientation (wales et al., 2011). it is exactly this conceptualization-that innovativeness contributes to the development of a marketing orientation--which we embrace here. the founders of one market orientation paradigm (jaworski & kohli, 1993) themselves describe market orientation as a form of innovative behavior while others refer to market orientation as an organizational innovation (kumar et al., 2011). it is also suggested that there is overlap in the definitions of market orientation and innovativeness and the constructs are typically highly correlated (keskin, 2006). given this description from the entrepreneurial orientation literature, we propose that the relationship between innovativeness and market orientation, given the right context, can be such that innovativeness helps build a market orientation. following this thinking, a firm that is more innovative is better able to adopt the necessary internal ingredients that can lead to a market oriented culture. this may be especially true within an industry sector that is traditionally production oriented and suffers from a commodity mentality, which is readily recognized for the us forest sector (toppinen et al., 2014; hansen et al., 2014; cohen & kozak, 2002; rich, 1986). it has been suggested that the relationship between market orientation and innovativeness may differ based on the firms studied (hurley et al., 2005; woodside, 2005). mainstream innovation literature also provides support for innovativeness leading to market orientation. simpson et al. (2006) outline a number of positive and negative outcomes of an innovation orientation. among the positive outcomes are competition-related and customer-related aspects, which have commonalities with 4 bioproducts business 1(1) 2016 market orientation. according to simpson et al. (2006, p. 1137), innovative firms “…proactively anticipate consumer needs and respond accordingly, creating greater value for consumers…,” a concept strikingly similar to that of the customer orientation component of market orientation. similarly, simpson et al. claim that innovative firms continuously monitor competitors. this work effectively suggests that innovativeness is a precursor to market orientation. perhaps the most intriguing proposal regarding the market orientation/innovativeness relationship comes from woodside (2005) who suggests a system dynamics view. he primarily focuses on interfunctional coordination, describing a “positive feedback loop” between interfunctional coordination and innovativeness rather than a one-way, independent-dependent relationship. in this system dynamics view, all variables have dependent and independent relationships with all other system variables. accordingly, innovativeness impacts market orientation and vice versa. kwak et al. (2013) find innovativeness to positively impact the responsiveness dimension of market orientation defined by kohli and jaworski (1990). hurley et al. (2005) acknowledge and support this more complex picture of the market orientation-innovativeness relationship. given the evidence, and the lag effect suggested by hurley et al. (2005), we pose the following hypotheses, each related to the idea that the more innovative a firm before a recession, the higher its market orientation after the recession. h1: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher post-recession h1a) customer orientation, h1b) competitor orientation, and/or h1c) interfunctional coordination h2: forest sector firms with higher pre-recession process innovativeness are able to achieve higher post-recession h2a) customer orientation, h2b) competitor orientation, and/or h2c) interfunctional coordination h3: forest sector firms with higher pre-recession business systems innovativeness are able to achieve higher post-recession h3a) customer orientation, h3b) competitor orientation, and/ or h3c) interfunctional coordination a large body of literature exists, including considerable work in the forest sector, extolling the critical need for innovativeness and innovation (e.g. leavengood & bull, 2013; andrew et al., 2007; hansen et al., 2006a; schaan & anderson, 2002) and a positive connection between innovativeness and firm financial performance (rubera & kirca, 2012; nybakk, 2012; rosenbusch et al., 2011; dobni, 2010; gibb & haar, 2010; hult et al., 2004; välimäki et al., 2004; schumpeter, 1934). furthermore, the ability to adopt the latest technology is a key source of competitive advantage for nordic sawmills (husso & nybakk, 2010). over the long-term, innovative companies are more successful and increasing innovative ability is important for increasing organizational growth and profitability (dobni, 2010; 2006). still, the literature is said to be fragmented and not fully consistent where nonsignificant and even negative associations have been found between innovativeness and performance (rubera & kirca, 2012). for example, innovativeness is not considered to be an advantage in conditions of high competitive intensity and low market turbulence and does not, in this context, contribute positively toward firm performance (tsai & yang, 2013). the majority of findings in the literature suggest a positive relationship between innovativeness and firm performance, leading us to the following hypotheses: h4: the more innovative a firm before a recession (h4a pre-recession product, h4b pre-recession process, h4c pre-recession business systems), the higher its post-recession financial performance the preponderance of evidence in the literature indicates a positive relationship between market orientation and performance (raju et al., 2011; agarwal et al., 2003; pelham, 2000; narver & slater, 1990). meta-analytic studies indicate a consistent, positive link (kirca et al., 2005) as well as recent synthesis and conceptual works (raju et al., 2011; liao et al., 2011). liao et al. (2011) describe the evidence as overwhelmingly in favor of a positive relationship. ellis's (2006) meta-analysis shows that approximately 10% of performance variation in u.s. firms is due to a market orientation. however, there are scattered results indicating a negative or no relationship between market orientation and performance (kirca et al., 2005). therefore, we pose the following hypotheses: h5: the more post-recession market oriented (h5a post-recession customer oriented, h5b postrecession competitor oriented, h5c post-recession interfunctionally coordinated) a firm, the higher its post-recession financial performance hansen and nybakk — when innovativeness determines market orientation: the forest sector and the great recession 5 1.3 methods in the following sub-sections we explain the methods employed in the study. first, we explain the sample frame and sampling methodology. next, we discuss the various steps involving measurement, questionnaire pretesting, pilot testing, and data collection. we then describe the analyses conducted to address study objectives. 1.3.1 sampling and sample frame data in this study come from manufacturers with fifty or more employees in the us wood products manufacturing (sic 24) sector. a database from the north american industrial classification association includes 976 firms from throughout the us. the database also includes information about firm size, year the firm was founded, and contact information of ceo/owner, our target respondent. for corporations that have multiple manufacturing sites, firm-level information is used since sbu and firm level cultures can differ (deshpande & webster, 1989; homburg & pflesser, 2000). 1.3.2 measures post-recession financial performance: post-recession financial performance is assessed by adapting subjective measures that are recommended and used in a number of previous studies (e.g. nybakk & jenssen, 2012; morgan & strong, 2003; beal, 2000; dess & robinson, 1984). the following four items representing different aspects of financial performance are used: return on sales, sales growth rate, after tax return on assets, and gross profit margin. respondents compare their firm to the rest of the industry and judge within which quintile their firm resides. respondents rate their firm based on how it compares with competitors in the industry using a 5-point scale where 1=the lowest 20%, 2=the next highest 20%, 3=the middle 20%, 4=the next highest 20%, and 5=the highest 20%. their ratings are based on calendar year 2012. post-recession market orientation: a 15-item, threedimension scale adapted from the work of narver and slater (1990) and lukas and ferrell (2000) is used. items for the three dimensions (customer orientation, competitor orientation, and interfunctional coordination) are randomized in the questionnaire. each of the five points of the interval scale are labeled where 1=not at all, 2=to a small extent, 3=to a moderate extent, 4=to a great extent, and 5=to an extreme extent. pre-recession innovativeness: pre-recession innovativeness is measured using an adaptation of the scale developed by knowles et al. (2008) and validated by crespell et al. (2008). the scale accounts for creation and adoption of product, process, and business systems innovations. each dimension is represented by four items. a 5-point, likert scale is used with respondents providing their evaluation of the innovativeness of their firm during the pre-recession years (see appendix 1 for a list of items). 1.3.3 data collection the questionnaire was pre-tested with four industry managers and one university extension specialist intimately familiar with the sector, resulting in only minor alterations. data were collected in early 2013, via mail survey, following the general principles of the tailored design method (dillman, 2007). after accounting for undeliverables, a total of 941 questionnaires were sent and 142 valid responses were received for an adjusted response rate of 15.1%. this is slightly higher than the average number of responses in studies summarized by raju et al. (2011), indicating an acceptable database size for market orientation-focused research. the potential for non-response bias is tested two ways. first, we compare early (n=47) versus late (n=34) respondents (armstrong & overton, 1977) using data from the list provider with respect to firm size measured by sales and number of employees; no significant differences are found. we also compare all respondents (n=142) and all non-respondents (n=799) on the same two metrics with no indication of differences, suggesting non-response bias is not a significant concern for this study. 1.3.4 data and analysis all statistical analyses were conducted in spss 21. in the first step, the data were thoroughly error checked. next, exploratory factor analysis was conducted for identifying potential cross loadings. based on this analysis, process and business systems innovativeness were combined into one dimension, process & business systems innovativeness. as a result, the hypotheses were accordingly changed. table 1 outlines the alterations made in stated hypotheses. in addition, several market orientation items were deleted (appendix 1). reliability analyses for all latent variables was tested using cronbach’s alpha, corrected item-total correlation 6 bioproducts business 1(1) 2016 and cronbach’s alpha if item deleted (appendix 1). all latent variables were acceptable, with the cronbach’s alphas higher than 0.7. for further details on analysis please see hansen (2014). based on these findings, new composite variables were calculated using the mean of all remaining items in each variable. table 2 provides basic information about study constructs. even though the sample frame was designed to exclude firms with fewer than 50 employees, over 20% of responses came from such companies. this may have been a result of workforce reductions due to the gfc. using data from the list provider, responding firms average $38 million in annual sales and 380 employees. 1.4 results and discussion ols regression was used to test the hypotheses. results of regression analyses are shown in table 3 (h1-h4) and table 4 (h5). firm size is used as a control variable but has no significant impact. with respect to pre-recession innovativeness and its impact on post-recession market orientation, product innovativeness was significant only with respect to customer orientation (table 4). being product innovative means a propensity to adopt and create new products. to do so successfully requires close interaction with customers in order to assure that the product meets customer needs. in responding companies, product innovativeness results in an enhanced customer orientation. the combined innovativeness dimension of process & business systems was positively and significantly related to competitor orientation and interfunctional coordination. because this aspect of innovativeness is heavily influenced by manufacturing processes, it is likely that innovative firms are creating and/or adopting machinery that increases fiber recovery or throughput and this may be motivated by meeting the actions of competitors, given the commodity product nature of the sector. various departments in responding companies may be well-coordinated with respect to production table 1: proposed and altered study hypotheses proposed hypotheses hypotheses subsequent to change in dimensions h1a: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher level of post-recession customer orientation unaltered h1b: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher level of post-recession competitor orientation unaltered h1c: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher level of post-recession interfunctional coordination unaltered h2a: forest sector firms with higher pre-recession process innovativeness are able to achieve a higher level of post-recession customer orientation h2a: forest sector firms with higher pre-recession process & business systems innovativeness are able to achieve a higher level of post-recession customer orientation (combined with h3a) h2b: forest sector firms with higher pre-recession process innovativeness are able to achieve a higher level of post-recession competitor orientation h2c: forest sector firms with higher pre-recession process innovativeness are able to achieve a higher level of post-recession interfunctional coordination h2b: forest sector firms with higher pre-recession process & business systems innovativeness are able to achieve a higher level of post-recession competitor orientation (combined with h3b) h3a: forest sector firms with higher pre-recession business systems innovativeness are able to achieve a higher level of post-recession customer orientation h3b: forest sector firms with higher pre-recession business systems innovativeness are able to achieve a higher level of post-recession competitor orientation h2c: forest sector firms with higher pre-recession process & business systems innovativeness are able to achieve a higher level of post-recession interfunctional coordination (combined with h3c) h3c: forest sector firms with higher pre-recession business systems innovativeness are able to achieve a higher level of post-recession interfunctional coordination h4a: the more pre-recession product innovative a firm, the higher its post-recession financial performance unaltered h4b: the more pre-recession process innovative a firm, the higher its post-recession financial performance h4b: the more process & business systems innovative a firm, the higher its post-recession financial performance (combined with h4c)h4c: the more pre-recession business systems innovative a firm, the higher its postrecession financial performance h5a: the more post-recession customer oriented forest sector a firm, the higher its post-recession financial performance unaltered h5b: the more post-recession competitor oriented a firm, the higher its postrecession financial performance unaltered h5c: the more post-recession interfunctionally coordinated a firm, the higher its post-recession financial performance unaltered hansen and nybakk — when innovativeness determines market orientation: the forest sector and the great recession 7 processes and goals as a result of their process & business systems innovativeness. an unexpected finding with respect to the role of innovativeness on performance is that product innovativeness was non-significant and negative. given the non-significant value, the negative relationship should be interpreted with caution, but it may be explained by the recessionary period when it was unlikely that firms were able to extract significant revenue from their new product development efforts. if recessionary periods could be predicted, firms may be wise to reduce investments in this area prior to oncoming recessions. an alterna table 2: descriptive statistics of and correlations among study constructs constructs mean sd 1 2 3 4 5 6 71) 1) pre-recession process & business systems innovativeness 3.09 .93 1 .503** .138 .278** .274** .312** .025 2) pre-recession product innovativeness 2.99 .96 1 .199* .195* .215 .055 -.108 3) customer orientation 3.89 .53 1 .361** .491** .135 -.104 4) competitor orientation 3.42 1.02 1 .359** .227* .087 5) interfunctional coordination 3.65 .61 1 .090 -.028 6) performance 3.42 1.0 1 .079 7) size ( measured as sales) 1 * correlation significant at the 0.05 level ** correlations significant at the 0.01 level pearson correlation, 1) = spearman’s rho correlation table 3: impacts of pre-recession innovativeness on post-recession market orientation and post-recession financial performance post-recession customer orientation post-recession competitor orientation post-recession interfunctional coordination post-recession financial performance sales (control variable) -.07 (-.07) .10 (.24) .02 (.85) .06 (.52) pre-recession product innovativeness (h1a-c, h4a) .20 (.04)* .10 (.28) .12 (.23) -.16 (.15) pre-recession process & business systems innovativeness (h2a-c, h4b) .04 (.69) .22 (.02)* .22 (.02)** .40 (.00)** r2 .058 .092 .086 .120 * significant at the 0.05 level ** significant at the 0.01 level p-values in parentheses table 4: impacts of post-recession market orientation on postrecession financial performance performance sales (control variable) .07 (.48) post-recession customer orientation (h5a) .07 (.53) post-recession competitor orientation (h5b) .20 (.06) post-recession interfunctional coordination (h5c) -.02 (.87) r2 .06 * significant at the 0.05 level ** significant at the 0.01 level p-values in parentheses tive explanation can be based on the work of tsai and yang (2013) in which they show innovativeness being detrimental to performance for firms in a low market turbulence and high competitive intensity context, a setting that fits many forest sector firms. the most relevant insight for the forest sector from tsai and yang (2013) is that high, price-based competition results in customers paying less attention to differences in product features. as a result, there is little reward available for introducing product innovations. on the other hand, process & business systems innovativeness is significantly related to performance in our responding firms. for many forest sector firms, raw materials (often logs) constitute a very high proportion of total costs. for example, log costs for a sawmill can represent as much as 80% of total costs. this rather unique context may help explain the importance of process & business systems innovativeness to firm performance. as this dimension is a combination of the original process innovativeness and business systems innovativeness dimensions, manufacturing processes are an important part of this form of innovativeness. a high focus on manufacturing processes is well established for this industry sector (toppinen et al., 2014) and it has been suggested 8 bioproducts business 1(1) 2016 that business systems innovations are an appropriate pathway to improved performance for many forest sector firms traditionally focused on manufacturing processes and cost reduction. gibb and haar (2010) find that in times of high competition, such as during the gfc, firms should engage in innovative activities and risk taking to enhance performance. although this study did not consider risk taking behavior, the findings are partially congruent with respect to process & business systems innovativeness, but not with product innovativeness. contrary to much of the extant research findings (grinstein, 2008; ellis, 2006; kirca et al., 2005), post-recession market orientation in our responding firms did not positively impact post-recession firm performance (see table 5). this finding is not unprecedented (liao et al., 2011), but relatively rare across samples, industry sectors, etc. earlier research on forest sector firms provides evidence of a positive impact of market orientation on firm performance (hansen et al., 2006b; narver & slater, 1990). the difference from past findings may be a result of the gfc. as mentioned earlier, the market for many forest sector firms shrank dramatically during the gfc, and the parallel housing crisis that saw housing starts fall by nearly 80%. in another study of the sector during the same timeframe, approximately 60% of responding firms indicated a decrease in financial performance while over thirty percent reported no change and less than five percent indicated an increase. on average, the reported change in performance was significantly negative (hansen et al., 2013). the customer orientation component of market orientation has been shown to be particularly important for small firms because it helps them compete with larger firms (brockman et al., 2012), but in our results the relationship was insignificant. in the brockman et al. study, customer orientation was no longer significant at lower levels of innovativeness. this could be true for our sample since the overall values for innovativeness were rather low and could help explain the non-significant finding. as outlined by brockman et al. (2012, p. 439), “firms with lower levels of innovativeness will not receive performance benefits from customer orientation either, possibly because they are unable to grasp new concepts and approaches.” an overview of hypothesis testing is provided in table 5 below. 1.4.1 study implications this study contributes to the market orientation and innovativeness literatures by examining the dynamics of forest sector firm reactions to the gfc and the followon effects to market orientation and firm performance. we introduced a temporal element to the relationships between market orientation and innovativeness, but a table 5: overall results of hypothesis testing hypotheses result h1a: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher level of post-recession customer orientation supported h1b: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher level of post-recession competitor orientation rejected h1c: forest sector firms with higher pre-recession product innovativeness are able to achieve a higher level of post-recession interfunctional coordination rejected h2a: forest sector firms with higher pre-recession process & business systems innovativeness are able to achieve a higher level of post-recession customer orientation rejected h2b: forest sector firms with higher pre-recession process & business systems innovativeness are able to achieve a higher level of post-recession competitor orientation supported h2c: forest sector firms with higher pre-recession process & business systems innovativeness are able to achieve a higher level of post-recession interfunctional coordination supported h4a: the more pre-recession product innovative a firm, the higher its post-recession financial performance rejected h4b: the more process & business systems innovative a firm, the higher its post-recession financial performance supported h5a: the more post-recession customer oriented forest sector a firm, the higher its post-recession financial performance rejected h5b: the more post-recession competitor oriented a firm, the higher its post-recession financial performance rejected h5c: the more post-recession interfunctionally coordinated a firm, the higher its post-recession financial performance rejected hansen and nybakk — when innovativeness determines market orientation: the forest sector and the great recession 9 more robust, time-series design would allow further insights into the evolution of relationships among study variables across business cycles. our results provide insights for scholars as we move towards an enhanced understanding of the dynamic relationship between innovativeness and market orientation and their impact on firm performance. the existing innovation knowledge base does not provide good guidance for managers to develop their innovation pathways (hansen & bull, 2010) and the results of this work are challenging to translate into managerial actions. the level of market orientation in a firm is largely within the control of firm managers (kohli & jaworski, 1990) and a host of research, both within and outside the forest sector, suggests that increases in market orientation will translate to enhanced firm performance. in fact, song and parry (2009) suggest that in times such as the gfc with high market turbulence and competitive intensity, an increased focus on market orientation is especially beneficial. given this background, results of the current research are especially perplexing from a managerial perspective. we expect that the gfc was such an anomaly, such an extreme event, that the general findings from past research did not hold true. an evolution in strategic thinking and the approach to marketing has occurred in recent years in forest sector firms (han & hansen, 2016; toppinen et al., 2014; hugosson & mccluskey, 2009) and we suggest that, despite current findings, an increased focus on customers and competitors accompanied with careful dissemination and use of information about each across the firm remains an advisable path. what is consistent and clear from our findings is that process & business systems innovativeness is important for the financial performance of forest sector firms. while manufacturing process innovation has been the norm within the sector for many years (hansen et al., 2014; crespell et al., 2006), our results emphasize the need to maintain this focus as well as further develop efforts with respect to business systems innovations. given the contribution to performance during the gfc and results from previous research focused on the sector, process & business systems innovativeness can be expected to positively impact performance regardless of stage of business cycle or the general state of the economy. on the other hand, product innovativeness does not appear to positively contribute to financial performance in the sector, suggesting that firms should not concentrate in this area. we speculate whether this reflects a sector that is still emerging from a production orientation and has yet to develop the refined capabilities needed to capitalize on new product development efforts (stendahl et al., 2007). firms that lack intimate customer knowledge struggle to recognize customer needs and therefore struggle to create new products that meet those needs (alberti & pizzurno, 2013). both of these areas may deserve improvement across forest sector firms. 1.4.2 limitations and future research the response rate in this study is low, but is reflective of other survey research among us forest sector companies. connected to the low response is the small number of total responses which impacted our analysis alternatives. however, the total number of responses is not significantly different from similar recent work (e.g. forsman & temel, 2011). our data fails to include firms that went out of business during the gfc and therefore gives no insight into the market orientation or innovativeness focus of those companies. insights into the actions of failed firms during the timeframe of the gfc could provide, perhaps, the most insight regarding the impacts of market orientation and innovativeness on firm performance. for example, was it the most or least innovative companies that were most likely to fail during the recession? given the fact that market orientation did not positively impact firm performance in this study, did failed companies over-invest in becoming market oriented? we have attempted to introduce a temporal element into this study, but this is limited by the fact that the same respondent provided data for both and their ability to accurately recall prior events is an open question. true time series data is needed to begin determining causality among market orientation, innovativeness, and firm performance. 1.5 references agarwal, s., erramilli, m. k., & dev, c. s. 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(2005). firm orientations, innovativeness, and business performance: advancing a system dynamics view following a comment on hult, hurley, and knight's 2004 study. industrial marketing management, 34(3), 275-279. 12 bioproducts business 1(1) 2016 appendix 1: constructs and construct reliability corrected item-total correlation cronbach’s alpha if item deleted post-recession customer orientation, cronbach’s alpha = .73 we constantly monitor our level of commitment and orientation to serving customers’ needs .494 .677 our business objectives are driven primarily by customer satisfaction .481 .687 our strategy for competitive advantage is based on our understanding of customer needs .535 .655 our business strategies are driven by our beliefs about how we can create greater value for customers .556 .639 we measure customer satisfaction systematically and frequently deleted we give close attention to after-sales service deleted post-recession competitor orientation, cronbach’s alpha = .73 we rapidly respond to competitive actions that threaten us .482 .728 our salespeople regularly share information within our organization concerning competitors’ strategies .586 .608 top management regularly discusses competitors’ strengths and strategies .612 .574 we target customers where we have an opportunity for competitive advantage deleted post-recession interfunctional coordination, cronbach’s alpha = .70 all of our bus. functions (e.g. marketing/sales, mfgring, etc.) are integrated in serving the needs of our target markets .541 our managers understand how everyone in our business can contribute to creating customer value .541 all the departments in our company are responsive to each other’s needs and requests deleted we freely communicate information about our successful and unsuccessful customer experiences across our company deleted pre-recession process & bus systems innovativeness, cronbach’s alpha = .94 our company tends to be an early adopter of new manufacturing processes .762 .919 our company sees creating new manufacturing processes as critical to our success .806 .916 our company actively seeks new manufacturing processes from outside this organization .676 .926 when it comes to creating new processes, our company is far better than the competition .716 .922 our company tends to be an early adopter of new business systems .817 .915 our company actively develops in-house business systems solutions .689 .924 our company sees creating new business systems as critical to our success .805 .916 when it comes to creating new business systems, our company is far better than the competition .775 .918 pre-recession product innovativeness, cronbach’s alpha = .84 our company actively develops new products in-house .646 .800 our company actively seeks new products from outside this organization .613 .814 our company sees creating new products as critical to our success .751 .751 when it comes to creating new products, our company is far better than the competition .655 .796 post-recession performance, cronbach’s alpha = .94 return on sales .857 .923 sales growth rate .774 .949 after tax return on assets .909 .906 gross profit margin .899 .910 abstract a multi-stage deplhi-study was undertaken to explore key research questions and priorities regarding competitive advantage in the bioeconomy for the forest-based sector from the perspective of nordic forest economics researchers. the study started with a brainstorming event undertaken in plenum among the 62 participants at the biennial meeting of the scandinavian society of forest economics (ssfe) at oscarsborg, norway 26th-27th of may, 2016. this was followed up by a two-round delphi-study, with the first round in august-september 2016 and the second round in november 2016. the initial brainstorming during the ssfe 2016 meeting resulted in five named categories of key future research questions; innovation & innovation systems, collaboration, culture, consumers/customers, environmental scanning and with a sixth category termed miscellaneous. in a first delphi-round, respondents were asked to add new questions, edit or delete existing questions, and propose category changes. in the second delphi-round, respondents were asked to give priority to categories, subcategories and individual research questions. overall, research questions relating to policies for innovation and consumer attitudes/preferences received the highest priority. cross-sector collaboration by forest industry companies, a highly visible topic in the bioeconomy discourse, received surprisingly low priority, especially given its sparse coverage in the existing literature. finally, an exploratory literature review was conducted to select and illustrate forest sector research relevant to the categories of research questions identified in this study. keywords: bioeconomy, competitive advantage, delphi, research questions competitive advantage for the forest-based sector in the future bioeconomy – research question priority eric hansen1*, hans fredrik hoen2, and erlend nybakk3 1 professor of forest products marketing, department of wood science and engineering, oregon state university, 119 richardson hall, corvallis, or 97331. 2 professor forest economics and management, faculty of environmental sciences and natural resource management, norwegian university of life sciences, pobox 5003, n-1432 ås, norway. 3 professor of innovation and entrepreneurship, kristiania university college, pb 1190 sentrum, 0107, oslo, norway. * corresponding author: email: eric.hansen@oregonstate.edu; tel.: 541-737-4240. bioproducts business 3(2), 2018, pp. 15-28. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-002 1.0 introduction the dramatic change associated with globalization and the high economic growth of developing nations, especially china, may pale in comparison to the potential change accompanying a shift to the bioeconomy. the bioeconomy is an economy primarily based on renewable and recyclable resources (roos 2016) and a new era described as, “…the next wave in our economic development (kutnar 2016 p. 2).” the forest-based sector (fbs) has long dealt with significant negative environmental impacts of its operations, making major improvements over recent decades. however, climate change and a societal shift towards an economy with large cuts in net emissions of greenhouse gases presents a potentially prosperous pathway towards enhanced future competitiveness of the fbs. careful management of forest ecosystems and production of renewable materials may be a recipe for a highly successful future for the fbs, yet there is much still unknown regarding how the sector will embrace this opportunity (ollikainen 2014, roos and stendahl 2015). development and growth of the bioeconomy presents an opportunity for fbs firms to diversify product offerings and move away from heavy reliance on stagnant markets for mature products. it is an opportunity for the sector to move from being seen as an “extractive” sector to an “attractive” sector in the eyes of global, environmentally oriented investors and consumers (toppinen et al. 2017a). the common theme for bioproducts is an expected or perceived superior environmental profile compared to alternatives based on fossil resources. 16 bioproducts business 3(2) 2018 some claim that the industry must transform in order to be a player in the new markets of the bioeconomy (chambost et al. 2009), but there are many hurdles along the path to transformation. perhaps most significant is a traditional culture in a mature industry that tends to rely on low costs to be competitive (bull et al. 2015, pätäri et al. 2011, chambost et al. 2008). what, in practice, might a more competitive fbs look like? with this question in mind, we sought to identify the key research questions regarding competitive advantage in the bioeconomy for the fbs from the perspective of nordic forest economics researchers. research leading to insights regarding future competitive advantage is essential to informing the transformation efforts of fbs companies as they strive to enter the future bioeconomy. surprisingly, despite its common use in the literature, the term competitive advantage has not been concretely defined within the forest sector literature. this has led to an effort to summarize recent research focused on competitive advantage to gain a better understanding of the issue (korhonen et al. 2018). while a precise definition is often missing in the literature, the key issue for competitiveness or competitive advantage is that, “… competitiveness implies that companies are able to produce goods and services more efficiently and/ or effectively than their competitors (iraldo et al. 2011 p.212).” competitiveness has also been described as the capability to capture the market (gupta et al. 2016). in practice, competitive advantage is what allows a company to be successful in the market. that advantage can arise from such factors as lower costs, strong brands, better service, etc. it is expected that development of the bioeconomy will result in increased demand for bio-based raw materials, especially wood. increased demand for its raw materials means that the fbs will require enhanced competitiveness to retain viability. to the best of our knowledge, this research is the first of its kind in the fbs-literature. we rely on the collective expertise of a professional body of forest economists from across europe, but especially from the nordic countries. the nordic region of europe, where the fbs plays a significant role in national economies, is highly focused on development of the bioeconomy. in practice this means that governments and researchers currently have a high interest and engagement in the bioeconomy (e.g., pelli et al. 2017, gabrielsson et al. 2010). the concept of the bioeconomy, research on the topic, and governmental policies supporting it can be argued to be centered in europe (e.g., fstp undated, ec 2011) and forest economists have a traditional interest in industry competitiveness issues (e.g., uusivuori 2002). in addition, a recent article emphasizes the need for social science research to further develop the bioeconomy (kleinschmit et al. 2014). therefore, our objective for this research is to provide an up-to-date and well-informed description of competitive advantage research priorities for a fbs aspiring to a bright future in the bioeconomy. 2.0 methods the overall process for identifying and prioritizing research questions is depicted in figure 1. identification of key research questions regarding competitive advantage for fbs firms in the future bioeconomy began as part of the may 2016 biennial meeting of the scandinavian society of forest economics (ssfe). ssfe has a 60-year history as a research-network. the ssfe-board consists of one member from each of the four nordic countries: denmark, finland, norway and sweden. following a presentation on the topic, the 62 participants were divided into 13 groups of four or five and assigned the task of identifying the “key future research questions regarding competitive advantage in the bioeconomy.” the authors assembled, eliminated duplicates, and separated the proposed research questions into the categories shown in table 1. the categories in table 1 were reported to the meeting participants. a detailed list of the original 32 items is provided in appendix a. participants were notified that a delphi-process would be used, involving the full mailing list of the ssfe, to further develop the research question set. delphi is a multi-stage survey technique designed to gain agreement or consensus among a group of experts on a particular issue (keeney et al. 2011, linstone and turoff 2002). the delphi method includes several rounds of inquiry and feedback of statements of earlier rounds while reconsidering the topic (landeta 2006, linstone and turoff 2002, toppinen et al 2017b). the number of panelists typically varies from a few to 50 and the experts are selected due to their expertise and knowledge on the topic (hatcher and colton 2007). the method is proven to be useful to seek new perspectives, and furthermore, achieve consensus among multiple respondents (linstone and turoff 2002). in our case, the group work completed at the ssfe meeting essentially substituted for a first delphi round. hansen et al. — competitive advantage for the forest-based sector in the future bioeconomy – research question priority 17 the delphi process was modeled after studies in medical science designed to develop research priorities (e.g., tiernan et al. 2014, simpson et al. 2014, stefanidis, et al. 2012, keeney et al. 2011) as well as recent forestry studies (näyhä and pesonen 2012, panwar and hansen 2009, pätäri et al 2016, toppinen et al 2017b). delphi is a tool that involves seeking the input of a group in an iterative fashion. the number of stages utilized may vary based on the problem at hand and the number of iterations are generally left to the judgement of the researchers (keeney et al. 2011). in the first round of the delphi process the categorized list of research questions, as presented in appendix a, was sent in a microsoft word document to each individual on the mailing list of ssfe as of may 2016 (total number of 277 individuals minus 15 incomplete addresses). each member was requested to, using the track changes function, add research questions and/or edit or delete the existing questions. in addition, they were invited to change the categorization or propose new categories. the request was sent on august 15th, 2016 and several rounds of reminders followed. the first round was closed on october 3rd and the author team consolidated the responses, using their judgement to resolve any conflicting opinions among respondents. a total of 29 individuals responded to our request corresponding to a response rate of approximately 11%. although several additional categories were proposed by respondents, there was little consistency among suggestions, so we chose to maintain the original category set. there were many new research questions suggested, resulting in a list of 140 items. after careful consideration we deleted a total of nine items because we could not understand the authors’ meaning. once we reached consensus on the remaining 131 items (appendix b) we did a complete copy-edit of the items for english usage and to assure they were in the form of a question. given the large number of items that were added, we chose to add sub-categories to facilitate the next round of data collection. in other words, we introduced subcategories in order to create “bite-size” chunks or sets of items that respondents could evaluate, rather than being faced with an endless list of 131 items. creation of sub-categories and assignment of each item was an iterative process among the authors including three rounds of reallocation taking place. this resulted in the reassignment of 22 items to categories where they better fit. once in agreement with the sub-categories and item assignment, we created an electronic questionnaire designed to assess the priority of each research question (item). once again we went to the complete mailing list of ssfe with the request for each individual to rate each item on a 5-point scale ranging from 1=low priority to 5=high priority. respondents also ranked categories as well as sub-categories with respect to importance. in total we received 32 complete responses in this second round for a response rate of 12.1%. an informal literature search was conducted based on the final categories and sub-categories identified in this research. example articles (limited to refereed journals) were selected via google scholar searches and the knowledge of the authors. the purpose of this exercise table 1. categorization of research questions developed at the 2016 biennial meeting of ssfe. innovation & innovation systems1 (5 research questions) collaboration (6 research questions) culture (4 research questions) consumers/customers2 (6 research questions) environmental scanning (5 research questions) miscellaneous (6 research questions) 1 abbreviated in text as “innovation” 2 abbreviated in text as “consumers” analyses of all data collected 13 expert groups iden�fied key research ques�ons assembled, eliminated duplicates and categorized research ques�ons presented and received feedback on categorizes design the first round ques�onnaire based on the qualita�ve expert group work 1st delphi round design of the second ques�onnaire based on the 1st delphi round 2nd delphi round figure 1. modified delphi process. 18 bioproducts business 3(2) 2018 [innovation & innovation systems] are the categories that appear to have higher priority with policies for innovations and consumer attitudes/preferences receiving the highest priority within each of these two sub-categories. furthermore, the category innovation has the lowest standard deviation (0.48) and policies for innovations has the lowest standard deviation (0.51) among the sub categories, indicating a consistency in the ranking of this (sub) category. the mean scores for the 131 research questions range from a high of 4.28 and a low of 2.47 (table 3 & appendix b). only four of the top scored questions had a mean more than ± 1 standard deviation away from the expected mean of 3.0. at the opposite end, none of the lowest rated questions had a mean score more than ± 1 standard deviation away from the expected mean of 3.0. table 3 shows the top ten research questions based on their mean score. this does not imply statistically significant differences between these questions and the other 121 questions, but is instead provided as an illustration of the types of research questions that were given a high priority by respondents. similar to overall results, innovation and consumers were the most common categories represented within the top 10 research questions. nine of the ten research questions represented these two categories while one research question belonged to (cross-sectoral) collaboration. the most common sub-categories represented by research questions in table 3 are, innovation: policies for innovation and consumers: attitudes and preferences. how policy and consumer attitudes and perceptions impact the ability of the fbs to effectively compete in the bioeconomy are thus of high interest among nordic forest economists. somewhat surprising is that various research questions related to collaboration were not rated as a higher priority. discussions and forums around the bioeconomy heavily emphasize cross-sector collaboration as a means for the fbs to become more competitive. while some work shows an industry with a positive attitude toward collaboration (hämäläinen et al. 2011) other work shows industry lacking collaboration, even within the sector (orozco et al. 2013). tables 4-8 provide an overview of the various categories and sub-categories, combined with a selection of examples of recent fbs articles in the area. selection of articles in tables 4-8 is based on informal google table 2. overall means for categories and sub-categories. categories and sub-categories mean sd innovation [innovation & innovation systems] 3.37 0.48 organizing and facilitating processes 3.47 0.53 efficiency and effectiveness of processes 3.17 0.68 policies for innovations 3.67 0.51 misc 3.09 0.75 collaboration 3.27 0.67 cross-sector 3.40 0.80 general collaboration 3.14 0.75 misc 3.19 1.02 culture 3.26 0.79 customer orientation 3.28 0.94 misc 3.24 0.76 consumers [consumers/customers] 3.41 0.73 attitudes/preferences 3.48 0.76 communication 3.35 0.90 misc. 3.32 0.82 environmental scanning 3.31 0.67 change 3.49 0.87 risk 3.47 0.80 sustainability 3.22 0.81 misc 3.23 0.77 misc. 3.03 0.75 was for illustration only. the results provide perspective on whether and how the current literature addresses the various categories, especially in the context of the bioeconomy. 3.0 results and discussion researchers completing the online questionnaire represented the following countries: denmark – 1, finland – 9, iceland – 2, norway – 7, sweden – 8, and “other” – 5. the other categories consisted of the united states, estonia, germany, france, and italy. table 2 provides overall means for both categories and sub-categories. given the small differences among means relative to standard deviations, it is unlikely that there are pronounced statistical differences among categories. only for one sub-category, namely policies for innovations, the mean score is more than ± 1 standard deviation away from the expected mean of 3.0. still, we believe the relative ratings provide some insight into the priority that nordic forest economists place on various categories of research questions. consumers [consumers/customers] and innovation hansen et al. — competitive advantage for the forest-based sector in the future bioeconomy – research question priority 19 table 3. high priority research questions regarding competitiveness in the bioeconomy. ranking sub-category* item mean sd 1 4 what are the key regulations, policies, technologies, and socio-economic trends that affect the forest bioeconomy? 4.28 0.81 2 4 how do alternative scenarios with regulations, policies, technologies, and socio-economic trends affect the future opportunities of the forest bioeconomy? 4.16 0.92 3 14 how do consumers form attitudes around forests, forestry, forest products, and/or the bioeconomy in different consumer markets? 4.09 1.00 4 4 what types of policy environments foster innovations – and what types do not? 3.94 0.91 5 2 how can the uptake of innovations throughout society (end-users, industries, academia) be facilitated? 3.88 0.91 6 7 how can the forest-based sector better connect what is already ongoing in other sectors? 3.88 1.18 7 3 what can be learned from successful firms in terms of innovation and creativity? 3.84 0.99 8 14 what are the factors influencing changes in consumer preferences (e.g., the role of information)? 3.84 1.14 9 14 what impacts consumer preference for bio-based products? 3.81 1.15 10 16 how should environmental performance of products be measured and presented to enable industry and end-consumers to make sustainable choices? 3.81 0.90 *2=innovation: organizing and facilitating processes, 3=innovation: efficiency and effectiveness of processes, 4=innovation: policies for innovations, 7=collaboration: cross-sector, 14=consumers: attitudes/preferences, 16=consumers: misc. table 4. the category “innovation”, sub-categories (with the two highest ranked questions listed), a description, and relevant publications. category: innovation general description of sub-category relevant previous publications organizing and facilitating processes how can the uptake of innovations throughout society (end-users, industries, academia) be facilitated? focuses on how research and development and innovation are organized, including ways of stimulating innovation. hansen et al. 2015 romero et al. 2009 klenk & wyatt 2015 how can downstream customers, users and beneficiaries be involved in innovation? efficiency and effectiveness of processes what can be learned from successful firms in terms of innovation and creativity? focuses on the impacts of research and development and where innovations are likely to come from. laukkanen et al. 2016 hämäläinen et al. 2011 bull & ferguson 2006how does r&d impact firm profitability? policies for innovations what are the key regulations, policies, technologies, and socio-economic trends that affect the forest bioeconomy? focuses on how innovation can be supported in the policy environment. ludvig et al. 2016 kleinschmit et al. 2014* white et al. 2013 how do alternative scenarios with regulations, policies, technologies, and socio-economic trends affect the future opportunities of the forest bioeconomy? misc. how can investments be attracted and risks managed in the bioeconomy? a broad set of research questions focused on innovation and not easily connected to the specified sub-categories. spetic et al. 2016 li & toppinen 2011 albert 2007*to achieve competitive advantage, what is the optimal interaction among humans, natural resources, and technology? * articles specifically addressing bioeconomy. 20 bioproducts business 3(2) 2018 table 6. the category “culture”, sub-categories, a description, and relevant publications category: culture general description of sub-category relevant previous publications customer orientation what can be done to encourage the entire value chain to be customer oriented? focuses on how to better connect with customers toppinen et al. 2013 hansen et al. 2006 rasmussen & nybakk 2016what makes some firms able to learn from and understand their customers? misc how can a culture of entrepreneurship be established in a mature industry? a broad set of research questions focused on culture kärnä et al. 2003 li & toppinen 2011 kubeczko & rametsteiner 2002does social responsibility lead effectively to competitive advantage? table 7. the category “consumers”, sub-categories, a description, and relevant publications category: consumers general description of sub-category relevant previous publications attitudes/preferences how do consumers form attitudes around forests, forestry, forest products, and/or the bioeconomy in different consumer markets? focuses on consumer attitudes, perceptions and buying decisions holopainen et al. 2014* kozak et al. 2004 gold & rubik 2009 what are the factors influencing changes in consumer preferences (e.g., the role of information)? communication how should firms communicate the benefits of biobased solutions to the public? focuses on how to communicate and the impact of media on consumers lähtinen et al. 2017 wilson 2009 aasetre 2006how can we move from unidirectional communication to dialogue with the public? misc how should environmental performance of products be measured and presented to enable industry and end-consumers to make sustainable choices? a broad set of research questions focused on consumers hansen et al. 2015 koskela 2015 räty et al. 2012 how can customers be integrated into product and service design and other value co-creation activities? * articles specifically addressing bioeconomy table 5. the category “collaboration”, sub-categories, a description, and relevant publications category: collaboration general description of sub-category relevant previous publications cross-sector how can the forest-based sector better connect what is already ongoing in other sectors? focuses on how cross-sectoral collaboration can be encouraged rametsteiner & weiss 2006 rusko 2011 ollonqvist 2008what type of environments connect, create, and promote cross-sectoral integration? general collaboration what are the mutual benefits that may enable sectoral partnerships? focuses on how to better connect with other actors lehoux et al. 2014 audy et al. 2012 cheng & sturtevant 2012how do collaboration and interdisciplinarity interact? misc how can the ideal, holistic of the bioeconomy, including a cradle-to-grave perspective and cross disciplinarity, be achieved? a broad set of research questions focused on collaboration de loë et al. 2016 how can the cultural differences among research fields be bridged? hansen et al. — competitive advantage for the forest-based sector in the future bioeconomy – research question priority 21 table 8. the category “environmental scanning”, sub-categories, a description, and relevant publications category: environmental scanning general description of sub-category relevant previous publications change which are the possible new sectors that will be part of the bioeconomy as it evolves via cross-sectoral processes? focuses on the what and how of changes in the external environment pelli et al. 2017* hurmekoski & hetemäki 2013 duchesne & wetzel 2003*what are the larger trends that promote or hinder transition to the bioconomy? risk what are recommended strategies for the sector and individual firms to manage policy risks? focuses on accounting for and minimizing risk näyhä & pesonen 2012* how are innovations affected by environmental risks? sustainability how will sustainability be defined in the future bioeconomy context? focuses on the role of sustainability in competitiveness and how to best address sustainability pätäri et al. 2016* marchetti et al. 2015* what are the contributions of forestry and the forest industry to economic and social sustainability? misc. what are the environmental trade-offs in an efficient bioeconomy? a broad set of research questions focused on environmental scanning how can we develop a better understanding of the dependence on local factors for the tradeoff among different services provided by the forest? * articles specifically addressing bioeconomy. scholar searches and the judgement of the authors and is meant for illustration only. still, we heavily emphasized bioeconomy in our searches, so we believe that this aspect of the existing literature is well-covered. overall, (not specific to the bioeconomy) the categories and subcategories of research questions identified in this work are addressed in the existing literature. when specifically considering bioeconomy-focused work, coverage is less consistent with multiple categories and subcategories lacking representation. multiple bioeconomy articles are identified that represent the environmental scanning category, with sustainability and change sub-categories being best represented. the innovation category is also well-addressed by bioeconomy focused research. despite the emphasis on cross-sector collaboration in the bioeconomy discourse, we are unable to locate any research specifically addressing the bioeconomy and collaboration. the culture category is equally unaddressed. we find only one article investigating consumers and the bioeconomy (holopainen et al. 2014). there are articles that reference the green economy (e.g., räty et al. 2012) or the bioenergy economy (e.g., white et al. 2013), which have conceptual overlap. with the exception of holopainen et al. (2014), näyhä and pesonen (2012), and pätäri et al. (2016), the identified fbs/bioeconomy literature is conceptual in nature (table 9). this reflects the early-stage nature of research table 9. characteristics of identified forest-based sector, bioeconomy-focused literature. article country of origin* article type focus kleinschmit et al. 2014 sweden conceptual broad forest sector albert 2007 canada conceptual forest-based communities holopainen et al. 2014 finland empirical retail consumers pelli et al. 2017 finland conceptual/secondary services duchesne & wetzel 2003 canada conceptual canadian bioeconomy näyhä & pesonen 2012 finland empirical forest biorefineries pätäri et al. 2016 finland empirical pulp and paper industry marchetti et al. 2015 italy conceptual forestry *based on home institution of primary author 22 bioproducts business 3(2) 2018 on the bioeconomy. the data for näyhä and pesonen and pätäri et al. is expert opinion collected through a delphi process while holopainen et al. data comes from final consumers in a retail setting. of the eight articles focusing on the bioeconomy, five are from nordic europe with four of these coming from finland. competitive advantage is directly addressed by näyhä and pesonen (2012) and referred to by kleinschmit et al. (2014), indicating that this critical concept for the future of the fbs is insufficiently addressed by academia. the research questions identified in this work, along with the current work shown in table 9 indicate a major knowledge gap and many opportunities for future research. 4.0 conclusions policy-related topics received high priority among our respondents. four of the top fifteen research questions are dealing with policy issues. this may reflect a tendency for economists to focus on policy issues and our results would likely have differed if a broader set of research fields were represented in our sample of respondents. still, the 131 items represent a huge diversity in topics and it must be remembered that there were not large differences among item priorities. despite the lack of coverage in the literature and the extent of emphasis it has received in bioeconomy policy documents, the low rating of collaboration topics was a surprising finding. perhaps this topic and the approach to its study is rather unfamiliar to our respondents. a potential limitation of our approach and results is that our respondents may have tended to prioritize research questions within their own expertise area rather than taking a broader view of where priorities should lie. we can only speculate about this issue since our methods did not allow for us to account for this potential issue. we can make no claims about representativeness of our sample and our response rates were low. however, as a first work of its kind, these results provide insight into a previously unexplored area, fbs competitive advantage and the bioeconomy. even with these limitations, our results give indication of the likely research directions of nordic forest economics researchers as well as identifies areas (e.g., collaboration) that may need extra emphasis for policy makers and funding agencies to assure broad coverage of the challenges facing the fbs as it faces entry into the bioeconomy. given the nature of national and international policies as well as ongoing work within the field, we predict a significant increase in fbs bioeconomyfocused literature in the short term with a shift away from largely conceptual pieces to empirical work. 5.0 literature cited aasetre, j. 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(2013). the role of governments in renewable energy: the importance of policy consistency. biomass and bioenergy, 57, 97-105. hansen et al. — competitive advantage for the forest-based sector in the future bioeconomy – research question priority 25 appendix a. original categorization of research questions prior to delphi process categories and research questions innovation & innovation systems is it more effective to seek innovations within established companies or startups? how to organize r&d for more support on competitive advantage? how do regulations, policies, technologies, and socio-economic trends affect forest bioeconomics? why are the established r&d platforms ineffective? how to stimulate creativeness in a business context – innovative, out-of-the-box thinking collaboration how to create inter-sectoral integration/overcome resistance (e.g., plastics) where to find cross-sectoral connections? how to “open up” to new sectors like health care? how to better integrate with other sectors to maximize potential value of the firm’s service positions? the role of collaboration and interdisciplinarity? why the lack of collaboration? consumers/customers how are consumer preferences changing regarding “greener solutions”? how to communicate to the public? how are attitudes formed around forestry? what are the factors influencing change in consumer preferences? what additional value customer would experience from bioeconomy-based products/services, now and in future? how to make customers willing to pay for being biobased? environmental scanning what are the signals of gradual change? building better foresight on risks and possibilities in political environment, including strategies to manage policy risks. sustainability monitoring, circular economy, and how to reveal the bioeconomy in statistics/data. what is happening in the competing sectors? what are the promising products from a sustainability perspective? culture how to get the entire value chain customer oriented? what makes some companies able to learn from and understand their customers? how to be more responsive to global developments? how can a company manage both “traditional” and “new” products and markets? misc. how can big data and ict be better utilized to drive market innovations and market development? how to produce “sustainable” products efficiently? finding competitive advantage through available raw materials, development of new technology, and cost-efficient operations. how to assess competitive advantages (methodology)? what can be learned from successful companies? how should risk be viewed/accounted for in business models? 26 bioproducts business 3(2) 2018 appendix b. full set of research questions, including means and standard deviations ranking category* item mean std 1 4 what are the key regulations, policies, technologies, and socio-economic trends that affect the forest bioeconomy? 4.28 0.81 2 4 how do alternative scenarios with regulations, policies, technologies, and socio-economic trends affect the future opportunities of the forest bioeconomy? 4.16 0.92 3 14 how do consumers form attitudes around forests, forestry, forest products, and/or the bioeconomy in different consumer markets? 4.09 1.00 4 4 what types of policy environments foster innovations – and what types do not? 3.94 0.91 5 2 how can the uptake of innovations throughout society (end-users, industries, academia) be facilitated? 3.88 0.91 6 7 how can the forest-based sector better connect what is already ongoing in other sectors? 3.88 1.18 7 3 what can be learned from successful firms in terms of innovation and creativity? 3.84 0.99 8 14 what are the factors influencing changes in consumer preferences (e.g., the role of information)? 3.84 1.14 9 14 what impacts consumer preference for bio-based products? 3.81 1.15 10 16 how should environmental performance of products be measured and presented to enable industry and endconsumers to make sustainable choices? 3.81 0.90 11 20 how will sustainability be defined in the future bioeconomy context? 3.72 1.28 12 21 what are the environmental trade-offs in an efficient bioeconomy? 3.72 1.22 13 19 what are recommended strategies for the sector and individual firms to manage policy risks? 3.71 1.10 14 14 how do firms become aware of consumer preference changes regarding “greener solutions”? 3.69 1.03 15 18 which are the possible new sectors that will be part of the bioeconomy as it evolves via cross-sectoral processes? 3.66 1.15 16 7 what type of environments connect, create, and promote cross-sectoral integration? 3.66 1.00 17 7 what are the emerging new sectors (e.g., nano, space) or emerging future needs (e.g., wellbeing, security)? 3.66 1.10 18 8 what are the mutual benefits that may enable sectoral partnerships? 3.66 0.87 19 2 how can downstream customers, users and beneficiaries be involved in innovation? 3.63 1.10 20 2 how can big data and ict be better utilized to drive market innovations and market development? 3.61 1.02 21 19 how are innovations affected by environmental risks? 3.61 0.99 22 2 how can r&d be organized for more effective support of competitive advantage? 3.59 1.07 23 4 how can policy design impact innovation systems, thereby stimulating industrial transformation? 3.59 0.98 24 11 what can be done to encourage the entire value chain to be customer oriented? 3.59 1.29 25 16 how can customers be integrated into product and service design and other value co-creation activities? 3.59 1.24 26 12 how can a culture of entrepreneurship be established in a mature industry? 3.58 1.23 27 2 how can mature forest firms be organized to become more innovative and open-minded? 3.56 1.13 28 5 how can investments be attracted and risks managed in the bioeconomy? 3.56 0.91 29 11 what makes some firms able to learn from and understand their customers? 3.56 1.22 30 18 what are the larger trends that promote or hinder transition to the bioconomy? 3.56 1.34 31 2 what are effective ways of stimulating creativeness in a business context, such as innovative, out-of-the-box thinking? 3.56 1.13 32 4 what is the role of public support to facilitate successful innovation systems? 3.55 1.03 33 14 are customers willing to pay for being biobased, and at what level? 3.55 1.26 34 20 what are the contributions of forestry and the forest industry to economic and social sustainability? 3.53 1.39 35 14 how can we identify motivation drivers of sustainable consumption and ways how to encourage consumers’ behavioral change? 3.53 1.08 36 23 what can be learned from successful firms (including other sectors and other types of operations) or society structures? 3.53 1.24 37 18 what are possible sources of radical changes in the external environment? 3.53 1.27 38 23 what is the role of digitalization in a future bioeconomy? 3.52 1.23 39 19 how are environmental change and risk influencing policy making? 3.52 1.23 40 12 does social responsibility lead effectively to competitive advantage? 3.50 1.16 41 12 how can attitudes and behavior be included in innovation and innovative systems to understand the possibility to change the culture of traditional systems (e.g., the use of alternatives like viscose, plastics)? 3.50 1.19 42 7 what conditions are needed to “open up” to new sectors like health care? 3.44 0.98 43 16 what are additional values customers would experience from bioeconomy-based products/services, now and in the future? 3.44 1.24 44 21 how can we develop a better understanding of the dependence on local factors for the tradeoff among different services provided by the forest? 3.44 1.01 *2=innovation: organizing and facilitating processes, 3=innovation: efficiency and effectiveness of processes, 4=innovation: policies for innovations, 5=innovation: misc., 7=collaboration: crosssector, 8=collaboration: general collaboration, 9=collaboration: misc., 11=culture: customer orientation, 12=culture: misc., 14=consumers: attitudes/preferences, 15=consumers: communication, 16=consumers: misc., 18=environmental scanning: change, 19=environmental scanning: risk, 20=environmental scanning: sustainability, 21=environmental scanning: misc., 23=misc. hansen et al. — competitive advantage for the forest-based sector in the future bioeconomy – research question priority 27 ranking category* item mean std 45 12 what should a firm do to effectively manage both “traditional” and “new” products and markets? 3.44 1.29 46 21 given the available raw materials and future new technologies, what bioproducts could have competitive advantage over non-bioproducts, and at what volumes could they be produced? 3.44 1.16 47 4 does policy uncertainty influence investment in product development/innovation? 3.41 1.16 48 16 how, utilizing new enabling technologies, is value created (co-produced and co-created) in the future bio-based economy? 3.41 1.34 49 21 is the forest area sufficient to cope with all competing land use demands, including bioeconomy, production of traditional forest products, nature conservation, recreation, etc.? 3.41 1.27 50 15 how should firms communicate the benefits of biobased solutions to the public? 3.41 1.04 51 18 how can firms become better at managing policy risks? 3.39 1.17 52 15 how can we move from unidirectional communication to dialogue with the public? 3.39 1.15 53 23 what are useful methodologies to assess competitive advantages in more dynamic operating environments? 3.39 0.99 54 20 how can data be analyzed to effectively determine sustainability? 3.38 1.16 55 9 can collaboration with business contribute to preserving ecosystem services and ensure competitiveness? 3.38 1.21 56 12 how can we move beyond linear, value-added chain processes to orchestration of value networks and to adaptive value systems which cannot be “managed” by a single player? 3.34 1.38 57 14 what is the overall legitimacy of the bioeconomy among members of the public? 3.34 1.10 58 14 how can heterogeneity in consumer preferences be accounted for? 3.34 1.23 59 14 how is value perceived and defined in a bioeconomy? 3.34 1.52 60 3 how does r&d impact firm profitability? 3.34 1.12 61 23 how can data be collected for improvement of integrated models of multiple-outputs production? 3.33 1.03 62 8 how do collaboration and interdisciplinarity interact? 3.32 1.30 63 14 what is the influence of sustainability as a product attribute on consumers’ buying decisions and willingness-to-pay? 3.31 1.15 64 15 how significant is media influence on consumers’ understanding and preferences? 3.31 1.20 65 20 what are the most promising recent advances in sustainability monitoring, circular economy, and statistics that biobased industries may use as information assets? 3.31 1.06 66 8 how can we solve competition and differences in status and power among firms that collaborate for common competitive advantage? 3.29 1.13 67 5 to achieve competitive advantage, what is the optimal interaction among humans, natural resources, and technology? 3.28 1.33 68 2 how can innovative ideas from individuals be promoted/supported/evaluated? 3.28 1.25 69 7 what kind of facilitation is needed to orchestrate effective co-creation across diverse actors? 3.28 1.08 70 11 who are the users and beneficiaries, and how do firms connect with their activities, needs, and “realities”? 3.28 1.37 71 3 what are comparative strengths and weaknesses of established firms and start-ups when pursuing innovations? 3.25 0.95 72 7 what is necessary to better integrate with other sectors to maximize the potential of the firm’s value proposition (tangible products and intangible services as solutions)? 3.25 1.24 73 23 how can we create new value propositions for bio-based products and services? 3.23 1.20 74 2 is the innovation process creating disadvantages for smes with low capital investment potential? 3.22 1.10 75 2 what part do pre-understandings, information and social interaction play in establishing an innovative system for competitive advantage? 3.22 1.04 76 4 what hampers and facilitates circular economy thinking and practice? 3.22 1.26 77 12 how can forest owners be included in firm(s) thinking and acting? 3.22 1.31 78 21 how can we increase efficiency in collection of data on provision of non-market goods and services to improve documentation of environmental effects? 3.22 1.07 79 23 how should risk be viewed/accounted for in business models? 3.22 1.24 80 23 what is the importance of a competitive forestry and forest industry in peripheral/rural areas? 3.22 1.26 81 4 what are the main factors for promoting new business options among private forest owners? 3.22 1.29 82 18 what are signals for monitoring and understanding gradual change in the external environment and how can they be identified? 3.19 1.22 83 5 what might be the “unexpected partnerships” that would help identify promising business solutions? 3.19 1.28 84 7 how can resistance to cross-sectoral collaboration be overcome? 3.19 1.06 85 11 how can reverse use of customer data be used for improved customer orientation and customer value co-creation in wood products marketing. 3.19 1.20 86 23 how can we develop and implement effective, efficient and simple policy measures without loopholes? 3.17 1.34 87 23 what does “digitalization” already mean in the forest-based sector context? 3.16 1.32 88 20 how can the three dimensions of sustainability can be addressed in the bioeconomy? 3.16 1.25 appendix b (continued) *2=innovation: organizing and facilitating processes, 3=innovation: efficiency and effectiveness of processes, 4=innovation: policies for innovations, 5=innovation: misc., 7=collaboration: crosssector, 8=collaboration: general collaboration, 9=collaboration: misc., 11=culture: customer orientation, 12=culture: misc., 14=consumers: attitudes/preferences, 15=consumers: communication, 16=consumers: misc., 18=environmental scanning: change, 19=environmental scanning: risk, 20=environmental scanning: sustainability, 21=environmental scanning: misc., 23=misc. 28 bioproducts business 3(2) 2018 ranking category* item mean std 89 16 how can new markets, including contracts that account for multiple outputs, interdependence, long time horizons, and imperfect information be developed? 3.16 1.25 90 7 how do we identify and establish key cross-sectoral connections? 3.16 1.25 91 20 can sustainability be regarded as a source of competitiveness? 3.16 1.19 92 19 how can foresight be used to better account for risks and possibilities in the political environment? 3.13 1.38 93 9 how can the ideal, holistic of the bioeconomy, including a cradle-to-grave perspective and cross disciplinarity, be achieved? 3.13 1.45 94 2 why are the established approaches to r&d ineffective in nurturing innovations? 3.13 1.04 95 20 how can promising bioproducts and services from a sustainability perspective be identified? 3.13 1.24 96 7 how can a firm, rethink its service positions when integrating with other sectors? 3.09 1.23 97 23 what are the opportunities and constraints of the bio-based forest sector in a platform/sharing economy? 3.06 1.26 98 8 what are the promises and drawbacks of interdisciplinary collaboration? 3.06 1.22 99 9 how can the cultural differences among research fields be bridged? 3.06 1.19 100 5 can increasing customer value, competitive advantage and resource efficiency through shifting from selling physical products to selling services help meet the triple bottom line? 3.06 1.32 101 11 what milieu models can be used for defining and predicting consumption behavior and respective market segments? 3.03 1.14 102 12 how can firms be more responsive to global developments? 3.03 1.20 103 16 how do location of production and location of consumption influence willingness-to-pay for bio-based products? 3.03 1.03 104 8 how can we handle a situation where a group of firms collaborate for common competitive advantage, but only one/ some of the firm(s) experience(s) an advantage? 3.03 1.15 105 11 how should the forest sector be “branded” through “storytelling” and “identity” and other models to reach customers? 3.03 1.43 106 12 is firm culture different in a bioeconomy compared to that of the present? 3.03 1.49 107 20 what are effective ways to monitor what is happening in competing sectors in terms of sustainability and csr? 3.00 1.16 108 23 what are the keys to finding competitive advantage through available raw materials, development of new technology, and cost-efficient operations? 3.00 1.29 109 12 how are a competitive firm’s employees led in the service business era? 2.97 1.38 110 14 how, if at all, can consumer preferences be interpreted as valuations of environmental consequences of production modes? 2.97 1.09 111 3 how is r&d related to internationalization expansion paths of firms? 2.94 0.95 112 14 how will changes in forest visitation among the public impact their attitudes? 2.94 1.27 113 20 how can we produce “sustainable” products efficiently? 2.94 1.15 114 20 is bioeconomy the most realistic and promising form of achieving higher levels of sustainability, compared to improving existing products and creating new materials? 2.91 1.40 115 23 how can we continuously link available raw materials, development of new technology, and cost-efficient operations? 2.90 1.30 116 3 how do r&d investments vary across business areas? 2.84 1.22 117 3 is it more effective to seek innovations within universities, institutes, established firms or startups? 2.81 1.15 118 12 how can we identify profession-based prejudices that constrain strategies (such as carbon neutrality)? 2.81 1.12 119 16 what is forest knowledge among members of generation y? 2.81 1.33 120 23 what are the key swot factors for bioeconomy sectors? 2.81 1.40 121 23 does the phenomenon competitive advantage change if it is an advantage for a) nature, b) society, c) a group of firms, d) a group of people, e) a single firm, b) an individual? 2.80 1.24 122 23 is it possible to understand and/or define the phenomenon “competitive advantage” without considering for whom or what the competitive advantage is an advantage for? 2.77 1.23 123 5 are current innovations connected to the bioeconomy capital intensive? 2.75 0.92 124 23 are privacy concerns a hindrance to innovations and societal development? 2.74 1.15 125 21 what part does environmental scanning have in establishing competitive advantage? 2.74 1.09 126 5 why has the fossil energy industry been extremely successful in terms of innovations? 2.69 1.33 127 23 are there differences in forest management activities, organizational structure, economic tasks, etc., among large forest management organizations? 2.68 1.25 128 21 how (by whom) are ecolabels created, and how are they used by firms and in marketing? 2.65 1.31 129 23 how can web-based business games help to solve research questions in the field of social science? 2.61 1.26 130 23 what is the phenomenon “competitive advantage”? 2.53 1.34 131 8 what are the reasons for the historical lack of collaboration? 2.47 1.24 appendix b (continued) *2=innovation: organizing and facilitating processes, 3=innovation: efficiency and effectiveness of processes, 4=innovation: policies for innovations, 5=innovation: misc., 7=collaboration: crosssector, 8=collaboration: general collaboration, 9=collaboration: misc., 11=culture: customer orientation, 12=culture: misc., 14=consumers: attitudes/preferences, 15=consumers: communication, 16=consumers: misc., 18=environmental scanning: change, 19=environmental scanning: risk, 20=environmental scanning: sustainability, 21=environmental scanning: misc., 23=misc. abstract the utilization of wood in long life products, such as construction materials in the built environment, is an effective way to optimize the use of natural resources while also reducing negative environmental impacts. however, the environmental benefits of timber, especially in the construction sector, are not always clearly understood. as a renewable material, timber is available in perpetuity if it is obtained from sustainably managed forests. using timber in the built environment stores sequestered atmospheric carbon dioxide in long-life products and timber can be incinerated at the end of its life (or its multiple lives) with energy recovery, thereby minimizing demolition waste. the built environment effectively acts as an extension of the forest. the question is: how should the environmental benefits of timber use be measured and presented? to answer that question, this paper offers an overview of the life cycle assessment (lca) methods the forest products sector could broadly apply to evaluate and report the sustainability performance of wood. in addition to environmental lca, the paper also incorporates an overview of organizational lca (o-lca), and social lca (s-lca). furthermore, this paper discusses environmental product declarations (epds) and construction standards aiming to enable better comparability of the environmental performance of products. this review paper concludes with a discussion of where the opportunities for the forest products sector lie and the need for joint actions within the sector. the importance of including the storage of sequestered atmospheric carbon dioxide into the standards assessing the environmental impact is emphasized. keywords: environmental impact, environmental product declaration (epd), forest products, life cycle assessment (lca), o-lca, product category rules (pcr), s-lca, wood life cycle assessment – opportunities for forest products sector andreja kutnar1,2 and callum hill3,4,5 1 university of primorska, titov trg 4, 600 koper, slovenia, andreja.kutnar@upr.si 2 innorenew coe, livade 6, 6310 izola, slovenia, andreja.kutnar@innorenew.eu 3 innorenew coe, livade 6, 6310 izola, slovenia, callum.hill@innorenew.eu 4 jch industrial ecology ltd., bangor, gwynedd, uk, enquiries@jchindustrial.co.uk 5 norwegian institute for bioeconomy research, postbox 115, ås 1431, norway acknowledgements: the authors acknowledge the support of cost action fp1407 and the european commission for funding the innorenew coe project (#grant agreement 739574) under the horizon2020 widespread-teaming program. furthermore, andreja kutnar is pleased to acknowledge the support of woodwisdom-net + and the slovenian ministry of education, science, and sport of the republic of slovenia for their support of the what we wood believe and cascading recovered wood projects; cash wishes to acknowledge support from the eu horizon2020 project number 636835 ‘isobio development and demonstration of highly insulating, construction materials from bio-derived aggregates’. furthermore, authors acknowledge jennifer deboer for her editorial assistance in finalizing this manuscript. bioproducts business 2(6), 2017, pp. 52-64. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-006 1 introduction wood is a natural, renewable, reusable, and recyclable raw material that can play an important role in minimizing negative effects on the climate and environment when it is sourced from sustainably-managed forests (hill 2011). forest biomass is currently the most important source of renewable energy and now accounts for approximately half of the eu’s total renewable energy consumption (ec 2013). wood products can contribute to climate change mitigation as they act as a carbon pool during their service lives by withdrawing co2 from its natural cycle. furthermore, wood products can substitute for more energy-intensive products (such as cement, steel, or aluminum) in the built environment and their inherent energy content can be recovered at the end of their service lives, substituting for fossil fuels when they are incinerated. however, it is important that the correct sustainability assessment tools are applied to better understand the benefits of using wood products. while wood-based products promise to offer economic, environmental and societal benefits, these kutnar and hill — life cycle assessment – opportunities for forest products sector 53 benefits need to be properly quantified. this requires using tools that can properly assess and compare sustainability benefits of different. wood-based products, from raw materials to intermediate and final products, need to be subjected to detailed life cycle assessment (lca), considering use and disposal or re-use to fully evaluate their claimed benefits. this is necessary to provide solid evidence for supporting policy decisions, such as policies to encourage building with wood, as well as to support claims of superior environmental credentials, particularly when compared with non-renewable materials. product quality standards, certification programs, environmental labelling, industry-led schemes, and communication tools are important to encourage demand and provide environmental information to consumers and other stakeholders. industries associated with non-renewable materials are putting considerable effort into conducting lcas and publishing environmental product declarations (epds) of their products; it is important that the forest products sector does not get left behind. lca is a tool that has been developed to analyze and quantify the environmental burdens associated with the production, use, and disposal of a product and is arguably the best way of quantifying this information (hill 2011). for the purposes of this review, the term product includes both goods and services. due to consumer pressure and government legislation at national and regional levels, the environmental impacts of products are increasingly coming into focus. many companies now make environmental claims about their products to boost sales and it is desirable to back up such claims with verifiable data which can be achieved by conducting lcas. this introduces a potential tension because companies tend to keep details of manufacturing secret, and lca process requires transparency. another use of conducting an lca is to reduce the environmental footprint associated with the manufacturing of a product. in this case, lca can be used as an analytical tool to identify where major environmental impacts arise and determine appropriate actions to reduce these impacts. a valuable outcome from an lca study is the identification of ‘hot-spots,’ which are parts of a process associated with the most significant environmental burdens, where investment in process improvements will result in the greatest environmental benefits. interest in lca grew rapidly during the 1990’s and generated high expectations, but also became the focus of criticism (ayres 1995, de haes 1993, ehrenfeld 1997, finnveden 2000, krozer and vis 1998). however, since the beginning of the 21st century, considerable progress has been made, including the development of international standards. there are also several international initiatives taking place with the aim of building consensus and developing robust methodologies. these include the life cycle initiative of the united nations environment program (unep), the society of environmental toxicology and chemistry (setac), the european platform for lca of the european commission (eplca) and the international reference life cycle data system (ilcd). life cycle assessment is not static and there are ongoing programs dealing with improving various aspects of this methodology (finnveden et al. 2009). it is important that the correct decisions are made regarding the choice of materials for the built environment and lca can be used as a means of informing those choices. however, it entails that lca is properly used and that decision support tools allow for accurate comparability between products (audenaert et al. 2012, ding 2008, forsberg and von malmborg 2004). the common lca methodology is defined in iso 14040 (iso 2006a) and iso 14044 (iso 2006b). since the 1980s, when lca analysis was first developed, numerous methodologies to classify, characterize, and normalize environmental effects have been developed. the most common are focused on the following environmental impact indicators: acidification, eutrophication, thinning of the ozone layer, various types of ecotoxicity, air contaminants, resource usage and green-house gas emissions. the lca methodology was originally developed for products. recently, however, its application at the organizational level is becoming more and more relevant, leading to the introduction of the so-called organizational lca (o-lca). this includes more than one product life cycle, as most organizations are engaged in many product life cycles to different degrees and a large part of organizations’ environmental impacts can reside outside the organization’s boundariesupstream and downstream in the value chain. guidance on o-lca is included in the technical specification iso/ts 14072 (iso 2014). iso/ts 14072 extends the application of iso 14040 and iso 14044 to all activities of the organization. o-lca also follows the four-steps defined in iso 14044. the main differences between lca and o-lca reside at the scope level and boundary definition (martínez54 bioproducts business 2(6) 2017 blanco et al. 2015a,b). in o-lca, the unit of analysis is the organization and its portfolio, which is unique for each organization. recent methodological developments have aimed at extending life cycle thinking to also evaluate social issues, referred to as social life cycle assessment (s-lca), and economic issues, referred to as life cycle costing (lcc), towards a complete and comprehensive life cycle sustainability assessment (lcsa). similar to lca, s-lca integrates traditional life cycle assessment methodological steps while having social impacts as its focus (sala et al. 2015). the basic phases of lca defined by iso 14044 are also applied in s-lca, including (i) scope and goal of the assessment; (ii) inventory of impacts; (iii) impact assessment with proper indicators (e.g., child labor, forced labor, health and safety, etc.); and (iv) interpretation of the results. these methodologies differ from the mere reporting of data, such as emissions from a factory, in that they consider the consequences of these activities on society. in this paper, lca of products as well as organizations are presented, aiming to deliver a comprehensive overview of environmental impact assessments to include assessments of environmental impact, social impact, and economic impact. the paper moves on to discuss the importance of these assessments in the context of the forest/wood products sector. 2 lca methodology to conduct an lca, it is necessary to determine the appropriate goal and scope (i.e. what is the purpose behind conducting a lca and what is being included in the study). the scope must define the system boundaries in the study and declare the functional unit. for many purposes, the system boundary can be defined as ‘cradle to gate,’ that is, from the manufacture of a specific product in a factory to the point at which it leaves the facility (corresponding to modules a1-a3 in the european standard en 15804 (cen 2012)). this provides the most accurate lca because this phase of a product life cycle involves the fewest assumptions and the data gathering process is relatively straightforward. however, a low impact product, as determined through a cradle to gate analysis, may require a lot of maintenance during the in-service phase of the life cycle, or there may be serious environmental impacts associated with disposal. a full appreciation and understanding of the environmental impacts associated with a product choice therefore requires the entire life cycle to be considered. this invariably introduces a higher level of uncertainty into the process because there may be aspects of the life cycle that are not well understood, thus requiring assumptions to be made. these assumptions may have a very significant impact upon an lca and a bias may be introduced if comparisons are being made between different products. defining the goal and scope involves writing a series of statements at the beginning of the process to tell the reader why the lca was performed, who is conducting the study, who the client is, and what is covered by the lca. it is at this stage that the system boundary is defined. for example, the purpose may be to conduct an lca of only the manufacturing process (i.e., cradle to factory gate) or of the entire service life. additional parts of the lifecycle, such as recycling and disposal, may also be analyzed. the purpose of the lca may simply be to report the environmental burdens associated with a product or process, referred to as an attributional lca, or to examine the consequences of changing various parameters or adopting different scenarios, referred to as a consequential lca (frischknecht and stucki 2010, gala and raugei 2015). it is also necessary to specify the subject of the lca. this is referred to as the declared unit if cradle to factory gate is being analyzed, or the functional unit if other parts of the lifecycle are also being studied. another important consideration when studying the environmental impacts associated with a product or process is the timescale involved and it is important that this is also defined at the preliminary stage. it is also a requirement to specify which allocation procedures will be used during the analysis. the life cycle inventory (lci) phase of the analysis requires a compilation of all information about the selected process. to do this, an imaginary system boundary is drawn around the process and all the material and energy inputs and outputs are quantified. this process is usually divided into the different life cycle stages, including manufacture, service life, end of life, and disposal. data gaps are identified once the lci phase of the analysis is complete. in some cases, it is possible to collect the missing data; where doing so is not possible, ‘reasonable’ assumptions must be made. during this phase, mass balance calculations are also performed. this is a very useful tool for identifying data gaps and is based on the principle that the mass of all matter gokutnar and hill — life cycle assessment – opportunities for forest products sector 55 ing into the system under study should equal that of all the matter exiting the system. at some stage, the data gathering process must be terminated and the point at which this occurs is determined by cut-off criteria. data falls into two principal categories: primary (foreground) and secondary (background) data. primary data is that which has been gathered by the lca practitioner and may include utility bills, delivery notes, and other information that is directly linked to the process. secondary data is that which has not been directly obtained, but is more generic in nature; for example, if wooden pallets are used to ship the product, then it is highly unlikely that a full inventory of the pallets would be made. this information may be sourced from a database, such as ecoinvent. the collection and analysis of data invariably leads to issues regarding commercial confidentiality, which can cause problems, especially when the lca must meet adequate levels of transparency to be credible. ultimately, what should result from such an analysis is a table, referred to as an input-output table that represents flows of materials and energy to and from the natural environment (i.e., the ecosphere). once the lci phase has been completed, it is necessary to quantify environmental burdens. this is called the life cycle impact assessment (lcia) phase. during this phase, there are several additional complications that should be considered. the biggest problem involves deciding how to report environmental impacts. there is ongoing discussion regarding how to properly report environmental burdens, but a consensus has been developing over the past decade or so. the objective involves aggregating environmental implications associated with flows to and from the natural environment into a small, but nonetheless meaningful, set of indicators. this methodology has essentially broken down into two main approaches, including midpoint and endpoint indicators (bare et al. 2000, ortiz et al. 2009, hauschild et al. 2013). in the midpoint approach, environmental burdens are grouped into similar environmental impact categories (e.g., global warming potential, ozone layer depletion, freshwater eutrophication, etc.). in comparison, the endpoint approach seeks to model the chain of cause and effect to the point of the evaluation of damage (e.g. incidence of skin cancer rather than ozone layer depletion is reported). this makes for simpler reporting with fewer indicators, but involves a higher level of uncertainty. the midpoint approach is preferred because of the higher level of accuracy, but can be more difficult to interpret (dong et al. 2014). impact categories are reported in terms of effect on human health (e.g., disability adjusted life years (daly)), or on ecosystems (e.g., species loss). some systems have even gone so far as to aggregate all impacts into one category (e.g., ecopoints), but values reported using this approach have such high uncertainties that they’re effectively meaningless. environmental impacts are calculated using a variety of models, currently more than 150, which attempt to determine the impacts of processes on the natural environment. examples of such models include: • midpoint: tool for the reduction and assessment of chemicals and other environmental impacts (traci), university of leiden institute of environmental sciences method – centrum milieukund leiden (cml), environmental development of industrial products (edip) • endpoint: eco-indicator, life cycle assessment method based on endpoint modelling (lime) • combined midpoint and endpoint: recipe (the acronym represents the initials of the main developers of the method), impact 2002+ for example, applying impact 2002+, the ‘value’ of an environmental impact is reported as an ecoindicator and measured in environmental points. the accumulated ecoindicator is composed of damage categories (e.g., human health, ecosystem quality, climate change, resources) and impact categories (e.g., carcinogens, noncarcinogens, respiratory inorganics, respiratory organics, ionizing radiation, ozone layer depletion, aquatic ecotoxicity, terrestrial ecotoxicity, terrestrial acidification, land occupation, aquatic acidification, aquatic eutrophication, global warming potential, non-renewable energy, mineral extraction). this requires a weighting process to be applied, which is reliant on value judgement. the impact categories selected should provide useful information about the product or process while taking the goal and scope of the study into consideration. when selecting the impact categories, it is also necessary to select characterization factors, which are the units used to report each environmental burden. to consider the example of the climate change impact category, the characterization factor for this category involves global warming potential over a 100-year timeframe (gwp100) measured in kilogram co2 equivalents. the method used to calculate impacts affect the results of the lca 56 bioproducts business 2(6) 2017 study, which should always be considered when making comparisons between products or materials in different studies (monteiro and freire 2012). another important factor involves the correct allocation of environmental burdens on different coproducts when the system under analysis produces more than one product. examples of this include the allocations between cereal and straw, or meat and wool in agricultural production systems (brankatschk and finkbeiner 2014). ideally, allocation should be avoided when possible but, in many cases, this cannot be done and a choice must be made regarding the allocation procedure used. various approaches can be used for allocating environmental burdens, including mass, energy, or economic allocation. guidance regarding allocation is given in iso 14040 and iso 14044, both of which recommend a hierarchy of choice for allocation methods. in many cases, economic allocation is used, which provides a more realistic allocation of burdens because economic concerns often justify processes used. problems with this method include price fluctuations and unavailability of important economic information. an advantage of mass allocation is that it does not vary, however, a disproportionate burden may be assigned to a waste or co-product. one method of dealing with allocation issues is to employ a system expansion so that all the different product streams are included within the same system boundary. for comparison purposes, the wood-based functional unit must be the same as the non-wood-based functional unit. for example, if a timber frame building is manufactured using waste from the process used to produce energy, then it is possible to make the functional unit ‘the structural frame plus the production of x kwh of energy’. this could be compared with the same structural functional unit made from a non-renewable material plus x kwh of energy produced from a fossil fuel. however, if the wood waste goes to the production of chipboard or paper, then the comparison becomes more difficult. it is almost inevitable that some form of allocation will have to be employed. in many cases, an economic allocation may be the best way of allocating burdens but, again, prices may fluctuate. furthermore, forests can produce different product streams at different times (e.g., first thinnings, second thinnings, third thinnings, harvest), which adds to the problem of economic allocation over a time scale that can be as long as a century (jungmeier et al. 2002). jungmeier et al. (2002) identified ten different processes in the forestry value chain where allocation issues can occur: forestry, sawmill, wood industry, pulp and paper industry, particle board industry, recycling of paper, recycling of wood-based boards, recycling of waste wood, combined heat and power production, and landfill processes. these can be divided into multi-output processes (e.g., sawmill) or multi-input processes (e.g., landfill or domestic waste incineration plant). at the end of the lca process, there are additional analyses that can be performed; these include normalization, grouping (aggregation), and weighting. these are usually used to make environmental information more comprehensible (chau et al. 2015). 3 life cycle assessment and environmental product declarations lca is a useful tool when it is used correctly. however, problems can arise when lca is used to make comparative assertions between different products. there is considerable scope for variation in the way that lca is performed (e.g., choice of system boundary, functional unit, environmental impact categories and calculation methods, assumptions about service life, maintenance, etc.), which can make comparisons between products problematic, if not impossible. a limitation of lca involves the insufficient transparency of results, which can hinder the utilization of existing studies as a source of information and in making comparisons. to compare lcas with confidence, the datasheet, assumptions, sources of data, and calculations should be provided. due to the use of commercial software, transparency is often lacking. for the wood sector and other bio-based products, it is particularly important to present system boundaries, functional units, and co-product allocation transparently. it is important to include agricultural activities as well as any change in land use for agricultural inputs. for example, old-growth forests represent a significant carbon pool; disturbing such forests could lead to the release of substantial carbon. furthermore, a direct lca comparison can only be done on the same functional unit, which considers the actual function of the product. if a comparison is performed on a mass basis, the comparison is meaningless when the alternative product has a different lifetime or is used or disposed of in a different way. kutnar and hill — life cycle assessment – opportunities for forest products sector 57 clearly, there is considerable potential for uncertainties to influence lca. nevertheless, considerable progress has been made in this arena in the past decade. one of the most significant developments has been the introduction of epds. in order to develop a framework that allows for the comparability of environmental performance of different products, iso 14025 (iso 2006c) was introduced. iso 14025 describes the procedures required to produce type iii environmental declarations (or environmental product declarations). this framework is based on the principle of developing product category rules (pcrs), which specify how information from an lca is to be used to produce an epd. a pcr will, for example, specify what the declared unit and/or functional unit is for the product. within the framework of iso 14025, only the production phase (i.e., cradle to gate) of the lifecycle should be included in the epd. it is also possible to include other lifecycle stages, such as the in-service stage and the end of life stage, but these are not required. iso 14025 also gives guidance on the process of managing an epd program. this requires program operators to set up a scheme for the publication of a pcr under the guidance of general program instructions. there has been a range of epd programs initiated since the publication of iso 14025 (del borghi 2013), resulting in a correspondingly large number of published pcrs, which often do not correspond with one another (subramanian et al. 2012). there have been additional standards issued that apply to the construction industry to promote greater comparability of the environmental performance of products. for example, iso 21930 (iso 2007) provided some guidance on both pcr and epd development, but this was recently replaced by en 15804 (cen 2012) in europe. en 15804 is an integral pcr for building products and is considerably more detailed and prescriptive than iso 14025; iso 21930 is currently being revised. different life cycle stages are divided into modules in en 15804. modules a1-a3 cover the production stage, a4-a5 the construction process, b1-b7 the use stage, and c1-c4 the end of life stage; beyond this is the ‘after-life’ stage (d). these are listed in table 1 below. the publication of this standard ensures harmonization of core pcrs for building products in europe (a core pcr is the basic pcr for a whole product group, upon which more specific pcrs are based). it is mandatory to report stages a1-a3, whereas the other stages are included for any reporting beyond cradle to factory gate. table 1. list of information modules within the product life cycle listed in cen standard en 15804 (cen 2012). module life cycle stage description a1 production raw material supply a2 production transport a3 production manufacturing a4 construction transport a5 construction construction/installation b1 use use b2 use maintenance b3 use repair b4 use replacement b5 use refurbishment b6 use operational energy use b7 use operational water use c1 end of life de-construction/demolition c2 end of life transport c3 end of life waste processing c4 end of life disposal d beyond building life cycle reuse/recovery/recycling the primary purpose of an epd, according to iso 14025, is to improve business to business (b2b) communication, but an epd may also be used for business to consumer (b2c) communication. in the latter case, there are further requirements within the process, which particularly apply to verification procedures. in any case, iso 14025 encourages those involved in the production of an epd to take account of the level of awareness of the target audience. standards are increasingly removing the flexibility (and uncertainty) that was once associated with determining the environmental performance of products and services. this should make it much easier to compare the environmental impacts of products within a product category in the future. namely, epd is presenting the life cycle of a product in a report, focusing on the product’s environmental impacts, such as contributions to global warming, ozone depletion, water pollution, ozone creation, and greenhouse gas emissions. an epd can include additional impacts that are of interest to the discloser, such as human toxicity, risk, and corporate social responsibility. 58 bioproducts business 2(6) 2017 what is required is a standardized method of reporting environmental burdens associated with a specific functional unit, which has led to the development of product category rules (pcrs). these pcrs have been developed by different organizations, which have set up epd programs; examples in europe include the international epd® system based in sweden and the institut bauen und umwelt based in germany. since the introduction of iso 14025, there has been a proliferation of epd systems, with their own pcrs. iso 14025 encourages the operators of epd programs to harmonize their methods and pcrs. in europe, this has resulted in the creation of ‘eco,’ a platform for rationalizing epds, involving 11 epd operators across europe. this platform involves mutual recognition of epds and the creation of common pcrs, working from agreed core pcrs, such as en 15804 in the built environment. in theory, the introduction of epds using common pcrs suggests it should be possible to compare different building materials in terms of environmental impact. however, while it may be possible to make choices based on the environmental impacts associated with the manufacture of products, the use phase and end of life phase also need to be considered to understand the whole picture. important considerations when examining the environmental consequences of the use of different materials must include the service life of the product, maintenance requirements, and performance in service, especially with regard to the impact on the operating energy of the building. this may require assumptions to be made regarding life span, maintenance, end of life scenarios, etc., which will have a critical impact upon the outcome of the lca. although the use of epds has become somewhat standardized, concerns arise regarding product environmental footprints (pefs). the eu commission published product environmental footprint methods as part of the communication entitled ‘building the single market for green products’ (2013/179/eu). these methods build on existing lca methodologies and aim to harmonize them for greater comparability between products and services by defining methods, thereby reducing flexibility. this is precisely why epds were introduced and the need for yet another method of comparing the environmental footprints of products has been questioned (finkbeiner 2014). 4 harvested wood products and atmospheric carbon storage the claim that carbon benefits result from the use of wood products in the built environment depends on whether embodied emissions are lower than the amount of atmospheric carbon stored in the wood product itself. an embodied emission is an emission that is associated with the production of a product, e.g. the co2 eq. emissions associated with transport, production of electricity used for the sawing and planning of a wood product, the co2 emissions associated with the use of gas for heating of the kilns, etc. pingoud and lehtilä (2002) studied wood products in a finnish context and estimated that ghg emissions associated with processing were equivalent to only 7% of the co2 equivalents stored in sawn wood products. these percentages rise with the amount of processing that is required for the wood product and are highest for virgin paper products (30-60%), but even in these extreme cases the amount of co2 equivalents released is lower than the amount stored in the product. the advantages of using timber and other bio-derived materials as a means of storing sequestered atmospheric carbon in the built environment has also received considerable attention in the scientific literature (e.g., brunetnavarro et al. 2016, jasinevičius et al. 2015, pilli et al. 2015,). although the environmental benefits of using natural materials, such as timber, in construction can be clearly demonstrated, the same cannot always be said for the economic benefits, unless the external costs of climate change are internalized in material prices. doing so will require the development of carbon accounting methods (sathre and gustavsson 2009). numerous studies have demonstrated the benefits of using wood in the built environment as a long term carbon store (e.g., hill 2011, nepal et al. 2016). yet, the role of harvested wood products in mitigating greenhouse gas emissions has only recently been recognized by the kyoto protocol. in 2009, during the 15th conference of the parties (cop 15) to the united nations framework convention on climate change in copenhagen, members agreed that harvested wood products (hwps) could be included as an additional carbon pool. during the first commitment period (2008-2012), it was assumed that the quantity of carbon leaving the hwp pool each year kutnar and hill — life cycle assessment – opportunities for forest products sector 59 was equal to the annual inflow. this means that although a substantial quantity of atmospheric carbon may be stored in the hwp pool, this amount is assumed to be stable over time, thus negating net benefits in terms of mitigation potential. for the second commitment period (2013-2020), carbon accounting included carbon stock changes in the hwp pool. although the intergovernmental panel on climate change (ipcc) recognizes the importance of the built environment, its mitigation strategies included in the fourth and fifth assessment reports (ipcc 2007, 2014) are almost exclusively concerned with energy consumption. the use of wood as an example of a low embodied energy material is mentioned, but consideration of the potential for timber and other plant derived products to act as carbon stores in the built environment is lacking. furthermore, the use of mitigation strategies associated with forestry is only connected to bioenergy and do not discuss the carbon storage potential of timber products. however, in 2009, the 14th conference of the parties (cop 14) did recognize the importance of including timber products as carbon sinks. likewise, the 2011 durban and 2012 doha conferences stated that carbon stored in wood products should be integrated into reporting procedures. nevertheless, the benefits of using wood products as a store for atmospheric carbon dioxide are only realized if the products have a sufficiently long life. the question of the temporal nature of carbon emissions into the atmosphere and considerations of the length of time that atmospheric carbon is held in storage are extremely important when biogenic carbon is considered (cherubini et al. 2012). unfortunately, there is no consensus regarding the methodology for measuring and accounting for carbon in biogenic products. although the ilcd methodology is still utilized, there have not been any useful developments in standardization. the 2008 version of pas2050 (bsi 2008) initially included methods for calculating the temporal aspects of biogenic carbon storage in annex c, but by the time the 2011 version was published, the methods were no longer included. similarly, the european standard en 16485 (cen 2014) that designated product category rules for round and sawn timber featured a temporal calculation method for determining the storage of biogenic carbon in its draft form, but not in the final publication. section 5.4.9 in the current version of the pef guidance document, commission recommendation 2013/179/eu (european commission, 2013), available from the european commission, deals with the issue of temporary carbon storage, stating, “credits associated with temporary (carbon) storage or delayed emissions shall not be considered in the calculation of the default ef impact categories. however, these may be included as ‘additional environmental information.’” conventional lca methods do not assign any benefits to the temporary storage of atmospheric carbon because the timing of emissions relative to removal is disregarded (pinsonnault et al. 2014). although there are benefits to be gained from using timber products in long life products as a store of atmospheric carbon, there is still no recognized way of accounting for this (brandão et al. 2013). 5 life cycle assessments of organizations the o-lca approach is a compilation and evaluation of the inputs, outputs, and potential environmental impacts of the activities associated with an organization. the organization, which is the object studied in o-lca, is defined by iso/ts 14072 (iso 2014). it can be a person or a group of people. o-lca can be performed by an organization of any size and sector. the organization’s portfolio usually includes more than one product. when performing an o-lca, all activities associated with the set of goods and services an organization provides are assessed at the same time. therefore, an o-lca can be incredibly complex. unep/ setac (2015) published guidance on organizational life cycle assessment, which summarizes opportunities an o-lca could provide. an organization may be motivated to perform an o-lca for analytical, managerial, or societal reasons. examples of analytical goals include: to understand internal operations, identify the operations with highest impacts on the environment, identify the risks and define the activities to reduce the impacts, etc. managerial objectives may include: gain support for strategic decisions, improve organizational procedures, initiate environmental communication and reporting with stakeholders, reduce operational costs, and/or demonstrate environmental awareness for marketing purposes. 60 bioproducts business 2(6) 2017 these goals may encourage other organizations and foster sustainable development of society. however, the objectives and/or justification for lca should be adapted to each organization. the iso/ts 14072 (iso 2014) does not allow the use of o-lca for comparative purposes. unlike a product lca, an o-lca is not capable of providing comparative assertions to be disclosed to the public. most principles, requirements, and guidelines of a product lca apply to an o-lca. an o-lca requires the definition of two new elements, roughly equivalent to the functional unit and reference flow, the so-called reporting organization and reporting flow. martínez-blanco et al. (2015a) compared the lca of products and the o-lca to identify the main differences in the scope phase of lca analysis. the authors found that the characterization of the organization must be evaluated carefully. the characterization of the so-called reporting organization should include three elements: name and description of the organization under study (i.e., whole organization or part of it), definition of the consolidation method (i.e., which sites should be considered), and the reference period to be considered in the o-lca. additionally, the system boundary of the study should define which direct and indirect activities are to be included. in the o-lca, all relevant upstream activities and downstream burdens should be incorporated. witczak et al. (2014) conducted evaluations of the implementation of lca in small and medium-sized enterprises (smes) by investigating 46 polish companies. the study concluded that smes should see the economic benefits of proposed environmental improvements and, therefore, lca should be performed simultaneously with life cycle costing (lcc). furthermore, the analyses led to the conclusion that incentives for smes to take measures should come from outside the organization, such as requirements for green public procurements, or as part of an assessment made by suppliers within the supply chain. in the guidance on organizational life cycle assessment (unep/setac 2015), the first practical experiences of approaches encompassing o-lca are identified. eleven case studies of the so-called “first movers” are included in the guidance document to illustrate some methodological facets and benefits that the methodology could bring to organizations. most of these organizations developed their own adapted methodology. eight sectors, including hotel and catering, food, chemical, car manufacturing, energy, retail, consulting, and cosmetic and personal care, and four regions, including south and north america, europe, asia, and oceania, were represented in the case studies. basf, a chemical company, was included as a pilot project. their industrial complex is located in the demarchi neighborhood of são bernardo do campo, brazil and includes seven production plants, mainly dedicated to paint and varnish production. the goal of the study was to evaluate the environmental impacts of production systems over time to evaluate impact trends and to identify relevant effects on impact distribution due to changes in production units. therefore, the cradle-togate boundary approach was used. the reference unit was 1 tonne of finished product. primary data, including the organization’s annual production reports for 2010, 2011, and 2012, and secondary data, including technical literature, research reports, and lca databases, were used in the study. the impact assessment included raw materials and energy consumption across the following impact categories: • depletion of natural resources, • cumulative energy consumption, • human toxicity potential, • land use, • emissions (e.g., gaseous emissions, global warming potential, photochemical ozone creation potential, ozone depletion potential, and acidification potential), • liquid emissions (volume of wastewater), and • solid emissions (the inventory flow waste generated)). to the best of our knowledge, no o-lca has yet been performed for the forest products sector. besides the o-lca, the so-called social organizational lca (so-lca) has also been proposed (martínez-blanco et al. 2015b). the so-lca is presented as a method able to boost the social life cycle assessment (s-lca), which addresses social aspects from a life cycle perspective. an s-lca is a method that can be used to assess the social and sociological aspects of products as well as their actual and potential positive and negative impacts along the life cycle. this method looks at the extraction and processing of raw materials, manufacturing, distribution, use, reuse, maintenance, recycling, and final disposal. s-lca makes use of generic and site-specific data, can be quantitative, semi-quantitative or qualitative, and kutnar and hill — life cycle assessment – opportunities for forest products sector 61 complements the environmental lca and lcc (unep/ setac 2009). the unep guidelines for social life cycle assessment of products discusses the main difference between the environmental lca and social s-lca as well as limitations of s-lca, due to the complexity of the social dimension. the s-lca methodology proposes 189 indicators of impacts, among which only 8 refer to the product level, while 127 refer to the organizational level and 69 refer to the country level. identified challenges of the s-lca were addressed by martínez-blanco et al. (2015b). the difficult challenge of linking social indicators to the product could be overcome in the so-lca by linking social indicators to the reference unit of the so-lca (e.g., the reporting organization), instead of the product(s). problems surrounding data collection and missing data in the s-lca, which is generally comprised only of generic sector or country data, could be resolved by the so-lca, as specific data is more likely to be available on the organization than on the product level. furthermore, the application and applied use of the s-lca, which is not clearly defined and does not adequately evaluate social performance on the product level, could be overcome by the so-lca, which refers to the assessment of organizational behavior and performance. 6 discussion the use of life cycle thinking and various lca methodologies could bring direct and indirect benefits to enterprises in the forest product sector. these approaches could be included in organizations’ decision-making processes to create value. typically, organizations focus on processes within their own organization, such as labor costs, manufacturing, and logistics. adding resource use assessments in their product life cycle across the entire value chain could reduce costs and provide additional benefits. an assessment of the whole value chain is a data intensive process but delivers a product’s environmental impacts across the value chain, from product development, sourcing, manufacturing, distribution, marketing, use, and reuse or disposal. energy, water, and raw material use involve real costs that, with proper handling, can reduce environmental impacts across the value chain. assessing the end-to-end product life cycle opens the largest potential opportunities for additional value creation through cost reduction and/or improved reputation. why isn’t the forest products sector implementing lca to a greater extent? the timber sector is an unusual industrial sector, as it is made up of a very large number of relatively small enterprises. this is partly due to the geographical distribution of forests and partly to the often local nature of the supply chain. forest product companies do not see the need to invest in the expensive lca, which can involve quite invasive questions about products and processes. this problem can, in part, be addressed by the development of generic epds, which cover certain product types for an entire sector and can be produced by member organizations. nevertheless, larger companies within the sector do see the need for conducting lcas, mostly due to competition for other materials, and a considerable number of epds have been produced over the past five years (hill and dibdiakova 2016). organizations in the forest products sector should use the o-lca to reveal environmental hotspots where the organization should focus energies and intervention, throughout the value chain and among all products and operations involved in the provision of the portfolio. furthermore, by understanding risk and impact reduction, opportunities could be a basis for strategic decisions at different levels. these decisions could be based on technologies, investments, and new product lines. o-lca may also serve as a framework for tracking environmental performance over time and for informing corporate sustainability reporting. in many respects, the forest products sector is taking the lead in social and environmental reporting with the long-established use of certification schemes. many of these have been voluntary, but an increasing emphasis has been placed on legislation. the european parliament introduced the sixth community action programme in july 2002 to deal with the trade in illegally harvested wood. subsequently, there was a report produced by the european commission entitled the ‘forest law enforcement, governance and trade (flegt): proposal for an eu action plan.’ the european union then negotiated voluntary partnership agreements (flegt vpas) with timber producing countries in order to introduce a licensing scheme to regulate trade. this was only partially successful and consequently the eu timber regulation came into force in december 2010, making it against the law to place illegally harvested timber and timber products on the eu market as of 3rd march 2013. the trend is increasingly moving towards 62 bioproducts business 2(6) 2017 the development of robust chains of custody throughout the entire value chain and the move from voluntary to legislated certification schemes. the chain of custody schemes that are required can be extended beyond the sawmill gate and involve all stages of the life cycle, which can also potentially allow for the tracking of sequestered carbon, as well as environmental burdens. there has been an increasing number of timber epds appearing. in march 2011, the construction products regulation (305/2011) was introduced, replacing the construction products directive (89/106/eec). the construction products regulation states that where a european standard exists, it must take precedence. in addition, it states, “for the assessment of the sustainable use of resources and of the impact of construction works on environment environmental product declarations should be used when available,” (eu regulation 2011). an increasing emphasis will be placed on environmental and social credentials by specifiers in the built environment and it is important that the forest products sector has the required information. architects are increasingly using building information modelling (bim) software, which will likely incorporate environmental and social impact information in the future, alongside the physical material properties that are already embedded. the forest-based sector can make a significant contribution towards the mitigation of climate change caused by anthropogenic co2 emissions, reduced energy consumption, increased wood products recycling, and reuse. apart from these environmental benefits, the use of forest products in long life products in the built environment, allows for the prolonged storage of atmospheric carbon dioxide. wood modification (chemical, thermal, impregnation) is being increasingly used in the wood products sector, but there is relatively little information on the environmental impacts of the processes. this is being addressed by cost action fp1407 “understanding wood modification through an integrated scientific and environmental impact approach,” where researchers from 36 countries are collaborating on the development of technologies and analyzing their environmental impacts. this requires analysis of the whole value chain, from forest through processing, installation, in-service, end of life, second/third life (cascading), and ultimately incineration with energy recovery (sathre and gustavsson 2006). the creation of an lca is a very complex process and is not always something which is easily undertaken by small enterprises. by participating in research communities, such as cost action fp1407, the entire sector can come together to participate in collecting and analyzing data for the benefit of all. 7 conclusions lca is a useful tool for reporting on the environmental burdens associated with a product or process and is increasingly being used to back up environmental claims, especially with the use of environmental product declarations. the forest products sector must be prepared to meet the challenges of the future. the timber sector has a good story to tell, but other sectors with more resources at their disposal are not standing still. a very important benefit of using timber from sustainable sources in long life products is the storage of sequestered atmospheric carbon dioxide. unfortunately, at the time of writing, the situation regarding the methodology of measuring and accounting for carbon in biogenic products is lacking. with current global efforts regarding the mitigation and adaptation of 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abstract despite increasing counts of scholarly signals that forest sector companies continue to be largely sales-oriented, marketing has become a somewhat forgotten topic in forest sector business literature. we aim to redress this situation. specifically, we examine how marketing is organized and implemented in forest products companies by drawing on two perspectives: the entity perspective and the activity-based perspective. data were collected from 20 companies via personal, in-depth, semi-structured interviews; and triangulated using website information and field notes. our results indicate that organization and implementation of marketing among forest products companies still remains at an incipient stage. many companies still continue to mix marketing and sales, and grossly undervalue activities such as marketing information management and product development. we argue that fostering a better conceptual understanding of marketing among forest industry managers may help them organize and implement it more effectively. keywords: case study, marketing activities, marketing department, sawmilling companies marketing organization and implementation in private u.s. sawmilling companies xiaoou (jane) han1* and eric hansen2 1 department of wood science and engineering, 119 richardson hall, oregon state university, corvallis, or, 97330 2 department of wood science and engineering, 119 richardson hall, oregon state university, corvallis, or, 97330 * corresponding author: email: xiaoou.han@gmail.com; tel: (541)-250-1539 acknowledgements: we thank the “forest business solutions team” of oregon state university, for their valuable comments to an earlier draft of this article. we would also like to express our gratitude to the reviewers for their comments and suggestions. bioproducts business 2(1), 2017, pp. 1-13. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-001 1.0 introduction to respond to ever-increasing complexity of customer needs, marketing in the forest products industry is evolving from a production/sales orientation to a customer/ market orientation (toppinen et al. 2013, hansen and juslin 2005, narver and slater 1990). when market demand is simple and homogenous, marketing can be production/sales-oriented. in this context, the task of companies is simply to produce large quantities of a commodity and then it is up to sales people to convince customers to place orders. this situation reflects little true marketing and sales is the key activity. as customer demand becomes increasingly complex, it becomes more important for companies to have a better understanding of what customers need and provide products and services that meet these needs accordingly (spetic et al. 2016, dasmohapatra 2009, hugosson and mccluskey 2009, hansen and juslin 2005, niemelä and smith 1996). achieving this task requires effective and efficient communication and coordination within companies. therefore, marketing must involve a broader range of people in companies, instead of a solely task for the marketing entity, which is normally known as the marketing department (webster 1992, narver and slater 1990). krohmer et al. (2002) suggest that it is beneficial for the marketing department to obtain involvement of other relevant functional units in marketing activities and this dispersed marketing approach increases the performance of the organization. as marketing becomes a shared task among individuals and functional units within companies, the boundary between marketing and other functional departments continues to blur (narver and slater 1990). some research concludes that marketing is on the decline as a standalone function 2 bioproducts business 2(1) 2017 and companies are reducing the size and resources associated with formal marketing entities (moorman and rust 1999). on the contrary, others maintain that a strong marketing department is important and will induce a market-oriented culture (verhoef and leeflang 2009, piercy 1998). although the opinions about how it should be organized are somewhat mixed, the importance of marketing undisputed. during the past two decades, there has been growing discussion on the organization and implementation of marketing within firms. topics that revolve around this research agenda include the role of marketing and how it has been changing (moorman and rust 1999), the interface and relationship between marketing and sales (madhani 2016, bieman et al. 2010, homburg et al. 2008), the capabilities of market-driven organizations (vorhies and neils 2005, day 1994) and marketing’s influence within companies (verhoef and leeflang 2009). two primary perspectives emerge when investigating marketing within a firm: the entity perspective and the activity-based perspective. the entity perspective treats marketing as an entity in the organization, while the activity-based perspective focuses on the activities traditionally and generally considered as marketing and sales activities (e.g., selling, advertising, product development). these two perspectives are not mutually exclusive nor do they contradict each other. instead, they enable researchers to examine marketing in the organization through glasses with different colored lenses and obtain a better understanding of the phenomenon (workman et al. 1998). despite the rich history in the research field of marketing and the implementation and organization of marketing, work in the forest products industry is sparse. this article attempts to bring marketing back to the forefront of forest sector scholarship. in this article, we take into consideration both the specialized marketing group and activities related to marketing and aim to gain a better understanding of how marketing is organized and implemented. our research questions are as follows: in the context of private u.s. sawmilling companies, • how does marketing fit in the organization as a management entity? • how is marketing implemented as activities? this work is based on qualitative data collected through field visits and website analysis of private u.s. sawmilling companies. the purpose is to obtain an indepth understanding of marketing organization and implementation, rather than to make any generalization to the overall sawmilling sector. looking at marketing in the context of the studied companies through both an entity approach and an activity-based approach allows a better understanding of the structural and nonstructural role of marketing. this can provide industry managers with insights to better manage marketing in their companies and compare their efforts with peers. for researchers, an enhanced understanding of the role of marketing as suggested by industry managers should assist developing an improved framework for studying marketing in the context of the forest sector. we thus provide an important contribution by refocusing forest business research on the core elements of forest products marketing. we organize the rest of the paper in the following way. below we first provide an overview of the role of marketing, from both the entity perspective and the activity-based perspective. in the section that follows, we describe study methods including design, data collection, and analysis. finally, we present results which we discuss both from academic and practical perspectives. finally, we draw study conclusions and outline key limitations. 2.0 theoretical background 2.1 marketing as an entity commonly referred to as “marketing department”, “marketing organization”, or “marketing function”, marketing as an organizational entity can be very different from one company to the next. piercy (1986), in his work on the marketing department and the chief marketing executive in medium-sized companies in the uk, finds that less than half of the studied companies have a formally organized department with a group of specialized employees performing marketing responsibilities. these departments have different names, including marketing department, sales department, marketing and sales department. although more than half of the studied companies are without such a department, some of them have one executive carrying out responsibilities that could be categorized as “marketing”, such as promotion and advertising. he maintains that such a difference can be associated with company size and han and hansen — marketing organization and implementation in private u.s. sawmilling companies 3 the companies that have a formalized department for marketing are bigger companies. for the companies that have a formally organized department for marketing, he concludes that the integration of various functions (e.g., sales, advertising, customer service) are different from firm to firm. for example, sales is a part of marketing in some of the studied companies while as a separate department in others (piercy 1986). besides the presence and constitution of the marketing entity, its size is also found to vary among companies (hooley et al. 1984, piercy 1986). wind (1981) suggests that many marketing decisions are influenced by other functional departments while at the same time other decisions in a firm are influenced by marketing considerations as well. the marketing entity should not be an isolated function in an organization. the coordination between marketing and other business functions is essential for the company to provide superior customer value and maintain competitiveness in the marketplace. the interfunctional characteristic of the marketing entity is a central aspect of a market orientation, which is a phenomenon studied extensively over the past 25 years with the general agreement that market orientation is positively related to firm performance (kirca et al. 2005, krohmer et al. 2002, narver and slater 1990). there is abundant research illustrating that the interaction and collaboration between marketing and other departments such as r&d and manufacturing are important to the firm (krohmer et al. 2002, griffin and hauser 1996). for instance, griffin and hauser (1996) suggest that well-conducted market research and a clear understanding of customer needs will contribute to successful product development. they maintain that customer needs are closely linked to design attributes and thus the joint consideration of marketing issues, engineering issues and technical issues are encouraged. also, market information and marketing research should be used by other departments besides marketing and new product development should be an interfunctional process (griffin and hauser 1996). in the empirical research conducted by kahn and mentzer (1998), marketing’s collaboration with manufacturing and r&d is also found to improve product management performance and overall company performance. recently, research attention on the marketing-sales relationship has increased (biemans et al. 2010), especially with respect to how marketing and sales are organized within the firm and the communication and collaboration between marketing and sales (homburg et al. 2008, rouziès et al. 2005). marketing and sales can exist in a firm as separate functional units (workman et al. 1998) or a single entity (kotler et al. 2006). the collaboration and power position between the marketing department and the sales department also varies among firms. in b2b companies, biemans et al. (2010), suggest a continuum demonstrating an evolutionary perspective of marketing-sales configuration, from sales-dominant with very little marketing to marketing and sales in a relatively equal position with an integrated interface and close collaboration. firms may move along this continuum as their size increases. homburg et al. (2008) consider the marketing-sales interface to be constituted of five conceptual domains: information sharing, structural linkages, power distribution, orientations and knowledge. successful marketing-sales configurations normally encompass an intense use of structural linkages with a clear but not extreme power distribution between marketing and sales, high market knowledge within the marketing unit, and a long-term orientation of the sales unit (homburg et al. 2008). in the context of the forest products industry, sinclair (1992) lists four types of marketing organizations that have been commonly adopted by forest products companies. they are function-based organizations, marketbased organizations, geographic-based organizations and product-based organizations. he suggests that the function-based organization is a more centralized and simple structure, with all functional areas reporting to a chief executive. depending on the specific structure, this type of marketing organization can be either marketing dominant or sales dominant. as the company grows and the diversity in its product lines increases, more decentralized organizational structures are preferred (rich 1970). compared with the function-based organization, a market-based organization, a geographic-based organization and a product-based organization are more decentralized structures. 2.2 marketing as activities and practices the most well-known approach to understand and categorize marketing activities is the “marketing mix” that consists of 12 items, including product planning, pricing, branding, channels of distribution, personal selling, advertising, etc. these 12 marketing activities are 4 bioproducts business 2(1) 2017 considered to be key elements of a marketing program (borden 1984). for pedagogical reasons, the original “marketing mix” was shortened and reconstructed into a four-variable framework by mccarthy (1960). known as the famous “4p” nowadays, the framework includes four components which are product, price, place (distribution) and promotion. some advocates of “marketing mix” and “4p” also suggest that service should be added to the framework (e.g., collier 1991). based on the “marketing mix” framework, there are certain capabilities that a firm should possess in order to achieve high performance (vorhies and morgan 2005, day 1994). this capability-approach is also a way to look at marketing activities, but from a slightly different angle. day (1994) groups marketing capabilities into three major categories: inside-out, outside-in and spanning. inside-out marketing capabilities mostly focus on the “inside” of the organization and are “activated by market requirements, competitive challenges, and external opportunities.” examples are manufacturing, logistics and employee training. outside-in marketing capabilities, such as market sensing and customer linking, focus on the external environment. taking the external environment into consideration, the company defines other capabilities and is able to compete in the market by anticipating market needs and developing and maintaining important relationships. spanning capabilities bring the inside-out and outside-in capabilities together. for example, price setting and new product/service development are spanning capabilities that will require the support of both internal (inside-out) and external (outside-in) analyses. in a similar vein, vorhies and morgan (2005) synthesize the literature and the findings from their fieldwork and suggest eight marketing capabilities which are considered important to achieve good business performance: (1) product development; (2) pricing; (3) channel management; (4) marketing communications; (5) selling; (6) marketing information management; (7) marketing planning; (8) marketing implementation. as previously mentioned, the notion of marketing capabilities is somewhat different from marketing activities, but they both look at marketing at the operational level and normally cover similar areas of marketing. according to the textbooks in forest products marketing written by hansen and juslin (2011) and sinclair (1992), marketing activities adopted in the forest products industry are quite similar to what are suggested in the general marketing literature. there is also empirical research examining marketing activities in forest products companies. researchers tend to focus on a particular marketing activity and examine how it is implemented in companies. product , process and business systems innovation is frequently discussed by forest products marketing researchers and is suggested to be an important source of firm competitiveness (hansen and nybakk 2016, hansen and bull 2010, stendahl et al. 2007, bull and ferguson 2006). under the umbrella of marketing communication, advertising (hamner et al. 2012, tokarczyk 2012, kärnä et al. 2002), corporate social responsibility (vidal and kozak 2008, toppinen et al. 2013, panwar and hansen 2007, han and hansen 2012, owari et al. 2006, kärnä et al. 2003), and trade shows (shi and smith 2012) also attract a fair amount of research attention. these studies provide knowledge about specific marketing activities. however, there is little empirical research examining how marketing activities are implemented in forest products industry companies. 2.3 a summary of the two perspectives the marketing entity and marketing activities constitute two distinctive dimensions of marketing organization and implementation in a firm. taking a look at both dimensions generates complementary knowledge and provides a clearer and more holistic picture of the role of marketing in an organization. these two dimensions are also related to each other. taking the marketing entity’s standpoint, its positions and possible sub-units are separated and defined by their duties, which consist of the activities they should perform. without the designation of duties and activities, the positions and sub-units are nothing more than empty organizational terms. similarly, the marketing activities must be assigned to and performed by individuals and groups. in practice, the existence of either a marketing entity or marketing activities will have to depend on the other (marketing activities or marketing entity) in order to be meaningful. therefore, we chose to investigate both in this work. 3.0 methods we adopted a case study approach for this research since the purpose of this study is exploratory. the “case” here is the phenomenon “the organization and implementation of marketing”, rather than the sample companies. the han and hansen — marketing organization and implementation in private u.s. sawmilling companies 5 case study approach was employed as a framework to collect and document evidence about the organization and implementation of marketing. 3.1 sample we followed a theoretical sampling approach and focused on companies that represent strong and positive examples of marketing sophistication (eisenhardt 1989). accordingly, our study sample consisted of private u.s. sawmilling companies in three geographic locations of the u.s. (table 1). these companies included seven softwood products manufacturers, 10 hardwood manufacturers and three companies manufacturing both. one or two managers were interviewed from each company. in all but three cases where more than one manager were interviewed in a company, the interviews were conducted separately. the positions held by the interviewees were chief executive officer, president, vice president of marketing/sales, sales manager and chief operating officer. in total, the sample included 30 managers in 20 companies (table 1). 3.2 data and analysis we collected three types of data for this study: personal interviews, field notes and company websites. to allow flexibility and depth of information, a semi-structured interview protocol was developed (yin 2009). the protocol was reviewed by a group of forest products marketing researchers, one graduate student that had industry experience, and two forest business professionals. all reviewers were outside of the study sample. only slight modifications were made to the interview protocol based on reviewer feedback (table 2). personal interviews were conducted during the period of 2010-2011. all the interviews were audio-recorded and later transcribed. field notes were taken during and immediately after each company visit, based on the researcher’s direct observation and general impression of the interviewees and companies. company websites were examined and information relevant to the research topic was carefully summarized as written notes. among the three data sources, personal interviews and field notes constituted the center piece of the case study evidence, while company websites were used to gather additional information for source and data triangulation. we followed the three-part approach to data analysis suggested by miles and huberman (1994). the analysis included data reduction, data display and conclusion drawing/verification. in addition, we followed steps suggested by yin (2009) to ensure validity and reliability. 3.2.1 part 1: data reduction the qualitative analysis software nvivo was employed to code the interview transcriptions. a list of primary themes was first developed following the interview protocol. the transcripts were examined carefully and the useful “chunks” of information were identified, highlighted and summarized under each primary theme. the summary of these “chunks” of information were read with the purpose of identifying secondary themes. additional primary themes were also identified based on literature as well as patterns that emerged during the coding process. all the themes and secondary themes were mentioned by at least three companies. next, the transcripts were totally recoded according to all the primary and secondary themes, to ensure that all relevant data was thoroughly included in the codes. finally, two primary themes were identified, one with several secondary themes (table 3). in addition, reflective remarks and initial ideas about the data and codes were documented in the form of a memo. 3.2.2 part 2: data display we used matrices in this part of the analysis to display data, with rows representing a company and columns table 1. general sample information. region no. of sampled companies no. of interviewees west & west north central 7 12 south 4 6 east 9 12 total 20 30 table 2. questions included in interview protocol. 1) can you tell me about your background? 2) what responsibilities do you have for your current position/ previous background related to marketing? 3) could you draw a simple organizational structure of your company and indicate where you fit? 4) are other departments involved in marketing? 5) could you please describe your major marketing activities and practices? *this list includes only those questions relevant to this article. 6 bioproducts business 2(1) 2017 containing information addressing interview protocol questions. patterns and codes developed were summarized and organized into a large matrix, while data collected from company websites was displayed in a separate matrix for data triangulation. data reduction and data display took place concurrently with website analysis. when analyzing company websites, the researcher visually scanned the website of each company, and placed relevant information and notes directly into a previously created matrix. 3.2.3 part 3: conclusion drawing/verification we analyzed the data in the matrices firstly within each individual company and then compared it among companies. conclusions were drawn based on data collected from all of the sources. it should be emphasized that the first author and the second author each analyzed the data independently, while keeping an open dialogue to exchange opinions regularly during the whole data analysis process. 3.3 validity and reliability we followed yin (2009) to ensure validity and reliability. first, we used a case study protocol consistently with each studied company. second, we conducted a pilot test with two industry professionals that were not included in our study sample and one graduate student who had an industry background. the case study interview protocol was slightly modified according to their feedback. third, we used multiple sources of evidence to triangulate the data. finally, we had two different researchers conducting the analysis independently for the purpose of investigator triangulation (yin 2009). agreement between the researchers was quite high in initial stages of analysis and through continuous discussion and negotiation became completely consistent. in other words, “intersubjective consensus” was met. 4.0 results and discussion our results are divided and organized based on the primary themes identified through our analysis (table 3). following the presented results of each primary theme, we discuss our interpretation of the data. all of the quotes presented below are from the interview data. the website information was used only to confirm and verify conclusions. 4.1 the marketing entity in studied companies 4.1.1 the marketing entity all of the companies studied have a department that is responsible for both marketing and sales work and are named marketing, sales or marketing/sales. they are mainly made up of sales managers and sales people. so we have a sales vp. he has a softwood sales manager, a hardwood sales manager and a panel manager. (west & west north central, softwood) then there is one sales office that does all of sales and marketing work for all 3 mills. in that office, there are 4 people: 2 are sellers, primary sellers, full time sellers; 1 does the scheduling. (east, softwood) in a few companies, both the department and the executive position titles include “marketing” in them. however, in reality they are sales departments as indicated by the following quotes, [interviewer: what is your title?] vp of sales and marketing. [interviewer: what are your major job responsibility?] well. sales for all the sawmills. not logs, just lumber products, lumber and panel products. we do sometimes sell logs. (west & west north central, softwood) [interviewer: what is your title?] vp of marketing. [interviewer: what are your job responsibilities?] my responsibility is to really develop market share for the company, the native production, in other words, [company name] production and sell it. (west & west north central, softwood) some of the companies have a marketing position that is essentially advertising and promotion. there is one company that has a marketing person who performs some customer/market analysis duties. however, he/she is part of the sales team and is not very much involved in the decision-making process. in general, table 3. primary themes and secondary themes identified during data analysis. primary themes secondary themes marketing entity no secondary theme marketing activity 1. selling 2. customer support 3. market information management 4. marketing communication 5. product development 6. pricing han and hansen — marketing organization and implementation in private u.s. sawmilling companies 7 these “marketing” people are dominated by sales in the studied companies. we call it marketing but this is really more advertising…when these sales people want to develop an advertisement or a brochure, they would be working with our advertising department to produce that. (east, softwood) i also got a marketing person, marketing and advertising. she will set up trade shows and stuff for us. …she also manages our website. (west & west north central, softwood) in terms of structure of the marketing entity, the managers mainly focus on the sales personnel in their descriptions. many companies break up the sales work geographically, although some are more structured and some are less structured. a fairly structured example of a marketing entity is presented below. the manager is a vice president of sales and the sales force is divided into two parts: internal sales and external sales. although internal sales, based at corporate headquarters is organized by product lines, external sales is organized by, and based in, geographic regions. the interviewee suggests that the internal sales and external sales perform different jobs (figure 1). the people that are out in the field that are aligned geographically, they are less transactional…they (external sales) go in, they sit down with them, give them samples, brochures, information and try to either bring in a new customer or if you are a current customer introduce you to a new product. once that sales job is done and now you are a customer. then you start calling on the phone to these folks (internal sales) here. these (internal sales) are the folks that you are gonna talk to on a daily basis to place orders… (west & west north central, softwood) 4.1.2 discussion of the marketing entity in studied companies although it is difficult to provide an explicit explanation of how a marketing department differs from a sales department, researchers outline some differences of the mindsets between marketing and sales employees which constitute an essential part of the distinction of a marketing department and a sales department. for example, rouziès et al. (2005) suggest that marketing people focus on market research while sales people normally deal with personal relationship and transactions with individual customers. also, marketing people are considered to be motivated by profits and oriented towards long-term goals, whereas sales people are considered to be motivated by sales volume and oriented towards short-term objectives (rouziès et al. 2005, kotler 1977). most of the interviewees do not understand the potential differences between a marketing department and a sales department. strictly speaking, most sampled companies have a sales department rather than a marketing department. however, very few interviewees acknowledge it. when asked about their marketing department, they simply talk about the sales department without any clarification, even though they do sometimes refer to it as “our sales department”. thus it can be inferred that “marketing department” and “sales department” are synonymous to them. also, their thinking simply resides in sales rather than marketing; they focus on selling rather than finding out and meeting customer needs. this indicates the existence of a sales orientation in these companies. hooley et al. (1984) suggest that sales-oriented companies typically have small marketing departments with one or two people. in some cases, the companies are considered to have no real marketing department, vp of sales marketing & advertising internal sales manager internal sales rep. (4) internal sales rep. (4) internal sales rep. (4) internal sales manager internal sales manager external sales reps (3) figure 1. an example of a marketing entity in the studied companies. 8 bioproducts business 2(1) 2017 although there are marketing activities and marketing related expenditures. these cases include the companies with the sales executive as the only employee being responsible for some level of marketing activities besides his/her sales work, and the firms with a marketing executive as one and the only marketing staff who reports to the sales executive (hooley et al. 1984). the situations of the studied companies were quite similar to what hooley et al. (1984) describe in their work. although the size of the marketing entities in the studied companies vary and there are companies with fairly large marketing entities, the sales people constitute the major component in these larger marketing entities. other employees are mostly support staff and were dominated by sales people. thus, these so-called “marketing” entities are actually sales departments mainly performing sales tasks. according to previous research, one characteristic of a “market-oriented” company is the establishment of a chief marketing executive, who is in charge of advertising, sales and other marketing activities (workman 1998, carson 1968). this is not the case within the studied companies. the marketing/sales executives are mostly responsible for sales work, despite the fact that their titles contain the word “marketing”. this reflects a salesoriented mentality, as opposed to a customer/market orientation. the forest products industry is traditionally production/sales-oriented. the great recession may have reinforced this tendency. during the recession, it is possible that companies were more motivated to cut costs and enhance operational efficiency in order to survive, rather than focusing on long-term profits (o’malley et al. 2011). they relied more on sales efforts which could help their companies with cash flow and short-term efficiency. also, homburg et al. (2000) maintain that being customer-orientated normally requires more complexity in the marketing entities’ structures. during a recession companies are more likely to have a simpler structured marketing entity-a sales-focused entity probably-for the sake of efficiency and cost-saving (homburg et al. 2000). presumably, the managers with such a mindset believe that being sales-oriented would help to save their companies from the recession. it is true that an emphasis on sales may help with their sales volume and shortterm turnover. however, if the companies are all about hard selling and continue to ignore changing customer needs, it is questionable that if they will achieve sustained profits and competitiveness in the long run. numerous researchers (narver and slater 1990, liao et al. 2011) consider company profits and long-term competitiveness as the consequences of a market orientation that concentrates on customer satisfaction, instead of a sales orientation which focuses on sales volume. it may be beneficial for forest products industry managers to rethink the approach that they have been taking and find the “happy medium” between short-term sales efficiency and long-term profits. 4.2 marketing activities in studied companies 4.2.1 selling managers speak extensively about how they make personal contact with customers and try to sell them their products. typical ways include writing letters/emails to the current or potential customers, sending samples, talking to them on the phone, and visiting in person. we will go in there, shake the guy’s hand, take him to lunch or dinner, go look at his lumber facility, find out what he really needs, get to know him, try to begin the process of getting him involved and buying what we make. (west & west north central, softwood) we go visit customers, we give them samples, we send in sample loads with the agreement we will buy them back if they don’t like them, give them guarantee…to get them out to our sawmill, ask them what they want. (west & west north central, softwood) a key selling tactic many interviewees emphasize is personal relationships. a good personal relationship with customers may lead to a good working relationship and eventually make sales happen consistently. we actually find what the best thing to do is, what i found is people like to talk to the same person. so we have it separated by customers…so customer a is always talking to [name], customer b is always talking to [name]. all that relationships. keep it like that. (east, hardwood) once i go down there and buy them (customers) a shrimp dinner, we are usually good friends. then we sell them more lumber. that’s how we do it. (west & west north central, hardwood) 4.2.2 customer support a few mangers mention ways to support their customers, through post-sales follow-up, joint market han and hansen — marketing organization and implementation in private u.s. sawmilling companies 9 research and services. by conducting these activities, they took care of their customers’ needs. this category of activities reflects some level of customer/marketoriented thinking. the third big way in which our sales works to make sure our customer is happy with the product is they actually to travel to see the customer and talk to the people who are using our product and actually look first hand in how it is working for them. (east, hardwood) so we often will go with our customer who we sell the lumber to, to visit their customer the end-user, the person who is actually using the product, to hear directly from the end-user, how is that product working for them. (east, softwood) we make sure not only did we deliver early enough but did we not deliver it too early too. customers don’t really want it too early. it is a just-in-time world. (west & west north central, softwood) 4.2.3 market information management despite the obvious focus on selling, some managers also speak about finding customer needs and wants. specific ways include talking to customers on the phone and doing field visits. both direct customers and end users are considered by these managers. this theme shares some similarities with the previous theme but has a different focus. our ears are open and finding out where things are happening… so our marketing is “keeping our eyes open” i guess and trying to follow where we think this business is going. sometimes it is a wild goose chase, but usually we ask them questions… (east, hardwood) so we need to know the end use application. hence we go talk to our customers whether it is the owner of the company or it is the vp sales or right down to the general manager who is really providing the product through his location in the market. we do that for all of our customer segments. (west & west north central, softwood) 4.2.4 marketing communication managers speak extensively about marketing communication. the topics included advertising, tradeshows, and branding. although paper media is still the mainstream for advertising, the internet is becoming increasingly popular. one thing we just have done recently is we have taken some time in the last year to put together a new website which we think will help us as a marketing tool. so we updated our information on our website…it can be a good marketing tool for us in the future. (east, hardwood) also we are doing more and more on electronic marketing or on the internet…we are trying different types and means to reach our audience which would be the manufacturing industry. (east, hardwood) many managers mention trade shows are a preferred way to meet their current and potential customers. trade shows are favored by companies because they are able to have personal contact with many people at the same time. they consider it more efficient than advertising and field visiting. trade shows and meetings are where a lot of our customers are and we might have a booth and do some advertising at the trade show and have our sellers be at the trade show. (east, softwood) we do go to trade shows primarily because…it is one of the most effective ways to get together with a lot of customers, because…everybody is there! (west & west north central, hardwood) a few managers speak of branding. they place the brand name either on the lumber or on the packaging. some of them mention that producing good quality products make it easier for successful branding. the lumber is stamped. the producers have to stamp the lumber… we try to brand our products more in recognition of the fact that we are one of the very few people that manufacture the specific products. so they are not necessarily branded to the finished user but they are branded to our customer base. (south, softwood) we’ve been around a long time. we make a very good quality product, very consistent. and it has got a very well-known name brand. it helps them sell it. many of their customers will only take a specific brand of lumber. so it is branded. (west & west north central, hardwood) 4.2.5 product development some managers express that their marketing/sales people identify product needs of the customers and bring that information back to the company. the mar10 bioproducts business 2(1) 2017 keting/sales people will work with manufacturing and customers to develop new products. also, a big part of product development has been through the initiative of our sales staff, where they work with the customer, find out if the customer is looking for something a little special. (east, hardwood) well, we are largely a marketing-driven organization. [name of the marketing/sales staff] has daily contact with our markets and with our customers. we are very flexible from a manufacturing stand of point to the extent that [name of the marketing/ sales staff] will develop products in coordination with our customers. (south, softwood) 4.2.6 pricing managers speak of different approaches to pricing. some companies follow a price guide or price report developed by groups such as risi and random lengths, while some rely more on talking to people in the industry and supply-demand situation. there are a couple of publications that report what they think the prices are on different species and grades of lumber. they are not accurate but can give you an idea, but they won’t tell you exactly what the true market is. so it is only by communicating with other people in the industry you get a better idea of what the pricing actually is. (east, hardwood) if we have a big pile out there that is piling up, because it is not moving, then the price is probably going down. if we don’t have any out there, that means we are selling it ahead. that means price is going up. it is completely supply-demand driven. from that we generate this price guide. (west & west north central, hardwood) 4.2.7 discussion of marketing activities in studied companies whether or not sales is organized within or separated from marketing in a company, selling is undoubtedly an important marketing activity (hansen and juslin 2011). however, many managers spend a lot of time talking about their selling tactics as if selling is the most important part of marketing. although some of the tactics mentioned have a customer-focus, it is sensed that “selling” what the companies have receives far more consideration than finding out what the customers needed. a close, collaborative relationship between companies and their customers is being sought by companies in the b2b world. such relationships are developed and exist in forms of joint programs and close communication links (day 1994). different from the personal relationship emphasized by many sales people, this coordinated relationship is based on mutual benefits and shared goals, and in many cases, is developed between companies and functional departments, rather than between individuals on a personal level. a thoughtfully developed and carefully executed customer support program will certainly contribute to the establishment and reinforcement of a collaborative relationship with industrial customers. toppinen et al. (2013) suggest that the forest industry should consider adopting a service-dominant logic. this service-dominant logic requires a closer relationship between a company and its customer in product and service development processes, in order to create superior value for the customer (toppinen et al. 2013, lusch 2011). however, customer support and service is not a widely mentioned theme among the managers. this indicates that customer support and service could be an area for potential development. a central tenet of a market orientation is suggested to be the ability of the firm to learn about customers and markets (kohli and jaworski 1990, narver and slater 1990). kohli and jaworski (1990) maintain that the organization-wide generation of market intelligence, the dissemination of the intelligence across departments, and organization-wide responsiveness to the market intelligence constitute market-oriented organizational behaviors. day (1994) also suggests that market sensing is an important capability of market-driven companies. some managers do admit the importance of market information management. however, they mainly focus on how they obtain market information from outside and mention little about how the information is distributed, interpreted and responded to within their companies. also, many of the interviewees simply do not mention this marketing activity. it is sensed that not enough importance is placed on identifying customer needs and market trends. for those companies suffering from the financial crisis and struggling to find a way to survive, this can be a good place to start. electronic advertising is gaining growing popularity among businesses. it is considered to be more efficient and covers a broader range of audiences due to wide internet usage. many of the studied companies reflect han and hansen — marketing organization and implementation in private u.s. sawmilling companies 11 this trend and are developing their own internet marketing programs. compared to many of the companies in the b2c market, forest products industry companies are behind on using the internet as a marketing tool so more efforts are needed in this area. also, a couple of managers mention e-business, which is also a good opportunity that the forest products industry companies could pursue. tokarczyk and hansen (2006) recommend that managers should consider two questions when they try to brand their products: what the brand stands for and how it can be maintained, improved and communicated. many of the interviewees express quite clearly that they try to create an image of “good quality” by branding all or a certain grade of their products. however, there is a lack of discussion on how they pursue branding, except for simply mentioning the brand name is stamped or printed on the package. the situation is quite similar when managers talk about trade shows. trade shows are effective ways for forest products industry companies to reach current and potential customers (shi and smith 2012, smith and smith 1999). there are ways to study the different goals of the attendees and tailor the communication message to meet their needs. however, managers talk about attending trade shows in a very general way without providing any details. it may be that managers need to take a more strategic approach to branding and trade shows. marketing’s participation in product planning and development is a characteristic of marketing-oriented companies and is suggested to have positive impact on firm performance (kahn and ncdonough 1997). research on marketing’s cross-functional integration with new product development indicates that interdepartmental collaboration may have a stronger impact on performance than interdepartmental interaction (kahn 1996). the job of marketing/sales people in product development in the studied companies is mostly information collection and dissemination, which is more of interdepartmental interaction. companies can potentially benefit from marketing/sales people being more involved and taking a stronger role in product development. hansen and juslin (2011) list three different pricing methods commonly used by forest products industry companies. they are market-based pricing, cost-based pricing and value-based pricing. among the three pricing methods, market-based pricing is suggested to play a significant role in north america (hansen and juslin 2011). it is mainly based on pricing newsletters and sales’ market knowledge. such a method is also frequently mentioned by the managers. so the findings are consistent with what is suggested in the literature. this largely reflects a production/sales orientation. companies, especially those who consider themselves “high quality” producers may want to give consideration to value-based pricing. this method is able to offer them the highest possible level of price optimization and thus more profit if they can anticipate customers’ perceptions of their products correctly (hansen and juslin 2011). 5.0 conclusions despite calls for improved marketing sophistication in the sector, we find underdeveloped thinking on the organization and implementation of marketing within forest products industry companies. from the entity perspective, most companies in this study do not have an integrated marketing department managed by a marketing executive. instead, they have a sales department with a sales executive. this largely reflects a salesoriented mentality. from the activity-based perspective, the importance of sales’ job is widely emphasized, while other marketing activities receive little attention. it may be that in the mind of the managers with a sales-oriented mentality market information management and product development are not as important as selling. it may also be that they do not consider market information management and product development as marketing activities. if this is the case, an enhanced understanding of the notion can potentially benefit the implementation of marketing in forest products industry companies. our findings provide strong evidence that forest sector companies have a major opportunity to increase their marketing sophistication. fostering a better conceptual understanding of marketing among forest industry managers may help them organize and implement it more effectively. done appropriately, this can pay off in competitive advantage. 6.0 limitations the interviews were conducted during the great recession when the companies were experiencing very difficult markets. marketing could be a more topical issue within this special context. however, due to the same reason, the managers might be cautious to reveal much detail about their business and be overly conser12 bioproducts business 2(1) 2017 vative on their answers. also, during the recession, the managers could be increasingly critical about investing much effort into marketing which is unlikely to bring the companies short-term returns. 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journal of marketing. 56(4):1-17. wind, y. 1981. marketing and the other business functions. research in marketing. 5:237-264. workman jr, j.p., c. homburg, and k. gruner. 1998. marketing organization: an integrative framework of dimensions and determinants. the journal of marketing. 62(3):21-41. yin, r. k. 2009. case study research: design and methods. 4th ed. sage publications, ca. 219 pp. abstract developed in the early 1990s, cross-laminated timber (clt) is an engineered wood product that consists of multiple layers of dimension lumber oriented perpendicular to one another and glued together to create structural panels. clt has been used successfully in europe for over 20 years and it is now entering the canadian and australian markets. it has also been gaining momentum in the u.s., particularly in the pacific northwest. this paper presents the results of a survey conducted to evaluate familiarity and perceptions of u.s. engineering firms about clt, as well as their willingness to adopt it. results indicate that the level of awareness of clt is low to moderate. highest ranked characteristics of clt were its environmental and structural performance and its aesthetic properties, while lowest ranked characteristics were vibration and acoustic performance and lack of availability in the market. influential barriers to the successful adoption of clt involve building code compatibility, high material and construction costs, and a rather limited availability in the u.s. most respondents indicated willingness to adopt clt in the near future. based on these results, this paper concludes that a successful market adoption of clt in the u.s. will greatly depend on the familiarity of the clt system and its advantages among construction professionals. this familiarity can be enhanced through promotional activities, educational initiatives, and successful demonstration projects. keywords: adoption, cross-laminated timber, mass timber, perceptions, willingness, wood construction awareness, perceptions and willingness to adopt clt by u.s. engineering firms 1 phd, department of bioproducts and biosystems engineering, university of minnesota, st. paul, mn 55108. email: lagua006@umn.edu. 2 associate professor, department of bioproducts and biosystems engineering, university of minnesota, st. paul, mn 55108. email: espinoza@umn.edu. * corresponding author. acknowledgements: the authors would like to gratefully acknowledge the assistance of tony staeger and john ellingson from hga architects and engineers; doug steimle from schaefer; david barber, hans-eric blomgren and michelle roelofs from arup; and benton johnson from skidmore, owings and merrill. the research discussed in this paper forms the basis of a phd dissertation and was funded through the department of bioproducts and biosystems engineering graduate research fellowship from the university of minnesota. maria fernanda laguarda-mallo1* and omar espinoza2 bioproducts business 3(1), 2018, pp. 1-14. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-001 1.0 introduction construction professionals today cannot afford to follow old models of design and construction (bernheimer 2015a). two major issues that will require firms to take a new approach involve climate change and a growing world population. the construction of buildings across the world is currently dominated by concrete (bernheimer 2015b), but production of cement, a primary ingredient in concrete, is a major source of pollution, producing a ton of co2 for every ton of cement (hanle 2013). one method of reducing the environmental impacts of construction involves increasing the use of materials with lower environmental footprints, such as wood. approximately half of wood is carbon, effectively turning wood, either as growing stock or as end products, into “carbon sinks” (lehmann 2011, oneil & lippke 2010). wood’s natural heterogeneity, unpredictable defects, and variation of properties have been timber’s greatest disadvantages in the market of structural products. engineered wood products were initially developed in order to account for this heterogeneity, more efficiently utilize the raw material and expand the uses of wood products in construction (forest products laboratory 2010, mackeever 1997). in ewps manufacturing, wood boards, chips, or particles are assembled using adhesives and/or pressure to create a product with less variability, enhanced design characteristics, and more consistency and reliability than the original material (apa 2015, forest products laboratory 2011). thus, the production of ewps can make use of small diameter trees, lower grade lumber, and a wider variety of tree species 2 bioproducts business 3(1) 2018 (paun & jackson 2000). the development of ewps, such as glulam, i-joists, and strand and particle boards, has established new uses for wood in construction (cwc 2014, paun & jackson 2000). a recent innovation in ewps was the development of clt in austria in the 1990s (lehmann 2012). clt is a building system (chen 2012, lehmann 2012, oqvist, ljunggren, & agren 2012, zumbrunnen & fovargue 2012) composed of large-format solid timber panels that developed as an extension of the technology that began with plywood (crespell & gagnon 2011, fpinnovations 2013, lehmann 2012). clt panels are composed of lumber boards that are glued together, alternating the direction of their fibers for each layer. the cross-lamination of layers translates into panels that are monolithic, experience minimal shrinkage (both longitudinal and transversal), and can carry forces in all directions (evans 2013). this stability can result in very small tolerances for prefabricated buildings. developed in europe over 20 years ago in the 1990s, clt has been used as a structural system for various types of buildings, from residences and offices, to barns, power lines, schools, churches, bridges and mixed-use mid and high-rise buildings (cwc 2015). this versatility has added visibility and reputation to the system (evans 2013, sanders 2011). in europe, the use of clt has become very popular. more recently, it has been introduced in north american and australian markets; more than fifty buildings have been built using this building system (crespell 2015). yet, the u.s. market for clt is still in its embryonic stage (laguarda-mallo 2014). so far, only a handful of projects have been built using clt, most of them with imported panels. 1.1 product adoption rogers (2003) defines adoption as “a decision to make full use of an innovation as the best course of action available.” therefore, the adoption of an innovation relates to consumers’ individual decision-making processes regarding the full use of new products. this complex process involves multiple stages, which will be described in the following sections. 1.1.1 new product adoption process the successful introduction of a new product in the market carries significant economic risk for a firm (armstrong, kotler, & he 2013). a number of authors have addressed the process of product adoption (harvey 1979, urban & gilbert 1971) and several models have been proposed (beal, rogers, & bohlen 1957, king 1966, rogers 2003). beal et al. (1957), for example, propose the five-stage product adoption process, as shown in figure 1. awareness is defined in the marketing literature as the moment a consumer learns about a new product, service or brand and starts forming the first perceptions about its benefits and disadvantages (armstrong et al. 2013). during this stage the individual usually has very limited information about the product. according to several authors, the level of awareness largely influenced by how and how much information about the product is getting to the potential consumer (beal et al. 1957, king 1966, rogers 2003). the second step in the adoption process relates to how attracted the consumer is to said product. at this point in time, the individual usually conducts a more in-depth research about the features and the performance characteristics of the product (armstrong et al. 2013). it is not until the application stage, that the individual evaluates the new product and considers its advantages and disadvantages (armstrong et al. 2013). during this stage, the potential consumer arrives to the conclusion of whether or not the new product should be tried out. a positive application leads to a trial period. finally, the adoption of the product (king 1966). during the adoption the consumer starts using the new product. according to gayle (2008), during this final stage, the individual often becomes an advocate for the product in their community. the role of these early adopters is essential in transferring product knowledge to other potential adopters. 1.1.2 innovation adoption in the construction industry the construction industry has often been described as laggards with regard to the adoption of new technologies (ganguly, koebel, & cantrel 2010, tangkar & arditi 2004, tatum 1987). innovation is seen by (wagner & hansen 2005) as a source of competitive advantage that can benefit the construction industry, providing the critical component of a firm’s long-term competitive strategy (slaughter 2000). however, the adoption of innovations is a highly complex process, where scarce research has been conducted. the risk associated with the adoption of an innovative material or process has been recognized by slaughter (2000) as one of the most significant factors affecting the rate of adoption of a new product. specific to the laguarda-mallo and espinoza — awareness, perceptions and willingness to adopt clt by u.s. engineering firms 3 construction industry, liability risk is considered one of the largest barriers to the adoption of new materials and technologies (u.s. department of housing and urban development (hud) 2005). design professionals, such as architects, engineers, and contractors, are often responsible for the performance of their buildings, including the specification of the materials used, and can face severe penalties when building components fail to perform as expected (sido 2006). this liability is frequently shared with product manufacturers (u.s. department of housing and urban development (hud) 2005). according to mccoy, thabet, & badinelli (2009), a complexity of the adoption process in the construction industry is caused by the large number of actors (e.g. suppliers, manufacturers, design professionals, and final users) involved in the decision-making process regarding the adoption of an innovation. although design professionals comprise only one group of actors involved in the decision-making process, their decisive role in the supply chain, as the specifiers of building requirements and materials, makes them essential to the success of the adoption of an innovative material or technology (mccoy et al. 2009). 1.2 objectives extensive research has been carried out to evaluate clt performance as a structural system, including studies on clt’s mechanical properties, fire and thermal performance, and seismic behavior (harris et al. 2013, karacabeyli & douglas 2013, kuilen et al. 2011). however, market research related to clt is scarce. to address this gap in the literature, this study seeks to assess the market potential for clt in the u.s. by investigating the level of awareness, perceptions, and willingness to adopt clt by u.s. structural engineering firms, considered one of the key actors in the structural material decision-making process. the research presented here is part of a larger effort by the authors to study the adoption of innovative wood products, specifically clt, by construction professionals. 2.0 methodology a nation-wide survey of u.s. structural engineering firms was carried out with the purpose of learning about the community’s awareness and perceptions regarding clt. the survey was conducted online, which provided a costeffective approach to reaching a large geographic area (dillman 2011, sue & ritter 2012). qualtrics software was used in the development of the design, implementation, and data analysis of this study (qualtrics 2016). given the importance of engineers in the material selection process, engineers comprised the population of interest in this study. based on information from prior interviews (laguarda-mallo & espinoza 2014) and preliminary economic analysis conducted by fpinnovations (fpinnovations 2011), which concluded that commercial buildings represent a likely market for clt, a decision was made to focus on u.s. civil engineering firms that work primarily with commercial (which includes office buildings, retail, hospitals, restaurants, and hotels), industrial, institutional, and educational buildings. as a first step in the survey process, a list of u.s. structural engineering firms was compiled using an online database managed by the american council of engineering companies (acec 2016). according to personal communications with the chair of membership of the acec, this association represents licensed engineers of all fields, including civil structural engineering firms. the acec’s member directory provides search tools to generate lists of firms using criteria such as geographic location, type of engineering firm, and zip code. there are currently more than 5,000 firms listed in the acec’s database, representing more than 500,000 employees throughout the country (acec 2016). as there are approximately 94,500 engineering firms operating in the u.s. (u.s. census bureau 2016), the acec database represents approximately 5.3% of all engineering firms in the u.s. 2.1 sample size determination choosing the sample size is a critical decision in any survey research. the objective involves selecting the figure 1. stages of the adoption process, according to beal et al. (1957). awareness informan�on applica�on trial adop�on 4 bioproducts business 3(1) 2018 smallest sample size that allows for an adequate confidence level and margin of error. an appropriate sample size will help decrease the occurrence of sampling error and sampling bias (dillman 2011). sample size was calculated with a desired level of confidence of 95%, a confidence interval of 5%, and a standard deviation of 0.5 (dillman 2011). assuming an expected response rate of approximately 25%, an initial sample of 1,600 firms was determined to be sufficient. the number of firms from each state to be included in the sample was calculated as a proportion of each state’s population. 2.2 survey development the first draft of the survey was created taking into consideration a previous survey to u.s. architecture firms conducted in 2015 (laguarda-mallo & espinoza 2015). this questionnaire contained a total 15 questions, including 6 multiple-choice questions, 8 likert-type items, and one open-ended question. the questionnaire covered the following topics: • firm demographic information, including the location and size of the firm. • sources of information used to investigate new structural materials, firms’ perceived innovativeness, and types of buildings and structural materials firms typically work with. • awareness of clt in the engineering community, including familiarity with clt and how respondents learned about the system. • perceptions about clt, including how participants perceive the environmental, structural and economic benefits of the system. • willingness to adopt the clt building system. the survey questionnaire was then sent to two university professors with extensive knowledge in conducting surveys and two professional engineers. these individuals provided detailed feedback about the questionnaire. based on this feedback, changes were made to the questionnaire. the survey instrument included an introductory email to inform participants about the study and ask for their participation, including a link to access the webbased survey. the questionnaire started with a welcome page, information about the study, and a confidentiality statement. questions were grouped according to the topics mentioned above. a final “thank you” message was presented to those respondents who completed the questionnaire. participants were also asked whether they were interested in receiving a summary of the survey results; those who answered positively were asked to provide an email address to which the summary would be sent. 2.3 survey pretest a pretest was conducted by sending the survey to seven u.s. structural engineering firms. these firms were asked to provide feedback on the survey’s clarity and potential errors. after one week, a reminder was sent to participants who had not yet responded. all seven firms’ representatives responded to the pretest. a preliminary analysis of the pretest responses did not show any problems completing the survey. 2.4 survey implementation an initial email was sent to all firms on the distribution list in february 2016. three reminder emails were sent to those participants that did not complete the questionnaire, one, two and three weeks after the initial email. thus, the online survey was closed four weeks after the initial email was sent. due to the low response rate obtained during the first iteration of the study, personal phone calls to all non-respondents were conducted over the course of the three weeks following the first reminder to obtain more responses. 2.5 data analysis responses obtained from the survey were analyzed using similar data analysis techniques as the ones used in a previous study by the authors (laguarda mallo & espinoza 2015). descriptive statistics were calculated using excel spreadsheets (microsoft 2017). chi-square tests were evaluated using ibm spss software at a 0.05 alpha level. 2.6 limitations authors recognize that as with any survey, there are many limitations that could arise (dillman 2011, laguarda mallo & espinoza 2015, sue & ritter 2012). the most important are listed below: • measurement error: survey questions and answers could lead to inaccurate analysis because question and answer options may be interpreted differently by different respondents. measurement error was minimized by the authors by seeking the input and feedback from experts and by conducting a pretest. laguarda-mallo and espinoza — awareness, perceptions and willingness to adopt clt by u.s. engineering firms 5 • non-response bias: this bias could occur when respondents and non-respondents are significantly different (berg 2005). in order to evaluate existence of any issues, non-response bias was calculated with early and late respondents. results are presented in the results section of this manuscript. • coverage error: using the acec database to compile the mailing list for this survey could introduce a source of coverage error, as not all u.s. structural engineering firms are associated with the acec (only 5.3% of all engineering firms in the u.s. are part of the acec), and some differences may exist between firms that belong to this association and firms that do not. • similarly to what was done by the authors in a previous study (laguarda mallo & espinoza 2015), a “multi-region” category was created, grouping those engineering firms that indicated to work in more than one region. even though this helped the authors simplify the data analysis and make inferences, it is possible that some region-specific information was lost from after this regrouping (laguarda mallo & espinoza 2015). • as with any internet-based survey, connection problems could have affected the completion of the survey (laguarda mallo & espinoza 2015). • it is important to mention that responses from the survey represent the insights of only one of many professionals of the participating firms (laguarda mallo & espinoza 2015). • due to our sampling criteria of selecting engineering firms that work mainly with commercial projects, generalizations to the entire engineering community cannot be made. • due to our low response rate (see next section “results and discussion”), generalizations to the population of interest are also difficult to make. 3.0 results and discussion 3.1 response rate the questionnaire was sent to a total of 1,601 u.s. structural engineering firms. a total of 113 usable responses were received. accounting for 110 firms that declined to participate or were not part of our target population (e.g., bridge engineering firms, consultants, etc.), 202 undeliverable emails, 1 duplicate address, and 12 incomplete (unusable) responses, the adjusted response rate was 8.8%. 3.2 non-response bias assessment non-response bias refers to error in estimating a population characteristic based on a sample in which, due to non-response, certain types of respondents are under or not represented (berg 2005). to assess non-response bias, respondents included in this study were separated in two groups, or “waves”: the first group corresponds to the early respondents and the second group corresponds to the late respondents (laguarda mallo & espinoza 2015). late respondents were used as a proxy for non-respondents. early and late respondents were compared using three demographic questions from the survey: location and size of the size, and level of awareness about clt. early and late respondents were compared using pearson’s chi-squared tests with a significance value of 0.05. the test performed using the location criteria resulted in a chi-squared value of χ2=0.997 and a p-value of 0.348 (p>0.05), indicating that there is no relationship between the time of response and the location of the firm. the association between the time of response and the size of the firm also shows that there is no statistically significant relationship between these two variables (χ2=0.937 and p-value =0.812). similarly, no statistically significant relationship was found between the timing of the response and the familiarity with clt (χ2=0.669 and p-value of 0.556). based on these analyses, we concluded that no significant bias existed between respondents and non-respondents. 3.3 firm demographics in order to gain further insights about respondents, authors asked participants in in which u.s. region their firm operated. multiple responses were possible. firms working in more than one region were grouped into a “multi-region.” table 1 displays the counts and percentages of respondents for each region as well as firm size. 3.4 sources of information findings about the most commonly used sources of information (table 2) indicate that most engineering firms gather information about new materials from the web (93.8%), industry events, such as meetings with suppliers (78.8%), and design and construction-themed magazines (64.6%). the least mentioned media included webinars, with only 19.5% of respondents indicating 6 bioproducts business 3(1) 2018 table 2. sources of information used to learn about new building materials. n=113. source of information count of respondents percentage* internet 106 93.8% industry events 89 78.8% magazines 73 64.6% academic journals 70 61.9% research academics 61 54.0% seminars 60 53.1% books 58 51.3% expos 42 37.2% workshops 41 36.3% conferences 39 34.5% manufacturer’s websites 37 32.7% webinars 22 19.5% unanswered 3 2.7% * multiple responses were possible. have been discussed, of which “innovation characteristics” and “adopter’s characteristics” stand out. in regard to “adopter’s characteristics,” the most common criteria include age, education, and income (arts 2008, gronross 1997). hirschman (1980) stated that “psychographic characteristics” are part of “adopter’s characteristics,” and include innovativeness, defined by the author as “a driver of adoption intention and adoption behavior as it captures the propensity of consumers to adopt new products.” to better understand how structural engineering firms perceive their own innovativeness and investigate the willingness of firms to adopt innovative wood-based materials, survey respondents were asked to rate their agreement with several statements related to employee training, the incorporation of innovation in the firm’s competitive strategy, and the openness to collaboration between the firm and other organizations. results for these questions are shown in figure 2. research conducted on organizational innovativeness indicates that encouraging employee freedom to explore and innovate positively influences innovative behavior at the individual, team, and organizational levels (anderson 2014, shalley & gilson 2004). results from our survey indicate that the majority of respondent firms invest in the training of their employees, with 93.8% of firms agreeing or strongly agreeing with the related statement. this is not surprising, given that professional engineers must fulfil continuing education requirements. similarly, 92.0% of respondents indicated that their firms encourage employees to research new materials. the inclusion of innovation in the corporate strategy seems to also apply to the majority of firms, as 84.1% of respondents agreed or strongly agree with the related statement. statements with which respondents indicated the most disagreement were those related to collaboration with other firms or institutions; 66.3% of respondents stated they “strongly disagreed” or “disagreed” with the related statement. we hypothesize that the lack of collaboration relates to the market-driven nature of the engineering industry, where opportunities related to the research and development of new technologies or materials are scarce and the primary objective of firms is to deliver the final product, based on the clients’ specifications, within the stipulated amount of time and cost, all while minimizing the risk for the firm. a pearson’s chi-squared test (α=0.05) was performed to determine whether there was a significant relationship between innovativeness and other demographic factors. table 1. location and firm size, as reported by survey respondents. n=113. firm characteristic count of respondents percentage — firm location (u.s. region) — multi-region 38 33.6% midwest 24 21.2% west 21 18.6% south 20 17.7% northeast 10 8.8% alaska/hawaii 0 0.0% total 113 100.0% — firm size (number of employees) — 1 to 4 employees 18 15.9% 5 to 9 employees 14 12.4% 10 to 19 employees 25 22.1% 20 to 99 employees 28 24.8% 100 employees or more 28 24.8% total 113 100.0% that they use this source to learn about new materials. these results show an opportunity to promote innovative materials through articles and reports published on the internet and in magazines, as well as by introducing them at industry related events. 3.5 innovativeness over the past three decades, many studies have been conducted to evaluate factors that influence the adoption of new materials by consumers (gatignon h. 2002, gronross 1997, rogers 2003). a wide range of factors laguarda-mallo and espinoza — awareness, perceptions and willingness to adopt clt by u.s. engineering firms 7 no statistical difference was found between location and innovativeness. however, a significant relationship was found between innovativeness and the size of the firm. table 3 lists criteria for which a statistical difference was found. in the engineering community, innovation is seen as a competitive advantage. however, as in any sector, the successful introduction of an innovation usually requires an upfront investment and carries significant economic risk (armstrong et al. 2013). our results indicate that larger firms tend to invest more in innovation than smaller firms. it may be that larger firms have greater financial resources, thus allowing them to be more open to collaboration and innovation. in contrast, collaboration and innovation could be perceived as being more risky to smaller firms trying to stay competitive. 3.6 type of buildings similarly to a previous study to u.s. architecture firms conducted by the authors (laguarda mallo & espinoza 2015), participants of this study were also requested to state all the type of buildings their firm is most commonly involved with. responses to this question are indicated in table 4. as expected, per our sampling method, twothirds (66.4%) of respondents indicated that they work with commercial construction. other frequent responses included industrial (46%), educational (45.1%), and multifamily (44.2%). only 23.9% of sampled firms work with single-family residential buildings. 3.7 materials used by type of construction according to an exploratory study conducted by laguarda-mallo and espinoza (2016), decisions regarding the structural material to be used in a commercial, industrial, institutional, or educational construction 24.5% 25.2% 22.1% 6.3% 41.8% 40.5% 32.7% 29.5% 8.9% 15.0% 6.2% 3.5% 30.0% 25.2% 35.4% 44.6% 57.1% 47.8% 68.1% 51.3% 9.0% 9.7% 22.3% 27.7% 36.3% 23.9% 42.5% firm collaborates with research centers firm collaborates with universities firm collaborates with other firms firm reviews and reflect on past projects firm open to collaborate with manufacturers innovation is in firm's corporate strategy employees are encouraged to research new materials firm invests in training employees strongly disagree disagree agree strongly agree note: percentages under 4% are not shown. figure 2. level of agreement with statements about firm innovativeness. n=113. table 3. statistically significant association between the size of the firm and innovativeness, as per pearson’s chi-squared test. innovativeness dimension p-value chi-squared “firm collaborates with other firms” 0.003 16.017 “firm collaborates with research centers” 0.008 13.745 “firm open to collaborate with manufacturers” 0.001 17.576 “firm collaborates with universities” 0.002 17.361 table 4. type of buildings that participant firms specialize on. n=113. type of building count of respondents percent* commercial 75 66.4% industrial 52 46.0% educational 51 45.1% multi-family residential 50 44.2% recreational 43 38.1% government 35 31.0% transportation 30 26.5% religious 29 25.7% single-family residential 27 23.9% non responses 19 16.8% * multiple responses were possible project are frequently made early in the design process. these decisions are influenced by many factors, including cost, code, and structural requirements. when asked about the materials used with each type of construction, respondents indicated light wood-frame as the primary type of material used for single-family residential construction and multi-family residential construction above foundation (53.1% and 32.5% respectively; see figure 3). for single and multi-family buildings, light wood-frame 8 bioproducts business 3(1) 2018 construction is generally more cost-competitive than concrete or steel alternatives (laguarda-mallo & espinoza 2016). for taller (more than 5 stories) and larger buildings with complex geometries and greater dead loads (i.e. stationary loads, such as self-weight of structural members), live loads (i.e. loads assumed by the intended use or occupancy of the building), rain, wind, snow, or even, in some cases, earthquake loads (icc 2015) other materials become more cost-effective. this tends to be the case with commercial, institutional, transportation, and government buildings. results shown in figure 3 indicate that for these types of construction, steel, concrete or a mix of both is typically selected. due to the low response rate for each category tested, chi-squared tests could not be performed to evaluate the relationship between the materials used by each type of construction and other items in the questionnaire. 3.8 importance of materials characteristics decisions made during the material selection process are affected by personal materials preferences of construction professionals and priorities set during the design process (e.g. cost, aesthetics, durability etc.) (laguardamallo & espinoza 2016) for this reason, firms participating in this study were asked to rate the importance of several materials attributes when selecting construction materials. a 6-point likert scale was used, ranging from “very important” to “not at all important. figure 4 summarizes responses to these questions. findings presented in table 4 show that the highest rated attributes that engineers look for in a construction material include “compatibility with building code” (76.1% of respondents rated this attribute as “extremely important” or “very important”), “mechanical properties” (72.6%), “economic performance” (76.1%), “fire performance” (64.6%), “post-construction maintenance” (62.9%) and “availability in the market” (62.8%). leed credits and acoustic performance did not appear to be a priority of engineers when selecting a material, as only 28.3% of respondents rated these characteristics as “extremely important” or “very important.” similarly to the what was found in the study to u.s. architecture firms conducted by the authors (laguarda mallo & espinoza 2015), attributes that are directly associated to the performance of structural elements are usually related the highest. authors hypothesize that this is due to the fact that structural performance is intrinsically related to the safety of buildings and its occupants for which construction professionals are legally responsible for (laguarda mallo & espinoza 2015, pealer 2007, sido 2006). other features, including “economic performance,” “availability in the market,” and “post-construction maintenance”, which are commonly associated with the short and long-term cost of buildings (laguarda mallo & espinoza 2015) were also rated high in importance among the engineering firms that participated in this study. these results were compared to a previous study conducted by laguarda-mallo and espinoza (2015) to figure 3. structural materials (or combination of materials) typically used by respondents for building types listed on the left. n=113. 53.1% 32.5% 12.6% 7.2% 11.4% 16.1% 16.7% 6.3% 15.0% 9.0% 5.9% 5.7% 4.8% 6.9% 14.1% 20.0% 14.1% 12.4% 5.7% 7.6% 17.2% 9.4% 8.3% 26.1% 24.8% 32.5% 24.1% 23.8% 20.7% 30.7% 27.8% 4.7% 6.7% 13.1% 16.3% 18.2% 20.7% 18.1% 12.6% 18.9% 22.2% 4.7% 8.3% 13.1% 17.6% 28.6% 25.3% 20.0% 6.9% 24.4% 16.7% 7.8% 9.2% 12.1% 15.7% 13.0% 14.9% 14.3% 19.5% 16.5% 16.7% single-family… multi-family… commercial educational transportation governmental recreational religious industrial other percent of respondents wood-frame concrete+wood wood+steel steel concrete+steel concrete masonry note: percentages below 4% are not shown. laguarda-mallo and espinoza — awareness, perceptions and willingness to adopt clt by u.s. engineering firms 9 identify similarities and differences between architects and engineers. both professions place considerable importance on the cost and structural capabilities of construction materials, but demonstrate very different opinions toward the aesthetic performance of construction materials. aesthetics was rated as “very important” or “important” by 94.0% of architects that participated in the previous study (laguarda mallo & espinoza 2015) and by only 6.2% of engineers that participated in the study discussed in this paper. the results from two previous studies conducted by the authors (laguarda-mallo & espinoza 2014, laguarda mallo & espinoza 2015) indicated that location and size of firm may be associated with the way professionals rate material’s attributes. for this reason, chi-square tests at a 0.05 alpha were conducted to determine the validity of this statement. results from the tests performed indicate that there are statistically significant differences between engineering firms in different locations and how “earthquake performance” was rated (p-value = 0.000, chi-squared = 21.027). this isn’t surprising, given that some regions experience seismic events with more frequency and intensity than others (dieterich & okubo 1996, koyanagi, endo, & ward 1976). in regard figure 4. importance of the characteristics listed on the left for specifying a structural material. n=113. 8.0% 12.4% 6.2% 5.3% 14.2% 13.3% 13.3% 23.9% 27.4% 19.5% 32.7% 41.6% 46.9% 46.0% 8.8% 18.6% 19.5% 19.5% 26.5% 27.4% 26.5% 27.4% 27.4% 17.7% 35.4% 43.4% 31.9% 31.0% 29.2% 34.5% 23.0% 25.7% 31.0% 27.4% 24.8% 28.3% 37.2% 28.3% 26.5% 11.5% 19.5% 26.5% 15.0% 15.9% 10.6% 8.0% 15.0% 12.4% 19.5% 17.7% 17.7% 14.2% 8.8% 6.2% 14.2% 9.7% 8.8% 23.9% 21.2% 9.7% 10.6% 11.5% 14.2% 10.6% 4.4% 10.6% 16.8% 11.5% 4.4% 17.7% 8.8% 8.0% 8.8% 8.8% 9.7% 8.8% 8.0% 9.7% 13.3% 8.8% 9.7% 8.0% 8.8% 8.0% 8.0% 10.6% leed credits acoustic performance vibration performance environmental… aesthetics maintenance moisture performance complexity of… availability of design… earthquake performance availability in the market post-construction… fire performance economic performance mechanical performance compatibility with… percent of respondents extremely important very important important moderately important somewhat important not at all important non response note: percentages below 4% are not shown. characteristics on the left are sorted using the two highest importance ratings (“extremely important” and“very important”), with the largest percentage at the top. to firm size, responses were significantly different for “earthquake performance” (p-value = 0.006, chi-square = 14.601) and “vibration performance” (p-value = 0.027, chi-squared = 10.961). these results may suggest that smaller firms, which are more likely to be associated with commissioned projects, such as single and multifamily residential buildings, could be placing a higher importance on vibration a greater concern for these types of buildings than others. 3.9 level of awareness as seen in the introductory section of this manuscript, the first step to the adoption of a new product relates to how familiar of potential consumers are with said product. one of the purposes of this research was to establish the level of familiarity or awareness about clt among u.s. structural engineering firms. findings (table 5) indicate that the familiarity with clt among engineering firms in the u.s. is low to moderate. a combined 59.3% of respondents indicated that they were “not very familiar” or that they “have not heard about it.” this indicates that there is a need for education and training on clt among the engineering community if this product is going to be more widely adopted in the u.s. 10 bioproducts business 3(1) 2018 due to the low response rate for each category tested, chi-squared tests could not be performed to evaluate relationships between the level of awareness, location, and firm size. because the rest of the survey questions required some knowledge of clt, a “skip logic” was set up in the questionnaire to direct those respondents that “have not heard about clt” to a short description about clt, its characteristics, and claimed advantages, followed by two questions. the first question addressed the survey respondent’s interest in learning more about clt; the second question addressed the likelihood that the respondent would adopt the system for future projects. of the 22 respondents that had not heard about clt, 12 indicated that they were at least “somewhat interested” in learning more about it. with regard to the likelihood that the respondent would adopt clt for a future project, 5 respondents indicated that it would be adequate while 7 indicated uncertainty. this uncertainty is consistent with the low familiarity of these respondents with clt. the following section will explore the responses of those participants of the study that reported having some familiarity with clt. these participants were ask to indicate how through which source they first learned about clt. the results in table 6 show that most firms learned about clt from the internet, design and construction-themed magazines and conferences (37.9%, 36.8% and 36.8% respectively). the least mentioned media included radio, television, newspaper and wordof-mouth, each of which were selected by less than 7% of the respondents. respondents were also given the option to indicate whether they heard about clt from another source. two respondents indicated that they learned about clt from a “design partner,” one indicated “pe (the principles and practice of engineering) exam,” another indicated “salesman,” and one respondent wrote that they heard about clt through this survey. beyond the 22 respondents that did not know about clt, 87 respondents that were familiar with clt were left for analysis. 3.10 perceptions about clt the way potential consumers perceive new products is central in the adoption process. according to cooney (2014) and armstrong et al. (2013), perceptions could be as or more important than the actual characteristics of the product. to address this question, participants of this study were requested to rate clt attributes in comparison to traditional building materials (e.g., steel and concrete). findings are presented in figure 5. the highest-rated features of clt included “aesthetics,” “environmental performance,” and “mechanical performance;” which were perceived as “good” or “average” by 51.7%, 51.7%, and 36.8% of respondents, respectively. this is consistent with the results from a previous study of u.s. architecture firms (laguarda-mallo and espinoza 2014), in which aesthetics, environmental and structural performance were also the highest ranked clt attributes. the lowest ranked characteristics were “availability in the market,” “acoustic performance,” and “vibration performance,” perceived as “good” or “average” by only 3.4%, 8.0% and 9.9% of respondents, respectively. recent research indicates that due to its massive nature, clt-based systems achieve good acoustic performance and provide adequate noise control for both airborne and impact sound transmissions, especially if sealant and other types of acoustic membranes are used to provide air tightness and improve sound insulation at the interfaces between floor and wall plates (sylvain gagnon 2011, s. gagnon & karacabeyli 2013). with regard to availability in the u.s. market, as of october 2016, clt panels are not yet widely available. only three u.s. manufacturers exist and only one of which is certified to produce clt panels for construction under the ansi/apa standard for performance rated clt (prg 320 (ansi 2012)). due table 6. sources of information from which respondents learned about clt for the first time. n=87. source of information count of respondents percent internet 33 37.9% magazine 32 36.8% conference 32 36.8% academic journal 8 9.2% relative/ friend 6 6.9% newspaper 5 5.7% television 1 1.1% radio 0 0.0% non-responses 3 3.4% table 5. familiarity with clt reported by respondents? n=113. familiarity with clt count of respondents percent very familiar 13 11.5% somewhat familiar 29 25.7% not very familiar 45 39.8% have not heard about it 22 19.5% unanswered 4 3.5% laguarda-mallo and espinoza — awareness, perceptions and willingness to adopt clt by u.s. engineering firms 11 figure 5. respondents’ perceptions about the performance of clt compared to other materials (e.g. steel, concrete). n=87. 5.7% 6.9% 9.2% 10.3% 11.5% 20.7% 26.4% 6.9% 8.0% 5.7% 8.0% 16.1% 12.6% 12.6% 18.4% 14.9% 23.0% 13.8% 16.1% 25.3% 31.0% 25.3% 11.5% 13.8% 14.9% 18.4% 17.2% 5.7% 12.6% 19.5% 17.2% 16.1% 16.1% 20.7% 18.4% 16.1% 5.7% 9.2% 20.7% 10.3% 16.1% 9.2% 5.7% 5.7% 17.2% 11.5% 5.7% 8.0% 8.0% 11.5% 12.6% 5.7% 20.7% 8.0% 4.6% 4.6% 8.0% 4.6% availability in the market vibration performance acoustic performance moisture performance maintenance leed credits compatibility with building… post-construction maintenance earthquake performance availability of design tools fire performance economic performance complexity of construction mechanical performance environmental performance aesthetics good average below average poor don't know percent of respondents note: percentages below 4% are not shown. to the low data count for each category tested, chisquared tests could not be performed to evaluate the relationship between how clt attributes are perceived and other criteria within the survey. 3.11 willingness to adopt clt the third objective of this study was to determine whether the population of interest would be willing to adopt clt if it were available in the market. this information is essential to evaluate the potential market success of clt in the u.s. table 7 presents participants’ responses to this question. more than half of respondents (57.8%) indicated that they would be “very likely” or “likely” to adopt clt in one of their future building projects if it were available in the u.s.; 35.6% were “uncertain” and 12.6% indicated “unlikely” or “very unlikely” to adopt the system in the future. these findings are consistent with the level of awareness reported previously, as more than a third of professionals would be hesitant to adopt a material with which they are not very familiar. 3.12 barriers to the adoption of clt to comprehend which product or market factors could hinder the widespread adoption of clt in the u.s. (laguarda mallo & espinoza 2015), participants of this study were asked to rate the importance of a series of barriers. findings presented in figure 6 show that “availability in the market” is considered the largest barrier among respondents (85.0% of respondents considered it a large or potential barrier). second, 78.1% of respondents perceived cost as a large or potential barrier. third, compatibility with building codes was also considered a barrier, with 75.9% of respondents indicating that the building code is a large or potential barrier. fourth, the lack of technical information about clt was perceived as a large barrier by 70.1% of respondents. furthermore, 69.0% of respondents also indicated “promotion/education” as a large barrier. these results indicate that nonprofit organizations looking into the advancement of wood construction could have an opportunity to further educate the u.s. engineering community. table 7. willingness to adopt clt by respondents, if it were “readily available” in the u.s. for the participants’ building projects in the near future? n=87. likelihood to adopt count of respondents percent very likely 12 13.8% likely 32 36.8% uncertain 31 35.6% unlikely 8 9.2% very unlikely 3 3.4% non-responses 1 1.1% 12 bioproducts business 3(1) 2018 findings also demonstrate that 58.6% of participants of this study believe that the amount of raw material used to manufacture clt panels could represent a large barrier for the wide adoption of the system in the u.s. based on the ten expert interviews from the study conducted by the authors in 2014, 6 respondents agreed that the main disadvantage of clt is the large volume of wood required for its manufacture (laguarda-mallo and espinoza 2014). in the same study, one interviewee with experience in design and calculation of clt structures estimated that clt panels use approximately three times the wood a wood-frame system requires. unexpectedly, however, the amount of wood necessary to manufacture clt panels was not seen as one of the possible barriers to architecture firms surveyed in a later study (laguarda-mallo and espinoza 2015), which suggests either informed knowledge about the u.s. forest inventory, or a lack of knowledge about the amount of wood required in the production of clt, which is likely the case given that the level of familiarity with clt was still low (only 4.3% of respondents indicated they were “very familiar” with clt). in the present study, respondents were also given the opportunity to indicate any other perceived barriers not listed in the questionnaire. “other” barriers listed included “no experience” and “contractor education.” chi-squared tests (alpha = 0.05) were performed to determine whether there was a significant relationship between the level of familiarity with clt and barriers to adoption of the system in the u.s. tests indicate that there is a statistically significant relationship between the level of awareness of the respondent and the way the respondent perceives clt availability (p-value =0.022, chi-squared = 14.732) as well as with the amount of 11.5% 12.6% 12.6% 20.7% 23.0% 27.6% 28.7% 42.5% 59.8% 46.0% 59.8% 49.4% 46.0% 48.3% 49.4% 42.5% 12.6% 26.4% 13.8% 16.1% 16.1% 10.3% 5.7% maintenance cost amount of wood clt performance availability of technical… promotion/education compatibility with building code construction cost availability in the market large barrier may be a barrier not a barrier at all percent of respondents note: percentages under 4% are not shown. figure 6. perceived barriers to adoption of clt in the u.s. n=87. wood required to manufacture clt panels (p-value = 0.008, chi-squared =17.370). results indicate a significant relationship between the likelihood of adoption and the availability of technical information (p-value =0.032, chi-square = 13.767) as well as clt performance (p-value =0.003, chi-square = 19.965), stressing the importance information has on the adoption process. results also indicate that there is an opportunity to improve the likelihood of adoption by making information about clt available to potential adopters. 4.0 conclusion the primary purpose of this research was to examine the level of awareness, perceptions, and willingness to adopt clt by engineering firms in the u.s, known as key actors in the material selection process. finding of this study indicate that the level of familiarity with clt in the structural engineering community in the u.s. is moderate, as only 13 respondents indicated they were “very familiar” with the clt system. from all respondents with some familiarity with clt, 33 firms indicated that they obtained the information from internet, 32 from magazines, and 32 at conferences, seminars or workshops. these findings are consistent with the results obtained from a similar study conducted by the authors with u.s. architecture firms (laguarda-mallo and espinoza 2015). results from this study show that the highest rated attributes of clt are its aesthetic characteristics and its environmental and structural performance. on the other hand, lacking availability in the market was one of the perceived disadvantages of the product, which coincides with the current state and domestic availability laguarda-mallo and espinoza — awareness, perceptions and willingness to adopt clt by u.s. engineering firms 13 of clt in the u.s. similarly to what was found in a previous study by the authors (laguarda mallo & espinoza 2015), engineering firms familiar with clt participating in this survey indicated lacking availability, initial costs, and building code compatibility issues as the largest perceived barriers to adoption of the system in the u.s. further, a considerable percentage of study respondents perceived clt performance and maintenance costs as additional barriers. this is consistent with the lack of experience surrounding clt among u.s. construction professionals. survey results suggest that engineers would be hesitant to adopt clt, even if it were readily available in the u.s. market. findings of this study show that improving and expanding wood educational programs and making information about innovative wood-based construction systems readily available to potential adopters (e.g. architects, engineers, contractors, etc.) will be of great importance to the clt market. certainly, the wide adoption of clt in the u.s. will take time. demonstration projects recently developed in the u.s. and canada may help. the experiences of professional that worked in the design and/or construction of these projects, as well as the perceptions and experiences of end users, could be used to educate professionals and consumers alike on the possibilities of clt systems and promote its wide adoption across the u.s. rewards for embracing clt will also help with the acceptance of the construction system in the u.s., while showcasing clt's capabilities in demonstration buildings. information obtained from this study will inform 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(2012, 16-19 july). mid-rise clt buildings the uk's experience and potential for aus and nz. paper presented at the world conference on timber engineering, auckland. abstract systems thinking is deeply connected to the concepts of supply chain and sustainability and yet, the study of sustainable supply chain management (sscm) practices has been fragmented, with most studies investigating practices in isolation. this paper proposes a conceptual framework that integrates sscm practices. we start by conducting a systematic literature review (slr) of existing research on sscm practices. keyword searches of academic articles published in english up to january 2016 were conducted in four major databases. only studies designed around one or more sscm practice were included in the final sample, which comprised 96 articles. the slr identified six categories of sscm practices: organizational and strategic management; sustainability and corporate social responsibility standards; specific social and environmental practices; sustainable procurement; relationships with suppliers; and strategic partnerships. we drew from systems theory to propose an integrative framework of sscm practices based on findings of the slr. integration of practices can decrease the need for trade-offs when implementing sustainability in supply chains and may improve supply chain effectiveness. in addition, this study suggests potential avenues for developing sscm research and practice in a way that better addresses major sustainability challenges. keywords: sustainable supply chain management (sscm), sustainable practices, systems theory, integration, systematic literature review (slr) integrating sustainable practices within supply chain management: a systems perspective natalia g. vidal*† and simon croom‡ * corresponding author: email: nvidal@unm.edu; tel.: 505-277-0332. † anderson school of management, university of new mexico, 1924 las lomas rd. ne, albuquerque, nm 87106, usa ‡ school of business, university of san diego, san diego, ca, usa bioproducts business 3(8), 2018, pp. 92-106. issn 2378-1394. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-008 1. introduction “the time has come for bold and scalable solutions, not just from a few leading companies, but from companies across all sectors who need to transition from making commitments to taking concrete actions. it is time to invest in systems change, reinvent the role of the corporation and fundamentally redefine business as usual.” —mindy lubber, ceo and president of ceres1 the above quote from mindy lubber from ceres, a nongovernmental organization (ngo) dedicated to building private sector leadership for sustainability, reinforces a message that many sustainability scholars and practitioners have been emphasizing for some time: society and business are not changing fast enough to address the most pressing sustainability challenges. some researchers go as far as arguing that contemporary management scholarship does not fully account for the impact that business has on society and the natural environment (bansal & song, 2017). part of the problem, they say, is an excessive focus on a single level of analysis, instead of focusing on the entire system and the interactions among different levels of analysis (bansal & song, 2017; shrivastava, 1995; starik & rands, 1995). in addition, a focus on the triple bottom line approach to sustainable business management does not necessarily contribute to sustainability, as it tends to “separate the firm from its environment, as opposed to treating the firm as a system nested in other systems” (bansal & song, 2017, p. 125). as isaksson, johansson, and fischer (2010) argue, the current discussion suggests a lack of systems understanding necessary for change toward sustainability. 1 lubber, m. (2018). it is time to scale up. forbes, april 25, 2018. available at https:// www.forbes.com/sites/mindylubber/2018/04/25/it-is-time-to-scaleup/#3def42e047ce (accessed on may 7, 2018) 93 bioproducts business 3(8) 2018 supply chains provide a particularly interesting context for applying a systems approach to business sustainability, especially given that the concept of supply chain management (scm) was developed largely through the influence of systems theory (holt & ghobadian, 2009; new, 1997; peck, 2005). from a sustainability perspective, the majority of the social and environmental impact of firms originates across their supply chains (hanifan, sharma, & mehta, 2012), yet most global firms identify supply chains as their biggest challenge in improving their sustainable performance (hanifan et al., 2012; united nations global compact, 2016). improving sustainability performance requires firms to simultaneously coordinate or direct a diverse set of sustainability practices across their supply chains (winter & knemeyer, 2013). supply chains are invariably complex and require firms to find efficient ways of addressing multiple sustainability issues across various levels of upstream and downstream channels in a manner that accounts for the individual characteristics and needs of each firm, while simultaneously driving improvements in the overall sustainability performance of their entire supply chain. clearly, this is not an easy task (carter & rogers, 2008). given the importance of understanding the interactions among different supply chain actors necessary for sustainable supply chain management (sscm), it is surprising that systems theory has received little attention in the sscm literature. the relatively few sscm studies that have touched on systems theory have merely used it to frame an aspect of sscm in a different light. overall, systems theory has been used to explain supply chain innovation for sustainable development (isaksson et al., 2010), decision-making in unstructured contexts found in sscm (alexander, walker, & naim, 2014), cross-tier sustainability issues in scm (koh, gunasekaran, & tseng, 2012; tachizawa & wong, 2014), and sscm drivers and their relationships (dubey et al., 2016). however, to the best of our knowledge, existing research does not explore integration of sscm practices from a systems perspective. prior studies have tended to emphasize practices in an isolated, fragmented and firm-centric way (carter & easton, 2011; pagell & wu, 2009; toubolicic & walker, 2014; winter & knemeyer, 2013). examples of studies that focus on one or a few practices include welford and frost’s (2006) examination of codes of conduct in asian supply chains, rosen, beckman and berkovitz’s (2003) exploration of two types of environmental standards for the computer industry supply chain, and lee & kim’s (2009) investigation of corporate social responsibility (csr) and sustainability standards in korean supply chains. while this approach contributes insights to the theory and practice of sscm, sustainability is, by definition, a multifaceted concept that requires simultaneous and combined efforts in different functions of organizations and their supply chains (bansal & song, 2017). thus, we contend that to create truly sustainable supply chains, researchers need to move toward better understanding of how sustainable supply chain practices can be integrated. this issue is where our paper is primarily focused. in setting out to redress the need for an integrative approach, this paper reports on a structured, systematic review of the literature relating to sscm practices. based on this review of the literature, we identified six major categories of sscm practices. we then draw from systems theory to propose an integrative framework that connects the practices identified in the systematic literature review. this article contributes to the conversation about sscm by addressing sustainability goals more effectively and holistically. we identify major categories of sscm practices in the literature by providing a bird’s eye view of this field of study, highlighting areas of overlap among sscm practices and suggesting ways of integrating these practices. furthermore, our proposed framework for integrating sscm practices suggests potential avenues for developing sscm research and practice in a way that better addresses major sustainability challenges. 2. theoretical background 2.1 supply chain management and sustainability the study of scm has been approached as both an integrating management philosophy and, at an operational level, as the study of a set of management processes (croom, romano, & giannakis, 2000). scm is generally defined as involving the coordination of traditional business functions within an organization and across its extended chain of suppliers, customers and logistics service providers, “for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole” (mentzer et al., 2001, p. 18). sscm broadens this definition by including sustainability considerations in the management of supply chains (beske & seuring, 2014). there are many contrasting definitions of sscm in the literature vidal and croom — integrating sustainable practices within supply chain management: a systems perspective 94 (e.g., seuring & muller, 2008, hassini, surti, & searcy, 2012), but we adopt carter & rogers’ (2008) definition of sscm as “the strategic, transparent integration and achievement of an organization’s social, environmental, and economic goals in the systemic coordination of key interorganizational business processes for improving the long-term economic performance of the individual company and its supply chain” (p. 368). the study of sscm is thus both a branch of the supply chain field, as well as a theoretical broadening of the field (beske & seuring, 2014; svensson, 2007). a natural alignment exists between scm and the concept of sustainability. linton, klassen and jayaraman (2007, p. 1078) suggest that a focus on supply chains brings firms a step closer to sustainability, because “the supply chain considers the product from initial processing of raw materials to delivery to the customer.” further, extending to a cradle-to-cradle approach supports the argument that firms need to integrate issues that go beyond traditional scm activities to incorporate areas such as product design, manufacturing by-products, by-products produced during product use, product life extension, product end of life, and recovery processes at end of life (linton et al., 2007). expanding the definition of scm to include sustainability implies that these activities or practices also need to be integrated with socially and environmentally oriented practices and strategic managerial decisions. 2.2 sscm practices we define sscm practices as those practices that address one or more sustainability issues in supply chains. most studies in sscm examine one or a few practices in sscm at a time and usually in a standalone fashion (carter & jennings 2002; carter & rogers 2008; pagell & wu, 2009). however, some studies have investigated different sscm practices in a more systemic way (brammer, hoejmose, & millington, 2011; pagell & wu, 2009). based on multiple case studies, paggell and wu (2009) propose a model of sscm practices that lead to more sustainable supply chains. their model includes practices that promote the integration of sustainability within focal firms (e.g., alignment of sustainability goals throughout the supply chains; proactive behavior and commitment to sustainability), practices that lead to new behaviors in the supply chain (e.g., reconceptualizing the supply chain to include ngos, competitors and trade groups; focus on supply based continuity through transparency, traceability and supplier certification), and practices that provide incentives and rewards to sustainable suppliers (e.g., intrinsic and extrinsic rewards). while these authors investigated the differences between traditional scm and sscm, we examined existing research to map knowledge related to sscm practices and identified interconnections to one another through a systems theory perspective. in their review of the literature on global sscm, brammer et al. (2011) proposed a best practice model of sscm. their circular model suggested that the best approach to sscm involves setting expectations, confirming supplier agreements to those expectations, measuring supplier performance, and evaluating and improving performance based on results. this review expands brammer et al.’s analysis by looking into a broader array of sscm practices and proposing an alternative way of looking at the interconnections among these practices. a number of other review articles related to sscm have been conducted, with one or more of the following objectives: theory building (gold, seuring, & beske, 2008); identification and classification of major areas of research (kleindorfer, singhal, & van wassenhove, 2005; seuring & muller, 2008; srivastava, 2007); concentration on a specific management discipline (hassini et al., 2012; quarshie, salmi, & leuschner, 2016) or a particular practice in sscm (gimenez & tachizawa, 2012; hoejmose & adrien-kirby, 2012; igarashi, de boer, & fet, 2013; srivastava, 2007); or published definitions of green scm and sscm (ahi & searcy, 2013). although many of these review articles mention sscm practices, none of them specifically focus on the integration of practices in sscm or the research questions addressed in this study. 2.3 systems thinking and sscm the concept of sustainability was developed from a systems theory perspective (bansal & song, 2017). the brundtland report, the document that popularized the term sustainable development, took a systems perspective to social and economic development arguing that the world is a complex system comprised of six intertwined challenges: population, food security, ecosystems, energy, industry, and urban issues (bansal & song, 2017). all physical resources are drawn from the natural systems, thus the collapse of the natural system would eventually lead to the failure of social and economic systems (bansal & song, 2017). systems are sets of interconnected elements organized in a coherent way to achieve a specific goal 95 bioproducts business 3(8) 2018 (meadows, 2008). they are self-organizing entities that contain hierarchical, differentiated sub-systems that act interdependently (kassel, 2013). therefore, a systems mentality shifts our focus from the characteristics of a system’s elements to the dynamics of how such characteristics connect to one another (kauffman, 1993). as table 1 illustrates, by adopting a systems mentality, we shift our focus to relationships between parts and the whole, from structure (i.e., how parts are organized) to processes that connect the necessary parts of a system in order to achieve change, and from linear movement to multidirectional movement (kassel, 2013). a systemic orientation promotes focus on interrelations among different parts and emphasizes that reality is not linear, but circular (senge, 2006). systems are normally composed of three parts: elements, interconnections, and purpose (meadows, 2008). in a system, tangible and/or intangible elements are interconnected to achieve a certain purpose and the interconnections of elements produce a distinct pattern of system behavior over time that is different from the individual behavior of each element or the sum of their behaviors (meadows, 2008; senge, 2006). the focus of this study is on the interconnections among sscm practices. interconnections comprise the relationships that hold the elements of a system together and typically operate through flows of information (meadows, 2008). interconnections also serve as feedback mechanisms that counterbalance each other, helping to regulate system behavior and the achievement of the goals of the system (meadows, 2008; senge, 2006). therefore, the identification of interconnections causing a problem can lead to new insights (senge, 2006). feedback in systems refers to “reciprocal flows of influence” that goes both ways—i.e., “every influence is both cause and effect” (senge, 2006, p. 74). many feedback processes contain delays, which are interruptions between actions and their consequences (meadows, 2008; senge, 2006). given the long-term orientation of systems thinking, feedbacks and delays are especially important; while they can often be ignored in the short term, they are surely felt in the long term (senge, 2006). the application of systems theory to management studies has not only considered the firm as a complex system, but has also looked beyond individual firms to study the relationship between organizational systems and other macrosystems (bansal & song, 2017). a central assumption when applying systems theory to management is that business is a vital part of the larger social and natural systems (bansal & song, 2017). humans depend on the outcomes of business activities that transform natural resources into products and services. resource scarcity resulting from increased consumption impacts firms’ ability to access resources leading to changes in prices and resource availability (clayton & radcliffe, 1996). in this article, we consider sustainable supply chains as complex systems (holt & ghobadian, 2009; new, 1997; peck, 2005) and we take a higher level of analysis that integrates natural, social and economic systems within the activities of supply chains. based on this perspective, we propose a framework that integrates different sscm practices identified in the systematic literature review as follows. 3. methodology this study was based on a systematic literature review (slr) of research publications to identify commonly used practices in sscm. systematic literature reviews are a replicable, scientific and transparent process that aim to minimize bias through exhaustive literature searches and by providing an audit trail of the reviewer decisions, procedures and conclusions (cook, mulrow, & haynes, 1997). in summary, systematic reviews map and assess the existing intellectual territory (tranfield, denyer, & smart, 2003). the research methodology for this study was conducted in five steps (briner & denyer, 2012), which are discussed next. 3.1 definition of review question and objective the core question of our slr was: what are the most commonly studied sscm practices? thus, this study is a retrospective analysis of prior literature, which serves to inform future research and focus analysis on key variables and mediators in the process of sustainability implementation. table 1: traditional vs. system thinking approach to sscm. traditional view systems thinking firm centric relationships between the parts and the whole structure (i.e., how parts are organized) processes connecting parts of the system linear movement multidirectional movement source: adapted from kassel (2013) vidal and croom — integrating sustainable practices within supply chain management: a systems perspective 96 3.2 definition of search parameters in our systematic review, defining parameters to be used involved identifying variations of keywords revolving around the terms “responsible and sustainable supply chain(s)” and “sustainable and responsible supply chain(s) practices” (see table 2). given that the definition of sustainability and csr used by scholars and practitioners is converging (bansal & song, 2017; montiel, 2008), these keywords provided inclusive, but reasonable boundaries for our search. the literature on sscm is relatively new, with publications beginning in the early 1990s. although we suspected that we would not find any publications prior to 1980, we searched all years up to january 2016 in peer-reviewed journals in four major databases (abiinform, google scholar, google, and web of science). these databases provide a wide coverage of journals in different areas, which allowed us to cast a wide net for data collection. although google is not an academic database, we used it to ensure that articles were not missed by searches in the other three databases. the first step consisted of conducting keyword searches within the four selected databases. only academic papers published in english studying one or more sscm practices were considered for this study. this search was conducted in december 2015 and january 2016 and yielded 206 publications. 3.3 inclusion/exclusion criteria given that most studies to date have not focused on groups of sscm practices, we kept our inclusion and exclusion criteria broad. studies designed around one or more sscm practice were included in our sample; conceptual articles were considered when there was extensive discussion of at least one sscm practice. two researchers evaluated the articles by reading their titles and abstract and scanning the full content of the article, when necessary. disagreements among researchers on including or excluding articles were resolved through discussion. having two researchers reviewing the articles served to ensure reliability. the use of clear guidelines for selecting studies ensured the validity of this research. our final selection included 96 articles. given that article selection was based on the title and abstract of each article during the keyword search, we found that many of the 206 publications collected through the keyword search were not designed around one or more sscm best practice, but simply mentioned these types of practices without any deeper analysis or discussion. therefore, 110 articles from the keyword search were eliminated after applying the inclusion/exclusion criteria. 3.4 data collection and analysis this step consisted of one author reading and extracting relevant information from the final selection of papers. data extraction for this review concentrated on descriptive information about articles (i.e., authors, title, citation, publication date, journal), as well as on the sscm practices reported in each article reviewed. these data were entered into a microsoft excel spreadsheet, with practices initially extracted and entered in a single column. after data were extracted, we inductively coded the data on practices arriving at six categories of sscm practices (table 1). the coding process consisted of categorizing similar or related practices into groups. in doing so, we considered the studies by pagell and wu (2009), brammer et al. (2012) and centinkaya et al. (2011) as existing frames for classifying our data into categories. descriptive information about articles was collected for organizational purposes and, thus, was not analyzed. the first author conducted the initial coding of these data, which was substantiated by the second author. the inter-rater reliability rate was 89.8% and discrepantable 2: keywords used in the systematic literature review. responsib* supply chain* sustainab* supply chain* responsib* supply chain* management sustainab* supply chain* management (sustainab* supply chain*) and (best practice*) (responsib* supply chain*) and (best practice*) (sustainab* supply chain*) and (practice*) (responsib* supply chain*) and (practice*) (supply chain*) and (sustainab* practice*) (supply chain*) and (responsib* practice*) (supply chain*) and (sustainab* best practice*) (supply chain*) and (responsib* best practice*) (supply chain* management) and (sustainab* practice*) (supply chain* management) and (responsib* practice*) (supply chain* management) and (sustainab* best practice*) (supply chain* management) and (resposnib* best practice*) 97 bioproducts business 3(8) 2018 cies were resolved based on discussion. we report the synthesis of the review data in the next section following briner and denyer’s (2012) suggestion that synthesizing the findings of a systematic review involves combining studies in a way that creates knowledge not previously discernible in each individual study. therefore, the first part of our synthesis provides a narrative of the main categories of sscm practices identified in the literature. the second part of our synthesis identifies relationships among different practices (briner & denyer, 2012). 4. results sscm practices are those practices that address one or more aspects of sustainability in scm. our review involved coding commonly studied practices and developing a synthesis of existing literature into six categories of practices, which are presented in table 3. each of the six categories we identified as the main building blocks for sscm execution are briefly described below. 4.1 organizational and strategic management arguably, the first step in the implementation of sscm practices involves setting up the necessary internal infrastructure and practices within the focal firm. focal firms occupy a central space in the supply chain and govern relationships with suppliers and end consumers (harland, lamming, zheng, & johnsen, 2001; holt and ghobadian, 2009). they are usually the key drivers of product design and branding in the supply chain, exerting dominant power by requiring suppliers and partners to implement different sustainability practices (frostenson & prenkert, 2015). for example, ikea, the swedish home furnishing retail chain, requires that its suppliers follow its code of conduct and implement environmental certifications, such as iso 14001 and fsc certification (andersen & skjoett-larsen, 2009). these firms normally have the greatest bargaining power over different actors in the supply chain (cox, 2014). many focal firms change or create organizational processes that develop internal capabilities necessary to implement sscm practices, such as new organizational structures (alvarez, pilbeam, & wilding, 2010) or organizational processes that help develop and maintain sscm practices (ciliberti, pontrandolfo, & scozzi, 2008; rao, 2002). leadership support is also, naturally, essential to the successful implementation of sscm practices (faisal, 2010; goebel, reuter, pibernik, & sichtmann, 2012). it enables sscm initiatives (giunipero, hooker, & denslow, 2012; walker & jones, 2012) and guides employee engagement and training in sscm practices (andersen & skjoett-larsen, 2009; cantor, morrow, & montabon, 2012; goebel et al., 2012). employee engagement on sscm issues may be encouraged through participation in ad hoc committees (cantor et al., 2012) and reward systems that guide behavior toward sustainability goals (pagell & wu, 2009). 4.2 sustainability and corporate social responsibility (csr) standards these standards include codes of conduct, social sustainability standards, environmental sustainability standards and/or environmental management systems (ems), and industry-level sustainability standards. codes of conduct are generally the first step focal firms implement when moving toward sscm and usually serve as gatekeepers (foerstl, reuter, hartmann, & blome, 2010). they help firms select suppliers that meet certain sustainability requirements (ageron, gunasekaran, & spalanzani, 2012; andersen & skjoett-larsen, 2009; goebel et al., 2012), while setting up minimum requirements for other sscm practices, such as life cycle analysis (lca) (balkau & sonnemann, 2010). however, codes of conduct alone are not sufficient for achieving long-term success in sscm (hoejmose & adrien-kirby, 2012) and firms need to monitor supplier compliance with the code (svensson, 2009). in general, suppliers’ commitment to codes of conduct tends to improve when focal companies invest in long-term, constructive relationships with suppliers (jiang, 2009). not surprisingly, social standards are much less adopted as a mainstream sscm practice than environmental standards (beske, koplin, & seuring, 2008) and, oftentimes, are not effective in addressing a broad range of social issues in sscm (blowfield, 2005). this can be explained, in part, by the context specificity of social issues (lee & kim, 2009). therefore, the applicability or appropriateness of social standards may vary, for example, by industry sector (graafland, 2002) and company size (ciliberti et al., 2008). social sustainability standards most commonly address working conditions and labor issues (andersen & skjoett-larsen, 2009), such as child labor, forced labor, adequate remuneration, and fairtrade issues (beske et al., 2008; caniato, caridi, crippa, & moretto, 2012). vidal and croom — integrating sustainable practices within supply chain management: a systems perspective 98 the use of environmental sustainability standards is more widespread. focal firms may require the use of environmental sustainability standards as part of their supplier selection process (ageron et al., 2012; andersen & skjoett-larsen, 2009) to advance relationships with suppliers (beske et al., 2008). therefore, these standards are used for the evaluation and assessment of suppliers’ environmental performance (darnall, jolley, & handfield, 2008) and, in many cases, may be used in lieu of other supplier evaluation methods, such as audits (kovacs, 2008). in other cases, environmental standards may be used to help further develop suppliers’ environmentally sustainable practices (rosen, bercovitz, & beckman, 2001). little research has been done on industry-specific standards within the context of sscm practices. however, some studies have explored organic and fair-trade certification of cotton (caniato et al., 2012), forest certification of wood-based products (andersen & skjoett-larsen, 2009), the development of computing standards (rosen et al., 2001), tourism (font, tapper, schwartz, & kornilaki, 2008), metals and mining (balkau & sonnemann, 2010), and automotive (beske et al., 2008) industry sectors. 4.3 specific social and environmental practices among the specific environmental practices identified in the literature, the most common are design for environment (dfe) of products or manufacturing equipment, waste management, recycling (of product and/ or packaging), substitution or optimization of material use for more environmentally friendly alternatives, reducing, tracking and offsetting carbon emissions, energy efficiency, and green transportation (caniato et al., 2012; flint & golicic, 2009; handfield, sroufe, & walton, 2005; rosen et al., 2003; roy & whelan, 1992; walton, handfield, & melnyk, 1998; zhu, sarkis, & lai, 2008). many environmental practices seem focused on one main goal: minimizing resource use. this might explain the increasing number of studies that investigate table 3: overview of sscm practices identified in the systematic literature review. sscm practices organizational & strategic management sustainability & csr standards social & environmental practices sustainable procurement relationship with suppliers strategic partnerships description of practice implementation of sustainability best practices in focal firm internal policies and third-party standards that help verify suppliers’ levels of sustainability performance practices that address specific sustainability issues use of sustainability criteria to select suppliers practices that facilitate collaborations in the supply chain through communication, evaluation of suppliers, and supplier development activities knowledge exchange, complementation of focal firms’ sustainability skills, and capacity building of sme suppliers examples sustainability policies, employee training, leadership support, embedding sustainability in strategic planning codes of conduct, iso 14001, sa 8000, forest certification recycling, energy efficiency, labor standards, human rights past and current sustainability performance of suppliers, social and/or product certification training of suppliers, key performance indicators, mentoring of suppliers on sustainability issues partnerships with other firms, partnerships with ngos, partnerships with government number of papers 50 49 41 33 76 16 main journals business strategy and the environment; international journal of production economics; journal of purchasing & supply management; supply chain management: an international journal business strategy and the environment; international journal of production economics; journal of business ethics; supply chain management: an international journal business strategy and the environment; corporate social responsibility and environmental management international journal of production economics; journal of cleaner production business strategy and the environment; international journal of production economics; journal of purchasing & supply management business strategy and the environment; international journal of production economics; journal of business ethics; supply chain management: an international journal corporate governance; journal of supply chain management; supply chain management: an international journal main works (most cited) pagell and wu (2009); rao (2002); walker et al. (2008) darnall et al. (2008); pagell and wu (2009); walker et al. (2008) pagell and wu (2009); walton et al. (1998); zhu et al. (2008) andersen and skjoett-larsen (2009); pagell & wu (2009); walker et al. (2008) vachon and klassen (2006); vachon and klassen (2008); walton et al. (1998); lee (2008); pagell and wu (2009); walker et al. (2008) 99 bioproducts business 3(8) 2018 more encompassing practices, such as lca, closing the loop, and reverse logistics (ageron et al., 2012; pagell & wu, 2009). the few studies that touched on social sscm practices primarily discussed labor related issues in a peripheral way. child and forced labor, compliance with labor standards, health protection, equal rights, freedom of association, and human rights have been the social sscm practices discussed in the literature so far (font et al., 2008; welford & frost, 2006). 4.4 sustainable procurement again, research on sustainable procurement has focused primarily on environmental sustainability. reinforcing our earlier statement relating to internal (focal) firm change, the implementation of internal sustainability practices and standards, such as emss, seems to be the first step toward sustainable procurement practices (green jr., zelbst, meacham, & bhadauria, 2012). although sustainable procurement programs are similar in many ways to traditional procurement programs (pagell & wu, 2009), these programs must consider product and supplier characteristics that are in line with sustainability principles (ciliberti et al., 2008). most firms achieve those goals by defining a set of supplier selection criteria, such as management style, attitude, and financial performance of suppliers; quality performance; ability to support the focal firm in product development; past and current environmental and social performance; and environmental, social and/or product certification (andersen & skjoett-larsen, 2009; caniato et al., 2012; handfield et al., 2005). csr and sustainability standards and criteria act as order qualifiers in supplier selection processes and, as suppliers improve their sustainability performance in accordance with such criteria, they develop closer, more collaborative relationships with focal firms (andersen & skjoett-larsen, 2009; chiarini, 2013). 4.5 relationships with suppliers firms develop relationships with suppliers for a number of reasons but mostly to improve supply chain coordination and performance. collaboration involves the development of long-term relationships with suppliers (ageron et al., 2012), which often requires trust among the different parties in the relationship (sharfman, shaft, & anex jr., 2009). consequently, firms tend to establish collaboration with major suppliers—i.e., those suppliers that are critical for the focal firm (alvarez et al., 2010). successful collaborations for sscm require three main components: (a) information sharing and dialogue (faisal, 2010; jiang, 2009); (b) evaluation and assessment of suppliers (gimenez & sierra, 2013; jiang, 2009; walton et al., 1998); and (c) supplier development activities (klassen & vereecke, 2012). focal firms may share information about a number of topics, including general and updated information about sustainability-related requirements and the benefits of adopting its code of conduct and other sustainability criteria (andersen & skjoett-larsen, 2009; holt, 2004). this information may be shared through training (formal or informal), workshops, annual meetings, or written documents (e.g., newsletters, manuals) (alvarez et al., 2010; andersen & skjoett-larsen, 2009). although supplier evaluation and assessment can be implemented independently from collaborative efforts in the supply chain, assessment acts as an enabler of collaboration (gimenez & sierra, 2013). firms can implement different methods of supplier evaluation and assessment with the most common ones being audits, supplier self-assessment surveys or questionnaires, certification or ems, and key performance indicators (chiarini, 2013; klassen & vereecke, 2012; reuter, foerstl, hartmann, & blome, 2010; varnas, balfors, & faith-ell, 2009; walker, sistob, & mcbain, 2008; walton et al., 1998; wu, dunn, & forman, 2012). firms may implement one or more of these methods, with many firms now focusing on combining some of these methods for continuous improvement of supplier sustainability performance (foerstl et al., 2010; reuter et al., 2010). supplier development programs are especially relevant for sustainability strategies because they help ensure supplier continuity—i.e., they help all members of the chain succeed and grow (flint & golicic, 2009; pagell & wu, 2009; vachon & klassen, 2008). most supplier development programs focus on capacity building and continuous improvement of suppliers’ sustainability and overall performance (andersen & skjoett-larsen, 2009; walton et al., 1998). 4.6 strategic partnerships strategic partnerships are becoming increasingly important best practices in sscm. three main types of partnerships may be used to improve the sustainability of supply chains: (a) industry and cross-industry partnerships; (b) partnerships with ngos; and (c) partnerships with government agencies. industry and cross-industry partnerships are collaborations established among firms vidal and croom — integrating sustainable practices within supply chain management: a systems perspective 100 of the same or different industry sectors. for example, roy and whelan (1992) found that european companies formed a technical group with its senior representatives to address end of life recycling of electronics. in general, these partnerships are often developed when other sscm practices require supply chain coordination, such as tracking carbon footprint, lca, and end-of-life recycling (balkau & sonnemann, 2010; flint & golicic, 2009; roy & whelan, 1992). partnerships with ngos often serve to complement focal firms’ skills and knowledge on sustainability and are established to promote and build capacity of suppliers on sustainability issues, provide technical assistance for suppliers, and develop sustainability standards for the chain (alvarez et al., 2010; bitzer, francken, & glasbergen, 2008). for example, nespresso developed a partnership with an ngo, technoserve, which provided technical assistance to suppliers implementing sustainability practices (alvarez et al., 2010). partnerships with government agencies relate to the adoption of specific programs or regulations for the promotion and improvement of sustainability practices and capacity building of sme suppliers (lee, 2008; roy & whelan, 1992; walker et al., 2008). for example, lee (2008) found that the south korean government aided suppliers implementing sustainability practices required by focal firms. 5. discussion current research in sscm indicates, sometimes in subtle ways, how many of these categories of sscm practices are interrelated. in table 4, we identify how different practices relate to one another based on the findings of the slr. based on these findings, we propose a model for integrating sscm practices (figure 1). sustainability originated from systems thinking (bansal & song, 2017) and we argue that sscm has a greater potential for effectively addressing sustainability challenges if scholars and managers approach best practices systemically. systems theory proposes a shift of focus from the characteristics of a system’s elements to the relationships among these elements (kauffman, 1993). given that relationships in a system operate through flows of information and serve as feedback mechanisms (meadows, 2008; senge, 2006), we looked for aspects of sscm practices identified in the systematic literature review that functioned as channels for dissemination of information and feedback loops. we found that relationships are the vehicles through which information flows to and from different parts of the supply chain system, connecting different sscm practices and actors. therefore, the model represented in figure 1 depicts relationships as an undercurrent transmitting and gathering information to different actors in the supply chain. as identified by the reviews by both fabbe-costes and jahre (2008) and van der vaart and van donk (2008), interconnections and relationships between actors in supply chains are central to both the coordination and performance of the supply chain system. furthermore, it has been noted that building relationships is of ultimate importance in connecting sustainability practices and participants in the supply chain (brammer et al., 2011; figure 1: proposed integration of sscm practices. suppliers strategic partnerships with external stakeholders relationships with suppliers focal firm organizational & strategic management social & environmental practices csr/sustainability standards sustainable procurement 101 bioproducts business 3(8) 2018 table 4: interconnections between and among different categories of sscm practices. organizational & strategic management sustainable procurement csr / sustainability standards social & environmental practices relationships with suppliers strategic partnerships organizational & strategic management sustainable procurement focal firms’ strategies determine needs and boundaries of sustainable procurement programs (andersen & skjoettlarsen, 2009; blome & paulraj, 2013) csr / sustainability standards focal firms’ strategies determine if and which standards suppliers need to implement (alvarez et al., 2010; ansett, 2007) sustainable procurement programs may require suppliers to implement csr / sustainability standards (shang et al., 2010) social & environmental practices focal firms’ strategies determine if and what type of specific practices suppliers need to implement (ciliberti et al., 2008) sustainable procurement programs may require suppliers to implement specific social and/ or environmental practices (andersen & skjoett-larsen, 2009) csr / sustainability standards may require the implementation of specific social and/or environmental practices (liu et al., 2012) relationships with suppliers focal firms’ strategies determine the types of relationships it needs with suppliers (ciliberti et al., 2008; ehrgott et al., 2013) different types of relationships with suppliers may be established as a result of sustainable procurement programs depending of suppliers’ strategic importance (andersen & skjoett-larsen, 2009) csr / sustainability standards are used to assess and evaluate suppliers’ sustainability performance (ciliberti et al., 2008; hoejmose & adrien-kirby, 2012) specific social and/ or environmental practices are used to assess and evaluate suppliers’ sustainability performance (font et al. 2008; klassen & vereecke, 2012) strategic partnerships focal firms’ strategies determine if and with whom strategic partnerships are needed (alvarez et al., 2010; andersen & skjoett-larsen, 2009) strategic partnerships may be needed to assist suppliers in implementing requirements of a sustainable procurement program (bitzer et al., 2008) strategic partnerships may be needed to assist suppliers in implementing csr / sustainability standards (bitzer et al., 2008; walker et al., 2008) strategic partnerships may be needed to assist suppliers in implementing specific social and/ or environmental practices (kannabiran, 2009; roy & whelan, 1992) strategic partnerships normally require established relationships with suppliers (fayet & vermeulen, 2014; walker et al., 2008) vidal and croom — integrating sustainable practices within supply chain management: a systems perspective 102 cousins, handfield, lawson, & petersen, 2006; power, 2005). we take a different approach and explore the centrality of relationships in promoting and supporting different sscm practices from a systems perspective, which emphasizes that practices promoting information flow and feedback mechanisms are crucial for supporting the interconnections of different system elements (meadows, 2008). organizational and strategic management takes part solely within the focal firm and is responsible for setting everything else in motion. it determines the system’s purpose, starts the flow of information, and influences all other practices. sustainable procurement communicates to suppliers the sustainability requirements for participating in the supply chain and serves as an initial step in building relationships with suppliers. supplier selection programs serve to verify suppliers’ compliance with a number of selection criteria (andersen & skjoett-larsen, 2009; caniato et al., 2012; handfield et al., 2005), which may require suppliers to implement sustainability and csr standards and/or different social and environmental practices. suppliers’ adoption of social and environmental practices and sustainability and csr standards often requires collaboration (rosen et al., 2003; roy & whelan, 1992), which promotes information flow but also provides feedback about suppliers’ sustainability performance. successful sustainable procurement programs also connect focal firms through feed-forward and feedback loops to their supply chain, monitoring suppliers’ progress to assist with the development of appropriate capabilities for sustainability (ciliberti et al., 2008). by involving external stakeholders in sscm, strategic partnerships promote information flow along the supply chain and contribute to supplier development activities (pagell & wu, 2009). partnerships also require clear goals and feedback mechanisms, which help participating parties assess the outcomes of their collaboration (cousins et al., 2006). in turn, the information flow and feedback mechanisms from partnerships support interconnections with supply chain actors. firms may certainly implement sscm practices individually, but there is increasing evidence that, together, these practices have stronger positive impacts on sustainability goals and on the competitiveness of all parties involved when implemented in concert with other actors across supply chain systems (becker, carbo ii, & langella, 2010; faisal, 2010; brammer et al., 2011; touboulic & walker, 2015). croom et al. (2018), for example, highlight the significant benefit from a strategic approach to adoption and implementation of sscm practices, particularly in driving improved business and operational performance. 6. implications and recommendations for future research if implementation of sscm practices usually requires trade-offs (wu & pagell, 2011), a focus on the integration of practices may increase efficiency and decrease costs of implementing these practices. when practices support and enhance one another, improvements made to one sustainable practice are likely to improve other existing practices, leading to more efficient sscm. if managers understand how one sscm practice supports others, they can make more informed decisions on the appropriate “bundle” of sustainable practices that best fits their needs. although the importance of relationships in building effective supply chains is not new (fabbe-costes & jahre, 2008; van der vaart & van donk, 2008), we emphasize that they are central to advance sustainability in supply chains. integration of sscm practices requires managers to see supply chains as inteorganizational systems with interconnected parts (croom et al., 2000). given that systems require effective information flows and feedback mechanisms to work properly (meadows, 2008; senge, 2006), managers should focus their efforts on developing supply chain relationships that promote learning and information exchange about sscm practices. conceptually, this study proposes new ways of studying sscm practices from a systems theory perspective. future studies should focus on the interconnections between and among sscm practices, the overlaps between them, as well as the possible impacts they might have on one another. this could be achieved by examining multiple variables or factors, the significance of mediating and moderating variables on outputs, how much these variables account for the underlying mechanisms at play in sscm, and the constraints or limits that may exist between and among such interactions. with an emphasis on relationships, future research could examine how sscm practices promote relationships among supply chain participants and could provide information that serves as feedback mechanisms to different parties in the supply chain. the study of emerging practices that are more encompassing in nature and 103 bioproducts business 3(8) 2018 require a more integrative approach, such as lca, closing the loop, and reverse logistics, might advance a systemic approach to the study of sscm. finally, firms may choose different sets of practices when implementing sscm and a better understanding of how strategic decision making, individual firm characteristics, and contextual factors shape (i.e., correlate, mediate or moderate) the combination of sscm practices selected can provide stronger evidence for outcomes and their effect sizes. the numbers of papers found in each category of sscm best practices (table 1) provides indications of other potential areas for future research. the lower number of studies found in sustainable procurement and strategic partnerships points to a potential underrepresentation of these areas within the sscm cannon. 7. conclusion in this article, we undertook a systematic literature review focused on exploring sscm practices and their key interconnections. by applying systems thinking to the categories of sscm practices identified in the literature review, we identified interorganizational and intraorganizational relationships as a central pillar of sscm practice adoption. relationships promote information flows among different elements of the supply chain system and are connected to all of the sscm practices identified in the literature review. wu and pagell (2011) contended that implementing sscm best practices can be costly and requires tradeoffs between operational performance objectives and resource allocation. from our study, by understanding how sscm practices may help or hinder the implementation of other practices and by further exploring the mediating power of relationship management, researchers may provide direction for practitioners to reduce costs and ameliorate trade-offs between longand short-term benefits. ideally, studying these interconnections will provide greater insight into organizational and supply chain processes connected to sscm. from a systems theory approach, managers must realize that their suppliers’ problems are also their problems because their firm’s success is influenced by the actions of all other firms in their supply chains (senge, 2006). therefore, a focus on the interconnections of sscm practices is likely to promote greater supply chain resilience by shifting the focus to long-term behavior and structure (meadows, 2008). 8. references ageron, b., gunasekaran, a., & spalanzani, a. 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(2008). green supply chain management implications for “closing the loop.” transportation research part e, 44, 1-18. abstract due to climate change concerns, governments and consumers are demanding higher environmental accountability for transportation fuels, particularly as related to carbon emissions. additionally, the u.s. policymakers are seeking renewable alternatives to enhance energy security, reduce oil price volatility and increase rural economic development opportunities. such factors present an emerging market opportunity for lignocellulosic materials to be used as biofuels. but this oppiortunity also has a number of associated challenges, particularly in terms of scaling up. this paper offers a comprehensive review of the emerging biofuels sector in the u.s. it begins with first generation corn-grain ethanol and biodiesel, today’s most widely available biofuels within the u.s. the paper argues that further growth of these biofuels may be limited by the “blend wall”, the “food-versus-fuel” debate, and land use change inssues. as a result, industrial, governmental and academic research interests have shifted to second and third generation biofuels produced from lignocellulosic biomass and algae to address ghg emissions, land use change, and the food-fuel issue. we outline that there are several limitations in scalingup these hydrocarbon drop-in biofuels which include feedstock costs and availability, high production and capital costs, policy uncertainty, and various technical, environmental and social issues. overall, this paper synthesizes the extant literature and draws on secondary sources to present a comprehensive and current inventory of existing u.s. biofuel players and a thorough review of the u.s. biofuels industry. keywords: biofuels, blend wall, food vs. fuel, renewable fuel standard (rfs), low carbon fuel standard (lcfs) u.s. biofuels industry: a critical review of opportunities and challenges min chen,1 paul m. smith,1* and michael p. wolcott2 1 department of agricultural & biological engineering, the pennsylvania state university, university park, pa 16802, usa 2 department of civil & environmental engineering, washington state university, po box 642910, pullman, wa 99164, usa * corresponding author: e-mail: pms6@psu.edu acknowledgements: this work, as part of the northwest advanced renewables alliance (nara), was funded by the agriculture and food research initiative competitive grant no. 2011-68005-30146 from the usda national institute of food and agriculture. bioproducts business 1(4), 2016, pp. 42–59. http://biobus.swst.org. https://doi.org/10.22382/bpb-2016-004 1.0 introduction over the past century, the success of personal transportation in the form of automobiles powered by internal combustion engines has driven the worldwide success of oil (brancheau, wharton, & kamalov, n.d.). in turn, the historical growth of the petroleum industry has led to these hydrocarbons supplying not only a bulk of the world’s energy needs but also a vast majority of the building blocks for chemicals and materials. but according to the energy information administration’s (eia) 2014 international energy outlook and annual energy outlook 2015, liquid fuel supplies are uncertain beyond the year 2040 due to a variety of “above-ground” geopolitical issues leading to average oil price volatility of 30 percent per year over the past two decades (energy information administration, 2014, 2015). these supply and demand issues are exacerbated by the emission of greenhouse gases (ghgs) from the combustion of fossil fuels and the associated climate change effects. fossil fuel recovery and use also introduces an array of other environmental issues, such as air and water pollution. to combat climate change, in march 2015, the u.s. submitted an intended nationally determined contribution (indc) to the united nations framework convention on climate change to cut net ghg emissions by 26-28 percent below 2005 levels by 2025 (the white house, 2015b). at the subsequent paris climate conference (cop21) in november and december 2015, approximately 200 countries adopted the universal global climate deal to avoid dangerous climate chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 43 ethanol blends in gasoline (typically, up to 10%) improve the octane number and add oxygen content to meet the u.s. clean air act (caa) (urbanchuk, 2010). similarly, the u.s. biodiesel industry has aided in the development of the rural economy by providing over 60,000 jobs nationwide (national biodiesel board, 2015c). biodiesel also contributes to the u.s. caa with 52 percent lower ghg emissions compared to petroleum-based diesel (energy efficiency & renewable energy, 2015b). despite the benefits of first generation corn-grain ethanol, the “food-versus-fuel” and ethanol “blend wall” arguments continue to constrain the industry. the “foodversus-fuel” debate has lasted for more than a decade and includes controversy over food security (carter & miller, 2012; ziegler, 2008) and food price inflation (ahmed, 2008; ajanovic, 2011; bardhan, gupta, gorman, & haider, 2015; cuesta, 2014). the ethanol “blend wall” also constrains the growth of the u.s. corn ethanol industry due to the e10 (10%) blend limit, the infrastructure requirements for higher blend options and consumer acceptance for higher biofuel blends (energy information administration, 2011). in addition to the food-fuel issue, biodiesel fuels also face challenges related to environmental, economic and social impacts, for example, nox emission, distribution and infrastructure modifications, and land use change (bomb, 2005; castanheira, grisoli, freire, pecora, & coelho, 2014; rabago, 2008). as a result, interest in developing new biofuels from non-food based lignocellulosic feedstocks has grown (brown & brown, 2013; mohr & raman, 2013; solomon, barnes, & halvorsen, 2007). compared to first generation biofuels, second generation cellulosic alcohols (ethanol and butanol) avoid the food-fuel controversy while benefiting from lower lifecycle ghg emissions (balan, chiaramonti, & kumar, 2013; fitzpatrick, champagne, cunningham, & whitney, 2010). however, second generation cellulosic biofuels have yet to become widely commercialized in the us due to a variety of underlying issues (balan et al., 2013; fitzpatrick et al., 2010). for instance, cellulosic alcohols face the same ethanol “blend wall” issue, plus strong price competition from existing corn-grain ethanol players. additional barriers to the scale-up (commercialization) of the cellulosic biofuels industry are well documented and include feedstock costs and availability, high production costs, high capital requirements, policy uncertainty, and various technical, environmental and social issues (balan et al., 2013; brown & brown, 2013; cheng & timilsina, change by limiting global warming to well below 2°c (european commission, 2015). according to the 2016 federal activities report on the bioeconomy released on february 2016, the biomass r&d technical advisory committee has recommended “targeting a potential 30% penetration of biomass carbon into the u.s. transportation market by 2030” (the biomass research and development (r&d) board, 2016). and, in january 2016, the white house and environmental protection agency (epa) released the final clean power plan to reduce carbon dioxide emissions by 32 percent from 2005 levels by 2030 (the white house, 2015a). additional mechanisms to curb u.s. fossil fuel emissions include the 1970 clean air act (caa), corporate average fuel economy (café) and the renewable fuel standard (rfs). in response to an increasing consumer awareness (charles, ryan, ryan, & oloruntoba, 2007), governments are demanding that renewable liquid fuels deliver economic benefits while mitigating several key negatives associated with petroleum products, including unreliable global supply, price volatility and ghg emissions (gegg, budd, & ison, 2014; the biomass research and development (r&d) board, 2016). to economically migrate to bio-renewable feedstocks for liquid fuels and chemicals, some have envisioned what is termed, the bioeconomy. golden & handfield (2014) have defined the bioeconomy as: “…the global industrial transition of sustainably utilizing renewable aquatic and terrestrial resources in energy, intermediate, and final products for economic, environmental, social, and national security benefits.” (p. 7) the global bio-based economy has been initially based on first generation biofuels produced primarily from food crops, such as, grains, sugar cane and vegetable oils (mohr & raman, 2013). in the united states, corn-grain ethanol and biodiesel have served as the major substitute fuels for petroleum-based gasoline and diesel over the past few decades. today, these two first generation biofuels account for over 90 percent of the total renewable biofuels within the united states (environmental protection agency, 2015a). the u.s. corngrain ethanol industry, with the production volume growth at an annual rate of 67 percent from 1991 to 2015 (renewable fuels association, 2016), has also reshaped corn farming by reducing government support for cropping subsidies while raising farmers’ incomes (renewable fuels association, 2014). meanwhile, corn 44 bioproducts business 1(4) 2016 2011; oltra, 2011; pimentel & patzek, 2005; temesgen, affleck, poudel, gray, & sessions, 2015). going forward, government, academic and industrial biofuel research efforts will include hydrocarbon biofuels recovered from lignocellulosic biomass and algae (gegg et al., 2014; regalbuto, 2009). the overall goal of this paper is to present a comprehensive review of the u.s. biofuels industry. the specific objectives are to provide a historical perspective for the development of the u.s. biofuels industry and to examine barriers to the scale-up of second and third generation versions with future development considerations. this paper contributes to extant debates on the transition from first generation biofuels to cellulosic alcohols and drop-in advanced biofuels. 2.0 historic perspective of u.s. first generation biofuels 2.1 corn-grain ethanol as shown in fig. 1, ethanol production dates back nearly 9,000 years to alcoholic beverages consumed in china; later, first century ad greeks distilled ethanol, allowing higher alcohol concentrations (“ethanol history”, 2010). between 1824 and 1826, samuel morey invented the world’s first internal combustion engine running on ethanol and turpentine (“ethanol history”, 2010). in 1896, henry ford built the first automobile to run on pure ethanol; however, the prohibition era in the u.s. (1919-1933) marked the end of ethanol and the rise of gasoline as an automobile fuel (“ethanol history”, 2010; gustafson, 2010). the 1973 energy crises once again made ethanol fuel more interesting and the u.s. began exploring ways to encourage its corn-grain ethanol industry (hoffman & baker, 2010; hughes, gibbons, & kohl, 2009; nixon, 1973). later, the u.s. corn-grain ethanol industry’s growth was supported by the 1990 clean air act (caa) and the 1992 energy policy act (epac). using ethanol as an oxygenate helped control carbon monoxide emissions (environmental protection agency, 2014), and the 1992 epac created a biofuels tax credit for the u.s. corn-grain ethanol industry (lave, burke, & tyner, 2011). from 20032007, methyl tertiary butyl ether (mtbe) was phased out as a u.s. gasoline oxygenate (lave et al., 2011; lidderdale, 2000) and early in the 21st century, the 2005 energy policy act established the first renewable fuel standard (rfs1) to further spur the biofuels industry while addressing oil price volatility, greenhouse gas (ghg) emissions, energy security, and rural economic development (golden & handfield, 2014; schnepf & yacobucci, 2013). in 2007, the energy independence and security act (eisa) expanded the reach of rfs1 (to rfs2) by mandating 36 billion gallons of biofuels to be blended into the u.s. fuel supply by 2022 (schnepf & yacobucci, 2013). the u.s. corn-grain ethanol industry’s production grew from approximately 830 million gallons in 1991 to nearly 14.8 billion gallons in 2015, representing about 60 percent of the world’s ethanol production (fig. 2) (renewable fuels association, 2015, 2016). figure 1. history of ethanol. chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 45 2.2 biodiesel the use of biofuels recovered from vegetable oils in diesel engines originated with the demonstration of the diesel engine by the german inventor rudolph diesel, at the world exhibition in paris in 1911 (yusuf, kamarudin, & yaakub, 2011). diesel envisioned widespread use of vegetable oils, such as hemp and peanut oil, for diesel engines; however, modern biodiesel, recovered by converting vegetable oils into fatty acid methyl esters, was not established in europe until the late 1980s (pacific biodiesel, 2015). in the u.s., biodiesel was first manufactured in 1991 in kansas city, missouri (national biodiesel board, 2015a). later, by 2002, biodiesel legislation in minnesota required the inclusion of 2 percent soybean biodiesel into the majority of minnesota’s diesel pool (national biodiesel board, 2015a). fig. 3 depicts the growth of the u.s. biodiesel industry from approximately 10 million gallons of 100% biodiesel (b100) in 2002 to 1.26 billion gallons in 2015 (energy information administration, 2016a). 3.0 current status of first generation biofuels in the us 3.1 corn-grain ethanol over 90% of u.s. ethanol biorefineries use corn grain as feedstock; the remaining use sorghum, cheese whey or waste beer (o’brien, 2010; renewable fuels association, 2015). fig. 4 illustrates the 208 u.s. corn-grain ethanol biorefineries in 2015 with the heaviest concentrations 0 2000 4000 6000 8000 10000 12000 14000 16000 0 50 100 150 200 250 91 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 total brs annual production (mgy) # of brs (biorefineries) production (mgy) 1992 energy policy act phase out of mtbe rfs1 rfs2 figure 2. growth of the u.s. corn-grain ethanol industry (# of biorefineries and production) from 1991 2015 (renewable fuels association, 2015, 2016). figure 3. growth of the u.s. biodiesel industry (# of biorefineries and capacity) from 2001 to 2015 (energy information administration, 2016b). (*the production volume of 2015 is predicted by the first 11 months of 2015) 0 500 1000 1500 0 20 40 60 80 100 120 140 160 2001 02 03 04 05 06 07 08 09 10 11 12 13 14 15* # of brs (biorefineries) b100 production (mgy)# of biorefineries b100 production (mgy) fig. 4. u.s. corn-grain ethanol biorefineries (n=208) by location in 2015 (adapted from (renewable fuels association, 2015)) 46 bioproducts business 1(4) 2016 in the midwestern corn-belt of iowa (n=40), nebraska (n=25), minnesota (n=21), south dakota (n=15) and illinois (n=14). the largest ethanol producers in 2015 were archer daniels midland (adm), poet, valero renewable fuels, green plains renewable energy, and flint hill resources (table 1). 3.1.1 conversion technologies & co-products. corn-grain ethanol in the united states is produced in both wet and dry mills (naik, goud, rout, & dalai, 2010). wet mills separate each component of the corn kernel into different fractions via steeping, de-germinating and separation (fig. 5). a variety of products can be recovered in wet mills, including starch, gluten meal, gluten feed and oil. the starch derived from wet mills may be further processed into sweeteners (high-fructose corn syrup, hfcs) or ethanol (amg, 2013). this diversified product portfolio allows producers to quickly adapt to changes in market conditions (hoffman & baker, 2010). compared to wet mills, dry mills are typically smaller, less expensive to build and produce a narrower product mix (fig. 6). the primary co-products of dry mill are distillers’ dried grains with solubles (ddgs) and/or corn oil (fig. 6). roughly one-third of every 56-pound bushel of grain that enters the ethanol process is converted to distillers’ grains and corn oil, with approximately onequarter of dry mill’s gross revenue from the sale of these two co-products in 2013 (renewable fuels association, 2014). as a result, the market share of ethanol dry mills increased from 30 to 89 percent from 1991 to 2009/10 (hoffman & baker, 2010; urbanchuk, 2010). table 1. the u.s. leading corn-grain ethanol producers by capacity in 2015 (renewable fuels association, 2015) company states 2015 capacity (mgy) archer daniels midland (adm) ia, il, mn, ne 1,762 poet llc in, ia, mn, mi, mo, sd, oh 1,666 valero renewable fuels ia, in, mn, ne, oh, sd, wi 1,300 green plains renewable energy ia, in, mi, mn,ne,tn,tx,va 1,220 flint hills resources lp ia, ne 820 cargill, inc. ia, ne 345 the andersons ethanol llc ia, in, mi, oh 330 abengoa bioenergía corp. il, in, ks, ne, nm 323 figure 6. schematic of dry milling process (naik et al., 2010; o’brien, 2010). figure 5. schematic of wet milling process (amg, 2013; naik et al., 2010). chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 47 3.2 biodiesel biodiesel is defined under the standard of astm d6751 as “a fuel comprised of mono-alkyl esters of long-chain fatty acids”, and can be produced from vegetable oilseeds (such as rapeseed, sunflower, olive, and soybean), animal fats (such as poultry, tallow, and white grease) or recycled restaurant grease (e.g. yellow grease) (alternative fuels data center, 2014; energy information administration, 2016a; lai, 2014). among all biodiesel feedstocks, vegetable oilseeds were the major biodiesel feedstock, accounting for approximately 71 percent of the u.s. total in 2015 (energy information administration, 2016a). that year, soybean oil was the largest feedstock accounting for 52 percent of the total, followed by recycled grease (14.3%), animal fats (13.4%), corn oil (11%), canola oil (8%), and other (1.3%) (energy information administration, 2016a). fig. 7 shows the locations of the identified 162 u.s. biodiesel biorefineries in 2015 (biodiesel magazine, 2015; lane, 2013a; national biodiesel board, 2015b). 3.2.1 conversion technologies & co-products. trans-esterification is the most widely used technology in biodiesel production (fig. 8) (moser, 2011). this trans-esterification reaction involves a triacylglycerol (tag) reacting with short-chain monohydric alcohol with the presence of alkaline catalysts (such as naoh, koh, or related alkoxides) to form fatty acid alkyl esters (biodiesel) and glycerol (fig. 8). the price of biodiesel depends largely on conversion technologies. in order to be cost-competitive against petro-diesel, research interests have been focused on the development of heterogeneous catalyst systems to increase conversion yields and to standardize biodiesel to enhance its marketability (hanna, isom, & campbell, 2005; santacesaria, vicente, di serio, & tesser, 2012). figure 7. u.s. biodiesel biorefineries (n=162) by location in 2015 (adapted from (biodiesel magazine, 2015; lane, 2013a; national biodiesel board, 2015b)) figure 8. production of fatty acid alkyl esters (biodiesel) via trans-esterification (moser, 2011). 48 bioproducts business 1(4) 2016 glycerol, a co-product from biodiesel production, has a wide range of applications including personal care, pharmaceuticals, foods and beverages (hanna et al., 2005; sheela, 2014). according to transparency market research (2013), the global demand for glycerol was around 2,000 kilotons in 2011 and is expected to reach 3,000 kilotons by 2018, worthing an estimated $2.1 billion (sheela, 2014). 4.0 challenges confronting u.s. first generation biofuels 4.1 ethanol “blend wall” corn-grain ethanol in the u.s. is blended with gasoline, primarily as e10 (up to 10% ethanol blended with 90% unleaded gasoline). a key benefit of e10 is that it is compatible with existing vehicles and infrastructure, including fuel tanks and retail pumps (schnepf & yacobucci, 2013). since 2010, the ethanol production volume has surpassed the capacity that can be blended with conventional motor gasoline at the 10% blend rate, commonly referred to as the ethanol “blend wall” (fig. 9). to address this demand dilemma, the epa approved the sale of e15 (up to 15% ethanol blended with 85% unleaded gasoline) in 2010 for 2001 and newer vehicles, with the potential to increase the annual amount of ethanol sold by 50% (renewable fuels association, 2013). in addition, the u.s. ethanol industry anticipates significant progress through the usda’s biofuels infrastructure partnership program (october 2015), which will result in 4,880 pumps and 515 tanks installed throughout the u.s. over the next year in 1,486 stations to offer consumers e15 and higher blends (buis, 2016). however, the adoption of higher blends is not a panacea as a lack of compatible fueling infrastructure and poor automaker and consumer acceptance of e15 or e85 for flex fuel vehicles (ffvs) remain (antoni, zverlov, & schwarz, 2007; energy information administration, 2011; martin, 2013; nacs, 2013). 4.2 “food-versus-fuel” debate the “food-versus-fuel” debate unfolded during the food crisis of 2007 and 2008 because most feedstocks currently used for first generation biofuels are directly or indirectly used for food production (ajanovic, 2011; babcock, 2012; srinivasan, 2009). as a result, serious concerns remain regarding the preservation of the food security of the planet and increasing feedstock prices (carter & miller, 2012; srinivasan, 2009; ziegler, 2008). however, others contend that oil prices and export demand may be the driving influences of feedstock and food price inflation and that the impact of biofuels production on food security and price inflation are exaggerated (schill, 2016). the renewable fuels association (rfa) contends that corn ethanol production uses only the grain’s starch component and returned an estimated 39 million metric tons of protein, minerals, fat and fiber to the animal feed market in 2014 (renewable fuels association, 2014). 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 0 2000 4000 6000 8000 10000 12000 14000 16000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* percentagemgy corn ethanol production volume % of conventional motor gasoline consumption ethanol "blend wall" figure 9. annual u.s. ethanol production volumes from 2006 to 2015 and their corresponding percentage of the conventional motor gasoline consumption (*2015 fuel ethanol consumption data is based on the prediction from eia) (energy information administration, 2016b, 2016c) chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 49 at the global forum for food and agriculture (january 2015), jose graziano de silva, director of the united nations food and agriculture organization (fao), stated: “we need to move from the ‘food versus fuel’ debate to a ‘food and fuel’ debate. there is no question: food comes first. but biofuels should not be simply seen as a threat or a magical solution. like anything else, they can do good or bad.” (food and agriculture organization, 2015) 4.3 biodiesel challenges in addition to the food-fuel issue, biodiesel fuels also face challenges related to environmental, economic and social impacts (castanheira et al., 2014). in the case of crop-based feedstock, representing approximately 71% of u.s. biodiesel production in 2015, specific issues include seasonal crop availability and similar land use change concerns associated with corn-grain ethanol production (bomb, 2005; castanheira et al., 2014; gnansounou, panichelli, dauriat, & villegas, 2008; rabago, 2008). including animal fat and restaurant grease-based biodiesel, overall challenges to biodiesel include potential infrastructure modifications to move fuel from production facilities to personal vehicles, storage shelf life and related distribution and infrastructure modifications, nox emissions, low-temperature operability, and reduced energy content than petrodiesel (bomb, 2005; castanheira et al., 2014; howell & weber, 1995; rabago, 2008; yoon, 2011). 5.0 transition to cellulosic alcohols a wide variety of agricultural biomass can be used as raw materials to produce cellulosic alcohols including short rotation forestry crops (poplar, willow), perennial grasses (miscanthus, switchgrass), agricultural, forest and mill residues, and municipal solid waste (msw) (pacini, sanches-pereira, durleva, kane, & bhutani, 2014; sims, taylor, saddler, & mabee, 2008). due to concerns over “food-versus-fuel”, land-use change and ghg emissions, non-edible cellulosic alcohols, primarily ethanol and butanol, are gaining momentum in u.s. road transportation fuel markets (mohr & raman, 2013; schnepf, 2010). compared to petroleum-based fuels and corn-grain ethanol, cellulosic alcohols benefit from their reliance on non-food based feedstocks, less competition on land use, and lower lifecycle ghg emissions (balan et al., 2013; fitzpatrick et al., 2010; pacini et al., 2014). researchers from the university of california at berkeley, stanford university, and argonne national lab estimated that, on a life-cycle basis, cellulosic ethanol could lower ghg emissions by around 90 percent relative to petroleumbased gasoline (energy efficiency & renewable energy, 2014b; farrell et al., 2006; schmer, vogel, mitchell, & perrin, 2008). 5.1 cellulosic alcohol biorefineries cellulosic alcohols may be produced in either “bolt-on” and “stand-alone” biorefineries. “bolt-on” facilities are added to or co-located with existing corn-grain ethanol biorefineries to leverage existing corn-grain ethanol facilities. these “bolt-on” cellulosic biorefineries can share feedstock and distribution supply chains and lower capital costs to reduce investment risk (fulton, morrision, parker, witcover, & sperling, 2014; lane, 2014). currently, eleven u.s. “bolt on” cellulosic biofuel biorefineries are in start-up mode (table 2) with two having launched commercial-scale production: poet-dsm “project liberty” (sept. 3, 2014) and quad county corn processors (july 1, 2014) (“four commercial”, 2014). table 2. “bolt-on” cellulosic alcohol biorefineries in u.s. as of january 2016 (n=11) companies location product capacity (gallons/year) citations abengoa york, ne ethanol 20,000 (piersol, 2011) ace ethanol stanley, wi ethanol up to 3.6 million (lane, 2013b) adm decatur, il ethanol 25,800 (lane, 2013a) aemetis keyes, ca ethanol na (aemetis, 2012) flint hills fairbank, ia ethanol na (business wire, 2012) front range windsor, co ethanol up to 3.6 million (sweetwater energy, 2013) gevo luverne, mn iso-butanol 0.6~1.2 million (gevo, 2015) icm st. joseph, mo ethanol na (icm, 2012) pacific ethanol boardman, or ethanol up to 3.6 million (pacific ethanol, 2013) poet-dsm emmetsburg, ia ethanol 25 million (poet-dsm, 2014) quad-county corn processors galva, ia ethanol 2 million (advanced ethanol council, 2015; qccp, 2015) 50 bioproducts business 1(4) 2016 table 3. “stand-alone” cellulosic alcohol biorefineries in u.s. as of january 2016 (n=16) company location feedstock products capacity (mgy) citations abengoa hugoton, ks corn stover, switchgrass ethanol 25 (abengoa, 2014) american process alpena, mi thomaston, ga sugarcane bagasse non-food based biomass, woodchips ethanol, acetic acid ethanol, succinic acid, bdo 0.7 up to 0.3 (advanced ethanol council, 2013) (american process, 2015) beta renewables clinton, nc energy grasses ethanol, lignin 20 (advanced ethanol council, 2013) (beta renewables, 2013) bluefire renewable fulton, ms anaheim, ca municipal solid waste (msw) ethanol 19 200 lbs/day (advanced ethanol council, 2013) (blue fire renewables, 2015) butamax wilmington, de woody biomass n-butanol na (butamax, 2013) canergy imperial valley, ca energy cane ethanol 25 (canergy, 2015) coskata madison, pa woody chips, msw ethanol, ethylene na (coskata, 2015) dupont biofuel solutions nevada, ia corn cob ethanol 30 (dupont, 2015a) enerkem pontotoc, ms msw ethanol and methanol 10 (advanced ethanol council, 2013) fiberight blairstown, ia msw ethanol 6 (advanced ethanol council, 2013) (fiberight, 2015) ineos vero beach, fl vegetative and wood waste ethanol 8 (ineos, 2013) mascoma kinross, mi hardwood ethanol & biochemicals 20 (balan et al., 2013) mendota bioenergy five points, ca energy beets ethanol 15 (mendota bioenergy, 2015) zeachem boardman, or energy woods ethanol & biochemicals 0.25 25 (zeachem, 2012) (balan et al., 2013) (brown & brown, 2013) fig. 10. cellulosic ethanol via enzymatic/dilute acid hydrolysis (modified from (balan et al., 2013)) in addition, sixteen u.s. “stand-alone” cellulosic alcohol biorefineries have been identified with three having successfully launched commercial scale production: abengoa bioenergy 25 mgy in hugoton, ks (oct. 19, 2014); dupont 30 mgy in nevada, ia (oct. 30, 2015); and ineos bio 8 mgy in vero beach, fl (july 31, 2013) (“four commercial”, 2014; dupont, 2015b; ineos, 2013). fifteen biorefineries produce cellulosic ethanol as the major product; butamax focuses on the production of n-butanol (table 3). 5.2 conversion technologies enzymatic/dilute acid hydrolysis and fermentation are the leading conversion technologies deployed in the u.s. to produce cellulosic alcohols (balan et al., 2013; brown & brown, 2013; coyle, 2010). due to the recalcitrance of lignocellulose, a composite of cellulose, hemicellulose and lignin, pretreatment is required to separate the lignin and improve enzymatic and microbial break down of biomass into sugars (himmel et al., 2007). various pretreatments are available, such as wet oxidation, dilute acid, steam explosion, ammonia fiber expansion (afex), mechanical extrusion, liquid hot water, lime, organosolv, and ionic liquid (balan et al., 2013; fitzpatrick et al., 2010). after separating from lignin, cellulase enzymes or acid is used to depolymerize cellulose into glucose, which is then fermented to ethanol (fig. 10). consolidated bioprocessing (cbp) combines enzyme production, enzymatic hydrolysis, and fermentation into the same reactor and has been adopted by aemetis and mascoma to produce cellulosic alcohols (brown & brown, 2013). cbp is purported to reduce capital and chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 51 operating costs as compared to separate enzymatic/ dilute hydrolysis & fermentation (brown & brown, 2013; olson, mcbride, shaw, & lynd, 2012) (fig. 11). 6.0 growth of cellulosicand algaebased hydrocarbon biofuels 6.1 hydrocarbon biofuels biorefineries the u.s. biofuels industry has also witnessed considerable progress of the non-food based hydrocarbon biofuels, which are drop-in replacements for gasoline, diesel, and jet fuel (savage, 2011). drop-in hydrocarbon biofuels are chemically similar to petroleum-based fuels and therefore are fully compatible with existing infrastructure, i.e., no need for engine modifications and drop-in biofuels may use existing petroleum distribution systems (alternative fuels data center, 2016). as of january 2016, seventeen companies are currently or proposing to use second generation (lignocellulsoic) and third generation (algal) feedstock for the production of various end products (table 4). 6.2 conversion technologies lignocellulosic biomass and algae can be converted to renewable hydrocarbon biofuels by thermochemical and hybrid (combined thermochemical and biochemical) technologies (yue, you, & snyder, 2014). three specific processes for the conversion are: 1) gasification of biomass to syngas (carbon monoxide and hydrogen) and further conversion of syngas to liquid fuels via methanolto-gasoline (mtg) or fischer-tropsch (ft) syntheses; 2) fig. 11. cellulosic ethanol via consolidated bioprocessing (cbp) (modified from (brown & brown, 2013)) table 4. drop-in hydrocarbon biofuels start-ups as of january 2016 (n=17) company location products citations lignocellulosic biomass amyris emeryville, ca renewable diesel from farnesene (amyris, 2016) cool planet alexandria, la renewable jet fuels & gasoline (coolplanet, 2015) emerald biofuels chicago, il renewable diesel (emerald, 2015) envergent (uop & ensyn) kapolei, hi green diesel & jet fuel (envergent, 2015) fulcrum bioenergy storey county, nv spk jet fuel or renewable diesel (fulcrum, 2015) haldor topsoe inc. pasadena, tx dimethyl ether, renewable gasoline (topsoe, 2015) lanzatech soperton, ga drop-in jet fuel via alcohol-to-jet (atj) (lanzatech, 2015) maverick synfuels brooksville, fl renewable diesel/jet fuel via methanol-to-olefins (mto) (maverick, 2015) red rock biofuels fort collins, co drop-in jet, diesel and naphtha fuels (redrock, 2015) sundrop fuels longmont, co green gasoline (sundropfuels, 2015) synterra energy ca & oh synthetic diesel fuel (synterra, 2012) terrabon, inc. bryan, tx renewable gasoline & chemicals (terrabon, 2008) virent madison, wi renewable diesel, jet fuel & gasoline (virent, 2015) algae algenol fort myers, fl renewable diesel, gasoline and jet fuel (algenol, 2016) joule unlimited hobbs, nm sunflow-d (diesel) (jouleunlimited, 2014) sapphire energy columbus, nm gasoline from omega oils (bardhan et al., 2015; sapphire, 2014) solazyme peoria, il soladiesel, solajet (bardhan et al., 2015; solazyme.com, 2014) 52 bioproducts business 1(4) 2016 fast pyrolysis or liquefaction of biomass to produce biooils followed by upgrading to liquid hydrocarbon biofuels via hydroprocessing; and 3) biochemical conversion of biomass to ethanol followed by catalysis or bioforming to hydrocarbon biofuels (fig. 12). 7.0 challenges confronting the u.s. cellulosicand algae-based biofuels industries 7.1 challenges of cellulosic biofuels compared to petro-based gasoline and diesel, cellulosic biofuels enjoy improved sustainability, energy security and lower ghg emissions. however, cellulosic biofuels are confronting high entry barriers that inhibit their entrance to the u.s. transportation fuel markets. these barriers include feedstock costs and availability, high production costs, and policy uncertainty (cheng & timilsina, 2010; cheng & timilsina, 2011; oltra, 2011; pimentel & patzek, 2005). 7.1.1 feedstock costs and availability. long-term investments in research, demonstration and deployment are ongoing to develop and fully scale cost-effective and time-sensitive supply chains for cellulosic biofuel biorefineries (richard, 2010; yue et al., 2014). in contrast to corn-grain and oilseeds, lignocellulosic feedstocks are generally less expensive; however, lower bulk density and higher moisture content results in significant logistical challenges (balan, 2014; coyle, 2010; richard, 2010). feedstock costs, estimated at 35-50 percent of total cellulosic ethanol production costs, consist of both the raw materials and the logistics costs, including harvesting, collecting, storing, preprocessing, and transporting biomass to biorefineries (coyle, 2010). feedstock availability issues related to environmental and social considerations represent another challenge. for agricultural residues and wastes, harvesting may be restricted by fig. 12. simplified conversion processes for cellulosicand algae-based hydrocarbon biofuels (modified from (balan et al., 2013; brennan & owende, 2010; brown & brown, 2013; naik et al., 2010; yue et al., 2014)) chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 53 sustainability criteria and soil quality maintenance which can impact the steady year-round supply of biomass to the biorefinery (coyle, 2010; wilhelm, johnson, karlen, & lightle, 2007). for example, corn stover represents three-fourths of all available biomass, yet 30% of it must remain on the fields after harvest to mitigate water and wind erosion (energy efficiency & renewable energy, 2011; ertl, 2013; gallagher et al., 2003; graham, nelson, sheehan, perlack, & wright, 2007). for forestry residues, there is no clear consensus on the minimum amount of organic material required to remain on site to maintain ecosystem services (daioglou, stehfest, wicke, faaij, & vuuren, 2015); however, research is currently addressing forest biomass inventories in response to changing land uses and climatic conditions (hollinger, 2008; temesgen et al., 2015). 7.1.2 high production costs. compared to the relatively mature fermentation process for corn-grain ethanol and trans-esterification for biodiesel, cellulosic biofuels are still at their early stages of development with most of these technologies at pilot or demonstration scale (balan et al., 2013). the main technical obstacle of producing cellulosic biofuels is the tough, complex structure of lignocellulosic biomass cell walls and the need to separate lignin (hahn-hägerdal, galbe, gorwa-grauslund, lidén, & zacchi, 2006; houghton, weatherwax, & ferrell, 2005; zhu et al., 2015). as a result, relatively immature and untested technologies for large-scale production challenge the economic-competitiveness of u.s. cellulosic alcohols and cellulosic hydrocarbon biofuels (coyle, 2010). for example, on january 2016, u.s. department of energy (doe) researchers reported achieving a cellulosic ethanol production cost of $2.15 per gallon (national renewable energy laboratory, 2016). at this cost, cellulosic ethanol is not competitive with petroleum-based gasoline when oil prices are below $50 per barrel (center for climate and energy solutions, 2009). 7.1.3 policy uncertainty. stable and consistent policies enabled first generation u.s. corn-grain ethanol biofuels to grow dramatically to approximately 15 billion gallons by 2015 (dahmann, fowler, & smith, 2016). second generation biofuels, however, have struggled to reach commercial scale production due, in part, to policy uncertainty (dahmann et al., 2016; dinneen, 2016). this uncertainty is reflected in the fluctuating renewable volume obligations (rvos) under rfs set by the u.s. environmental protection agency (epa) (lane, 2015). rvos are the obligated quantities of biofuels for companies that supply gasoline or diesel transportation fuel for the retail market (schnepf & yacobucci, 2013). the u.s. epa has been tasked with the implementation of the rfs by calculating and establishing rvos based on rfs2 volume requirements and u.s. energy information association (eia) projections of gasoline and diesel production for the coming year (environmental protection agency, 2015b; schnepf & yacobucci, 2013). epa then issues an annual notice of proposed rulemaking and a final rule by november 30 of each year to set the rfs for each ensuing year (schnepf & yacobucci, 2013). however, in light of recent and dramatic oil price drops, biofuel exports and retired renewable identification numbers (rins)1, current u.s. law and policy for cellulosic and other advanced biofuels have neither provided adequate stimulus nor a clear a direction to foster stable and predictable development and commercialization (dahmann et al., 2016). as an alternative approach, california has taken a leadership role in developing and implementing a low carbon fuel standard (lcfs) with the goal of establishing: “…average carbon intensity values for various fuels such as gasoline, diesel, biofuels, natural gas, and electricity. carbon intensity values are calculated using a life-cycle analysis, which accounts for all greenhouse gas emissions associated with a fuel’s production, distribution and use — as opposed to a simple measure of carbon emissions when a fuel is burned” (dahmann et al., 2016; langston et al., 2011; yeh et al., 2012). in addition to california, a lcfs is being explored elsewhere, including oregon, washington and in the eastern u.s. where 11 states signed a 2009 memorandum of understanding to adopt a “clean fuels standard” (dahmann et al., 2016; yeh et al., 2012). this type of carbon-based policy tool could greatly impact the future direction of the u.s. biofuels industry in terms of feedstock use, plant siting and technology deployment. 7.2 challenges of algae-based hydrocarbon biofuels algal feedstocks enjoy high growth rates and tolerance to varying environmental conditions, which allows them to survive and reproduce in low quality high saline water unsuitable for agriculture (energy efficiency & 1 rin refers to a serial number (a unique 38character) to a batch of biofuel for the purpose of tracking its production, use and trading as required by renewable fuels standard (rfs) (schnepf & yacobucci, 2013) 54 bioproducts business 1(4) 2016 renewable energy, 2014a; naik et al., 2010). similar to lignocellulosic hydrocarbon biofuels, drop-in algaebased hydrocarbon biofuels also benefit from existing fuel distribution networks and lower ghg emissions. however, feedstock cultivation, processing, and logistics issues pose significant challenges and various technological and economic barriers remain (energy efficiency & renewable energy, 2014a; hughes, gibbons, moser, & rich, 2013; lee, 2013; oltra, 2011; sheehan, dunahay, benemann, & roessler, 1998). 8.0 discussion corn-grain ethanol and biodiesel are relatively mature u.s. first generation biofuels due in part to stable and supportive policies, established conversion technologies, and synergy with existing u.s. food production systems. in 2015, 208 u.s. corn-grain ethanol biorefineries produced approximately 15 billion gallons of ethanol. however, first generation corn-grain ethanol biofuels are facing challenges to further growth in term of the ethanol “blend wall”, the “food-versus-fuel” debate, and consumer acceptance related to engine wear and reduced energy content (table 5). biodiesel is a renewable substitute for diesel fuel (up to 100%) with favorable lubricity properties which may extend the life of diesel engines (energy efficiency & renewable energy, 2015a; pacific biodiesel, 2016). in 2015, 162 biodiesel refineries produced about 1.26 billion gallons of pure biodiesel (b100), of which 71 percent of the production used vegetable oil seeds with the balance derived from animal fat and restaurant grease. the crop-based biodiesel faces similar food-fuel and land use change issues and all biodiesel fuels face infrastructure, shelf life, energy content, nox emission, and low-temperature operability issues (table 5). driven by the “food-versus-fuel” debate and concerns over ghg emissions, second generation cellulosic alcohols (e.g. cellulosic ethanol and butanol) are gaining interest from researchers, policymakers and investors. by using non-food based feedstocks, cellulosic alcohols offer an opportunity to reduce impacts on food supply and price, impose less competition on land use, and further reduce ghg emissions by around 90 percent relative to petroleum-based gasoline (table 5). as of january 2016, eleven “bolt-on” and sixteen “stand-alone” u.s. cellulosic alcohol biorefineries have been established in the u.s. table 5. summary of the opportunities and challenges confronting u.s. biofuels fuels opportunities challenges fossil fuels meets current energy needs price volatility ghg emissions energy insecurity corn-grain ethanol renewable substitute oxygenate about 10% of us gasoline consumption “food-fuel” ethanol “blend wall” consumer acceptance biodiesel renewable substitute up to 100% blends increased lubricity “food-fuel” land use change infrastructure energy content shelf life nox emissions low-temperature operability cellulosic alcohols cellulosic hydrocarbons renewable substitute “food-fuel” lower lifecycle ghg emissions renewable substitute “food-fuel” lower lifecycle ghg emissions drop-in feedstock costs/availability production/capital costs policy uncertainty technical, environmental and societal constraints algae-based hydrocarbons renewable substitute “food-fuel” lower lifecycle ghg emissions drop-in high potential yields flexible feedstock siting feedstock cultivation/ processing/logistics production costs energy/water/nitrogen/phosphorus requirements chen et al. — u.s. biofuels industry: a critical review of opportunities and challenges 55 second generation non-food based drop-in cellulosic and third generation algae-based hydrocarbon biofuels eliminate the food-fuel issue and infrastructure/engine compatibility concerns [166] (table 5). cellulosic alcohols and cellulosic hydrocarbon biofuels face several potential challenges associated with feedstock costs and availability, high production and capital costs, policy uncertainty, and various technical, environmental and societal constraints. as of january 2016, seventeen u.s. companies were producing or proposing to produce hydrocarbon-based “green” gasoline, renewable diesel and/or biojet. early success of these pioneering projects is critical to attract capital investment and create demand (brown & brown, 2013). in spite of high potential yield and the ability to grow algae in locations unsuitable for agriculture, algae-based hydrocarbon biofuels are challenged by feedstock cultivation, processing, and logistics issues, technology (large volume requirement of water, nitrogen and phosphorus), and economic barriers (high production costs and high energy requirements) that need to be addressed in the coming years (energy efficiency & renewable energy, 2014a; hughes et al., 2013; lee, 2013; oltra, 2011; sheehan et al., 1998). 9.0 conclusions future biofuel conversion technologies and resultant final products are difficult to predict; however, a fully drop-in, sustainable and energy dense biomass-based liquid fuel at price parity with petro-based fuels is the ultimate goal to address societal needs around climate change and energy security (babcock, marette, & tréguer, 2011). in particular, specific biofuel pathways will be driven by a favorable value proposition vis-à-vis petrofuels in terms of overall economics and proven environmental benefits without perceived negative impacts on performance. and, the lessons learned from corn/ grain ethanol suggest that specific and stable policies addressing feedstock infrastructure/logistics, capital formation, and environmental issues may more rapidly and effectively advance the adoption and diffusion of next generation renewable liquid fuels. addtitionally, researchers have recognized that innovative technology underpins a strong bioeconomy (the biomass research and development (r&d) board, 2016). therefore, further research and development on technological advances should be encouraged and supported to help lignocellulosic liquid biofuels achieve economic-competitiveness. this paper provides an up-to-date critical review for researchers and policymakers to better understand the structure of existing u.s. biorefineries and to benchmark future opportunities for the u.s. bioeconomy. references “ethanol history”. 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(2008). report of the special rapporteur on the right to food. geneva, switzerland. abstract this paper reviews the literature on the economic evaluations of tree improvement for planted forests and investigates whether or not using improved reforestation stock from tree improvement programs is a good investment. the main findings from systematic web-based searches show that (1) tree improvement is an effective tool to improve forest productivity and to realize financial returns; (2) economic gains from wood production with selection for breeding traits (e.g., high-volume yield or height growth) are the main reasons forest managers adopt new biotechnologies in tree improvement; (3) cost-benefit analysis is the primary empirical approach for estimating the economic effects of tree improvement for planted forests; and (4) there is very little literature on estimating the non-market benefits (e.g., improved watershed protection, amenities, or conservation of genetic diversity) that tree improvement brings, using non-market valuation techniques. the recent introduction of new biotechnologies in tree improvement, such as genomics-assisted tree breeding (gatb), can achieve genetic gains in selected traits more quickly and effectively than traditional breeding approaches, providing economic incentives for forest managers to use better quality stock for planted forests. therefore, we suggest that future research should (1) consider the additional benefit, extra research and development costs, and time saved by applying new biotechnologies in tree improvement (e.g., gatb) in the cost-benefit analysis; (2) investigate the trade-offs between timber volume and wood quality traits and assess the economic effects of new biotechnologies in tree improvement along different stages of the forestry supply chain; and (3) explicitly account for the non-market trait values for the targeted breeding traits (e.g., drought/pest resistance) so that tree improvement programs can contribute to sustainable production systems. economic analyses along these lines could help policy makers, forest managers, and forest company owners better understand the trade-offs of alternative breeding objectives and make economically efficient investment decisions for planted forests. keywords: economics, benefit-cost analysis, tree improvement, improved regeneration material, genetic gain economic evaluations of tree improvement for planted forests: a systematic review 1 department of wood science, university of british columbia, vancouver, bc. 2 department of resource economics and environmental sociology, university of alberta, edmonton, ab. 3 department of renewable resources, university of alberta, edmonton, ab (orcid: 0000-0002-9718-9297). * corresponding author. email: changwy@mail.ubc.ca; tel: 1-604-363-2821. acknowledgments: this work was supported by genome canada; genome alberta through alberta economic trade and development; genome british columbia; the university of alberta; and the university of calgary. further cash funding has been provided by alberta innovates biosolutions; forest resource improvement association of alberta; and the forest resource improvement program through west fraser ltd. (blue ridge lumber and hinton wood products) and weyerhaeuser timberlands (grande prairie and pembina). in-kind funding has been provided by alberta agriculture and forestry; blue ridge lumber west fraser; weyerhaeuser timberlands grande prairie; and the thomas, wishart and erbilgin labs in support of the resilient forests (res-for): climate, pests & policy – genomic applications project. wei-yew chang1*, shuo wang2, chris gaston1, julie cool1, henry an2, and barb r. thomas3 bioproducts business 4(1), 2019, pp. 1-14. issn 2378-1394. https://doi.org/10.22382/bpb-2019-001 1 introduction planted forests (fao 2016) play an important role in sustainable forest management and can help to fulfill a wide variety of social, economic, and environmental objectives (paquette and messier 2010). with timber harvesting in natural forests restricted or banned in many countries, combined with an increasing demand for wood products resulting from continued growth in human populations and incomes, the world’s planted forests have expanded significantly over the past 20 years, from 124 million ha in 1995 to 291 million ha in 2015, an increase of 135% (fao 2015). in 2012, planted forests were estimated to contribute 46.3%, or 770.2 million m3, of the world’s industrial roundwood production, and projections indicate that the world’s planted forests could increase production to 75% of the global industrial roundwood demands by 2030 (fao 2015, payn et al. 2015). in addition to increasing the availability of wood to consumers, planted forests also provide key ecosystem services, helping to preserve the world’s remaining primary forests and sequester a significant mailto:changwy@mail.ubc.ca 2 bioproducts business 4(1) 2019 proportion of the carbon caused by human activities (paquette and messier 2010, sedjo 2001). as forests become more common, it makes economic sense to improve the quality of seed and subsequent seedling stock used in planted forests, which includes planting improved (superior) trees rather than planting the same unimproved seed and seedling stock year after year. using improved seedling stock also creates economic incentives for investors to pursue plant domestication and tree improvement activities to capture the benefits of these improvements and innovations (sedjo 2003). tree improvement is the application of genetic principles to increase the value of trees (frampton 1996). many traditional breeding programs throughout the world were initiated in the 1950s and involved selecting superior (plus) trees, breeding or simply collecting seed from these selected trees, and testing the progeny for the desired traits (zobel and talbert 1984). since the 1990s, biotechnologies such as tissue culture, cloning, marker-assisted selection, and genetic modification/ transgenics programs have been developed and introduced to forestry (sedjo 2003), and more recently, genomic selection (grattapaglia and resende 2011, el-dien et al. 2016, ratcliffe et al. 2015, 2017). while the use of biotechnology has the potential to improve trees by enabling foresters to achieve gains in selected traits – such as greater volumes or better wood quality – more quickly and effectively, the key question before any specific program can be implemented is “what exactly will the benefits be?” private woodlot owners and investors may be more interested in the potential (financial) profitability of the program, while policy makers will also consider the societal benefits. in order to consolidate the knowledge that exists about the financial and societal benefits generated from tree improvement programs, we conducted a systematic review of existing literature on the economic analysis of employing tree improvement as a management option for planted forests. our main questions are as follows: (1) are there economic/financial benefits of using improved reforestation stock from tree breeding and improvement programs over the use of unimproved reforestation stock? (2) what are the most common evaluation methods for assessing the economic returns of using improved planting stock for planted forests? (3) what are the knowledge gaps in the existing literature, and (4) what are the challenges and issues that may affect the economic evaluation of employing tree improvement for planted forests? 2 document acquisition to acquire the related literature for review, our search utilized both keyword-driven and manual approaches, following tong et al. (2016). specifically, we first conducted several systematic web-based searches using keywords and boolean operator in the isi web of science core collection database. the boolean search was built on the following keywords: “economic*” (“financial*” or “benefit*“) and “tree improvement*” or “planting stock*” or “genetically improved*” or “forest genomic*” or “regeneration*”. a manual approach with a snowball technique was also conducted to carefully go through the reference lists of selected articles that included major research questions of interest for our investigation. we collected and focused on peer-reviewed literature in english that was published between 1988 and 2018. articles that did not have empirical research on an economic analysis of the use of improved reforestation material from tree improvement were excluded from the systemic review. in total, 15 studies were identified. the studies were located in seven countries: canada (5 studies), the united states (1), finland (3), sweden (2), the united kingdom (2), new zealand (1), and australia (1). under the category of tree species, most studies (14 articles, >90%) focused on the examination of softwood species, and only one study focused on hardwood species. among all of the studies investigated, the majority (11 articles, or 78%) focused on the economic analysis of the use of improved tree stock generated from conventional seed orchards versus unimproved materials (wild seeds); four studies (22%) investigated the financial incentives in comparisons of alternative tree breeding strategies (e.g., seed orchard, rooted cuttings, or genetic markers approaches) for planted forests. for economic evaluation methods, cost-benefit analysis is the primary empirical approach for estimating the economic effects of tree improvement for planted forests, which was employed in all of these studies and tended to focus on assessing the derived market (financial) benefits. in the following sections, we introduce information needed to conduct a cost-benefit analysis of using improved stock from tree improvement programs for planted forests, followed by a literature review of the chang et al. — economic evaluations of tree improvement for planted forests: a systematic review 3 studies that we captured. finally, we identify the main findings, knowledge gaps, and challenges and issues that should be considered in future economic analyses of applying forest tree improvement for planted forests. 3 cost-benefit analysis of tree improvement programs economic assessments of all forest management options should help forest managers and policy makers clarify objectives and choices while considering the trade-offs (mckenney 2001, schreiber and thomas 2017). thus, when conducting an economic evaluation of tree improvement programs for planted forests, it is important to first identify the objectives of the tree improvements, which include the following: (1) identifying the selected breeding traits (e.g., genetic gain in volume yield, height growth, wood quality, or other characteristics related to biotic or abiotic resistance); and (2) clarifying the tree breeding objective for planted forests (e.g., for wood production use or non-wood use). only then can appropriate economic tools for examining the economic effects of tree improvement programs be identified and conducted. cost-benefit analysis has been identified as the main analysis method by forest managers to estimate the benefits and costs of tree improvement programs and compare them with alternative options for planted forests, particularly with the objective of increasing wood production for commercial use (schreiber and thomas 2017). the impact of tree improvement research is reflected as a change in the biological growth function trait (volume), which is generally presented as genetic gain in percent of individual progeny or families when compared with an unimproved or average volume (calculated from the height and diameter at breast height) of the trees for a given population at a given rotation length. gain improvement can be estimated by tree growth and yield models for stand-level impact projections or further incorporated into timber harvesting models for large-scale forest-level impact projections. thus, it is the change in the value of the growth function that is relevant for an economic analysis of the biotechnology change in forestry (mckenney et al. 1992). the information needed for conducting a cost-benefit analysis generally includes costs, stumpage prices, genetic gain of the breeding objective trait, and the general criterion for profitability. with that information, a worthwhile investment is one where the discounted or present value of all benefits, less all costs that occur through time, needs to be greater than zero (mckenney 2000). when compared with alternative reforestation materials, the economic efficiency of deploying new biotechnology in tree improvement for planted forests can be examined by comparing the maximum land expectation value with “unimproved” tree stock at the optimal rotation age (e.g., using wild seedling material from natural forests) and the maximum land expectation value with “improved” tree stock (e.g., using seedlings with better genetic quality from tree improvement programs) (mckeand et al. 2006, ahtikoski et al. 2012). if the increase in land expectation value exceeds the additional (extra) seedling costs per hectare for better quality genetic material, there are economic incentives for tree growers and private investors to use improved seedlings for planted forests. the investment decision could also be justified on economic grounds (pearse 1990). 4 literature review among all of the empirical studies that we captured, cost-benefit analysis was the most common approach to comparing the economic effects of alternative tree improvement programs for planted forests for which the objectives were to increase wood production (volume gained per unit time). the majority of authors concluded that using improved tree stock from these tree improvement programs for planted forests was a good investment when compared with unimproved reforestation material (see table 1). 4.1 north america petrinovic et al. (2009) used a financial model to estimate the benefits produced by using improved white spruce (picea glauca moench) plantations in quebec, canada, with three different tree breeding methods: (1) a traditional tree breeding program from a seed orchard (with 10% potential genetic gain in height relative to unimproved seedling stock); (2) a method using cuttings from superior families obtained from controlled crosses (15% height gain relative to unimproved material); and (3) a program that involved planting multiclonal varieties produced through somatic embryogenesis and selected from seed orchards using genetic markers (20% height gain relative to unimproved material). factors related to the quality of reforestation sites (at site index [si] 8 m 4 bioproducts business 4(1) 2019 table 1. summary of cost-benefit analyses of tree improvement programs for planted forests country tree species genetic gain of selected trait vs. unimproved results is tree improvement a good investment? literature quebec, canada white spruce 10-20% in height growth up to cad$712/ha net present value for using a genetic marker approach (at a 7% discount rate) yes petrinovic et al. (2009) new brunswick, canada white spruce timber volume gain of 6.25-26.55 m3/ha up to 12.5 benefit-cost ratio (bcr) at a harvest age of 40 (at a 4% discount rate) yes wu et al. (2015) ontario, canada black spruce 8-16% in volume growth for seed orchard approach and 10-20% for clonal/rooted cutting approach tree improvement program can be break-even (i.e., bcr=1) at a stumpage price of cad$10/m3 for seed orchard approach and cad$17/ m3 for rooted cutting approach (at a 4% discount rate with 2000 ha annual planting) no, due to the low stumpage prices (cad$4.5/m3) at the time mckenney et al. (1989) ontario, canada black spruce and jack pine 8-16% in volume growth seed orchard program can break-even at a stumpage price of cad$17/m3 for black spruce and cad$10/m3 for jack pine (at a 4% discount rate with 1000 ha annual planting). investing in a jack pine improvement program would generate more revenue per dollar than black spruce yes mckenney et al. (1992) alberta, canada white spruce and lodgepole pine 1-4% increase in volume growth per decade cad$7.4 million increased net present benefit under the scenario of 2% increase in volume gain per decade and 15% increase of area planted per decade (at an 8% discount rate) yes, if an allowable cut effect is considered schreiber and thomas (2017) southern united states loblolly pine 7-21% in height growth us$99-415/acre (us$245-1025/ha) of additional net present site value for using improved seedling materials that could increase the site index from 70-85 feet (at a 5% discount rate) yes mckeand et al. (2006) finland scots pine 8.7-14.7% in height growth using mature 1st generation seeds could generate 44% and 38% more financial benefits per hectare than the use of unimproved seeds for tree growers and a sawmill, respectively, in south-central finland (at a 3% discount rate) yes ahtikoski et al. (2018) finland scots pine 15% in volume growth up to €2,849/ha net present site value (at a 2% discount rate) yes ahtikoski et al. (2012) northern, finland scots pine 3-10% in volume growth the net cost of seed orchard seeds was less than the cost of natural stand seeds with 7% yield growth and 15% better seed quality with a higher survival rate (at a 3% discount rate) yes ahtikoski and pulkkinen (2003) northern, sweden scots pine 4-10% in volume growth using improved planting stock on the most productive site could generate additional benefits (up to €1,956/ha) relative to unimproved material via the natural regeneration method (at a 1% discount rate) yes simonsen (2013) northern, sweden scots pine and norway spruce 7.5-26% in volume growth depending on breeding methods planting improved seedlings has a higher benefit-cost ratio (24.6) than the benefit-cost ratio of cloned seedlings (2.0) due to lower investment costs (at a 2.45% discount rate) yes simonsen et al. (2010) united kingdom ash, sycamore maple, wild cherry, and sweet chestnut 10.7-65.8% in volume growth, depending on tree breeding methods. £38/ha of additional net present benefit with simple mass selection approach and £100/ha with seed orchard method. no additional net present benefits with the use of clonal techniques, due to the relatively low timber price and the higher extra early costs of planting stock yes, but only for the simple mass selection and seed orchard methods palmer et al. (1998) united kingdom sitka spruce 31% extra better quality logs planting vegetation propagation stock could not be justified under the market conditions at the time (£150/ha extra planting stock cost, £5/m3 log premium, and at 3-5% discount rate) no, due to the high extra cost of rooted cutting method lee and watt (2012) new zealand radiata pine 25% in volume yield and 5.6% in height growth nz$7,400-11,400/ha increased net present value for using highly improved tree materials and up to nz$8.5 billion increased total economic benefits in new zealand (at a 7% discount rate) yes kimberley (2015) australia radiata pine 20-25% in volume growth aud$927 million increased net present value using improved seedling materials in the 1990s yes wu et al. (2007) chang et al. — economic evaluations of tree improvement for planted forests: a systematic review 5 and 12 m at age 25) and silvicultural regimes (with and without thinning) were also considered in the model to examine their influences on the net present value of benefits. while the study was examined from a private woodlot owner’s perspective and did not specifically consider the costs associated with generating improved planting material, as these costs were assumed to be borne by the government in quebec, the authors found that planting improved trees can have significant financial benefits to the forest industry as well as for private woodlot owners. in addition, forest site quality had a substantial influence on the benefits, and the optimal economic rotation age could be reduced by up to 9 years for improved white spruce selected by genetic markers. from a private woodlot owner’s perspective, mckeand et al. (2006) evaluated the benefits of improved loblolly pine (pinus taeda l.) seedlings from a range of genetic gain levels and site productivity levels using a growth and yield model. the authors found that an increase in si values (at base age 25 years) associated with genetic gains in height of 1.52 to 4.57 m (5 to 15 ft), which is equal to a height gain of 7% to 21% relative to unimproved material, from different site productivity levels would result in increases in the net present site value ranging from us$124 to $741 ha-1 (us$50 acre-1 to over us$300 acre-1), depending on planting density (1794 and 1077 trees ha-1 or 726 and 436 trees acre-1) and management regimes (with versus without thinning). additionally, the optimal economic rotation age for planting improved loblolly pine was reduced with an increase in site quality and through domestication (pers. comm., s. mckeand to b.r. thomas, november 2017). the results of the study suggested that private landowners should plant the best genetic material (seedlings with the greatest gain value) on the most productive sites and under the most intensive forest management regimes to realize the largest financial benefits. wu et al. (2015) conducted a cost-benefit analysis to examine the investment desirability of an established white spruce clonal seed orchard in new brunswick, canada, versus one that used wild stand (unselected) seeds. the authors used actual costs incurred in the establishment of the seed orchard and projected revenue increases from the realized genetic gain in volume growth. a growth and yield model projected volume gain for two rotation ages (40 and 50 years) and two silviculture management scenarios (with versus without commercial thinning). compared to wild-stand seeds, using improved seedling stock would result in a timber volume gains of 6.25 to 26.55 m3 ha-1. the estimated results indicated that the white spruce seed orchard in new brunswick was a very good investment for all scenarios when the discount rate was less than 6%, and that the estimated benefit-cost ratio could reach up to 12.5 when commercial thinning was applied and trees were harvested at 40 years of age, assuming a 4% discount rate. mckenney et al. (1989) used a cost-benefit analysis to compare two tree improvement methods (i.e., the traditional seed orchard approach and the clonal forestry/rooted cuttings approach) for black spruce (picea mariana (mill.) b.s.p.) tree improvement in ontario, canada. the genetic gains in volume for the traditional seed orchard approach were assumed to be 8% and 16% over wild seeds and 10% and 20% volume gains over wild seeds for the clonal/rooted cutting approach. to assess the potential economic impact of tree improvement, the authors specifically separated the research and development costs from the operational costs of tree improvement activities. the difference in net present value between improved and unimproved plantations at optimal rotation ages was therefore compared with the research cost to determine the total net worth of tree improvement. the authors found that the clonal/ rooted cutting approach was economically unattractive, due to the high cost of cutting production relative to the conventional seed orchard approach, despite the higher genetic gain that could be achieved. under more favorable though less likely conditions (i.e., lower costs and/or greater gain), the authors found that the project could be beneficial for plantations of 200 ha or larger. ultimately, the authors suggested that, in addition to obtaining increasingly better clones, tree improvement research should also be aimed at lowering the production cost of the rooted cuttings to allow clonal forestry to become economically attractive. mckenney et al. (1992) further compared the economic attractiveness of black spruce and jack pine (pinus banksiana lamb.) seed orchard programs in ontario, canada, using a cost-benefit analysis. genetic gains of 8% and 16% in merchantable volume relative to unimproved material were used for both black spruce and jack pine. the estimated results showed that both jack pine and black spruce improvement programs could be supported on economic grounds with just an 8% increase in volume gain, as long as stumpage prices exceeded cad$8 to 12 m-3 on the best quality site and 6 bioproducts business 4(1) 2019 assuming a 4% discount rate. sensitivity analysis results also revealed that the total net present value of the jack pine seed orchard approach consistently outperformed the total value of the black spruce seed orchard approach for all scenarios. thus, if government budgets are limited, investing in jack pine improvement programs would generate more revenue per hectare than black spruce in ontario. 4.2 europe there have also been economic analyses of tree improvement programs in europe. a recent study reviewed by jansson et al. (2017) found that tree improvement programs in scandinavia and finland have resulted in increases in volume growth in the range of 10% to 25% relative to unimproved material for scots pine (pinus sylvestris l.) and norway spruce (picea abies l. (karst)). the estimated net present value associated with planting improved trees in the region yielded better returns on investment due to shorter rotation periods than those for unimproved forests. ahtikoski et al. (2012) examined the financial performance associated with the use of improved scots pine seedlings in finland and found that the use of improved seedling material with a 15% genetic gain in volume growth relative to unimproved material from a 1.5 generation orchard was financially attractive for private woodlot owners in most parts of finland. the net present value (– land expectation value) was calculated to be worth up to €2,849 ha-1 (us$3,386 ha-1) at a 2% discount rate, and the optimal rotation period would be reduced by 15 years with a 15% genetic gain in volume. ahtikoski and pulkkinen (2003) compared the financial attractiveness of using improved seeds from scots pine seed orchards with seeds from natural stands in northern finland from a tree grower’s perspective. considering an increase of 7% in timber volume and an increase of 15% in seed quality, with higher survival rates relative to natural stand seeds, the authors found that the net cost of orchard seed was less than the total cost of natural stand seed, assuming a 3% discount rate. moreover, in another study conducted by ahtikoski et al. (2018), who compared three types of improved scots pine seedlots to unimproved seedlots on three different sites in finland, the authors found that using improved scots pine seed material (including mature 1st generation, juvenile 1.5th generation, and mature 1.5th generation) not only created financial benefits for tree growers but also provided financial incentives for a sawmill in finland, with higher sawing yield than that of unimproved trees. in sweden, the profitability of using improved planting stock to increase forest growth has also been investigated by simonsen et al. (2010). the authors examined several silvicultural measures to increase the forest growth of scots pine and norway spruce for a forest company in northern sweden and found that the use of improved planting stock generated from seed orchards is highly profitable, due to low investment costs and considerable increase of forest growth relative to other silvicultural measures, such as fertilization, treatment against insects, and improved seed quality. under the scenario of planting improved stock with a 15% volume gain for scots pine and a 7.5% volume gain for norway spruce over wild seeds on average productivity sites, the estimated benefit-cost ratios for planting improved scots pine and norway spruce were 24.6 and 19.4, respectively, at a 2.45 discount rate. in addition, when the use of improved stock from different tree breeding methods was further compared, the authors found that planting improved seedlings generated from traditional seed orchards could have a much higher benefit-cost ratio relative to the use of cloned seedlings (i.e., 24.6 versus 2.0). simonsen (2013) further compared the profitability of regenerating scots pine in northern sweden with two alternative regeneration methods (natural regeneration versus planting) and found that using improved planting material from seed orchards could greatly shift the preference towards the planting method. specifically, under the scenario of using improved planting stock with a 10% volume gain over unimproved material, planting improved material could generate an additional us$ 2211 ha-1 (€1956 ha-1) on the most productive site (si 28 m at age 100) at a 1% discount rate, when compared with the natural regeneration method. moreover, the authors found that planting improved stock could enable landowners to break-even on lower productive sites, compared with the natural regeneration approach. in the u.k., palmer et al. (1998) assessed the financial benefits of planting four broadleaved tree species (i.e., ash [fraxinus excelsior l.], sycamore maple [acer pseudoplatanus l.], wild cherry [prunus avium l.], and sweet chestnut [castanea sativa mill.]) using three different tree improvement methods: (1) simple mass selection (with up to 10.7% timber yield gain relative to unimproved material); (2) untested clonal seed orchards chang et al. — economic evaluations of tree improvement for planted forests: a systematic review 7 (up to 32.6% in timber yield gain relative to unimproved material); and (3) mass vegetative propagation (i.e., clonal) techniques (up to 65.8% timber yield gain relative to unimproved material). the estimated results showed that conventional selection methods (e.g., collecting seed from simple, mass-selected parent trees and the seed orchard method) were found to be more cost-effective than the use of clonal techniques, due to the relatively low timber price at the time. therefore, the increased revenue from the improved stock was found to be insufficient to compensate for the higher extra early costs of planting stock produced by the clonal propagation breeding technique, despite the higher genetic gains that could be achieved. another study conducted by lee and watt (2012) compared the financial returns of planting improved sitka spruce (picea sitchensis [bong.] carr.) stock derived from seed orchards with more expensive rooted cuttings through the vegetative propagation method in the u.k. the authors assumed that the predicted growth rates of seed orchard and vegetative propagation stock were the same; however, improved wood quality traits (such as stem straightness and branching quality) were observed from the vegetative propagation planting stock. the improvements in quality traits were further translated through the increased proportion of quality logs (i.e., extra 31% green logs relative to unimproved stock) and log premium. while this study specifically considered wood quality traits in the economic analysis, the authors found that planting vegetatively propagated stock could not be justified on economic grounds due to the high extra cost of planting stock (£150 ha-1) relative to orchard seed seedlings. 4.3 oceania wu et al. (2007) reviewed the genetic improvement of radiata pine (pinus radiata d. don) in australia and found that, compared to unimproved material, the genetic gain in volume of radiata pine at 15 years of age increased up to 33% from a first-generation seed orchard, while an average 20% to 25% volume gain at the age of 10 to 15 years was generally observed from most first-generation gain trials. the investment in radiata pine breeding in the 1990s had generated a net present value of us$ 670 million (aud$927 million) through the increased volume productivity and genetic seedling quality of the plantations produced. the authors concluded that tree improvement programs had generated significant economic benefits for the australian forest industries. more recently, kimberley et al. (2015) analyzed a series of large plot trials in new zealand and quantified the realized genetic gain in radiata pine tree improvement. the authors found differences in volume yield and height growth between unimproved and highly improved seedlots of 25% and 5.6%, respectively. the realized genetic gains were then incorporated into a national growth and yield modelling system to project the log volume gain at the harvest age. the authors used these estimated results to calculate the economic value of logs harvested at 30 years and found that the moderately improved and highly improved varieties resulted in economic gains of us$2,030 ha-1 to us$3,654ha-1 and us$5,007 ha-1 to us$7,715 ha-1 (nz$3,000 to nz$5,400 ha-1 and nz$7,400 to nz$11,400 ha-1), respectively. extrapolating this gain in the harvest log value per hectare to the 1.57 million ha of plantation area in new zealand and assuming a 7% discount rate, the total net present value of tree improvement programs in new zealand was estimated to increase by us$2.4 to 5.8 billion (nz$3.5 to 8.5 billion), depending on the specific improved planting materials. this study demonstrated convincingly that tree improvement programs have created substantial economic benefits for new zealand. most cost-benefit analysis studies that we reviewed indicated that tree improvement was an effective tool that can be used by forest managers to improve forest productivity. using better genetic quality seedlings for planted forests was a good investment for private woodlot owners and the forest industry when compared to unimproved seedling materials. economies of scale will also be realized from harvesting larger trees at the optimal economic rotation age, as well as more timber volume per hectare. however, studies have also found that the additional (extra) costs associated with the tree breeding methods used to produce the reforestation material must not be too high; otherwise, the genetic gains required to achieve profitability would be unrealistic. 5 discussion and future prospects in summary, the existing literature on the economic effects of using tree improvement as a management option for planted forests tends to (1) focus on wood production use and estimate the market benefits of improving selected (market) traits such as volume yield or height growth in the cost-benefit analysis; (2) ignore non-market benefits (e.g., improved carbon sequestration, watershed protection, amenities, or conservation 8 bioproducts business 4(1) 2019 of genetic diversity) provided by tree improvement compared to unimproved reforestation material, as tree breeders generally do not account for the nonmarket trait values of the selected traits; and (3) lack consideration of the trade-offs between wood quality and timber volume quantity resulting from alternative breeding traits/strategies and previous studies generally were examined from a tree grower’s perspective. in this section, we identify several challenges and issues that ought to be considered in future economic analyses of applying forest tree improvement to planted forests. 5.1 long breeding cycle in contrast to breeding programs for many agricultural crops, a traditional tree breeding program is considerably longer. the long rotation period of some conifer species (e.g., 60 to 110 years for lodgepole pine [pinus contorta douglas] and white spruce in western canada) and the long breeding, progeny testing phase and seed orchard establishment that is required for commercial deployment reduce the present value of the expected benefits and increase the riskiness of the investment. burgeoning new biotechnologies in tree improvement (e.g., genomic selection) can increase selection accuracy and improve the genetic gain of interest traits, but more importantly, genomic selection offers a new approach to mitigating the long investment horizon by substantially reducing the entire tree breeding cycle (e.g., by up to 20 years for white spruce in the boreal region of canada) by shortening the progeny testing phase in particular (porth et al. 2015, porth et al. 2016). a recent report from isik (2014) suggested that genomic selection in loblolly pine improvement in the southern u.s. could significantly reduce the breeding cycle time by half and increase genetic gains twofold per year. the potential time savings from integrating genomic selection into tree improvement programs also significantly reduces the ancillary resources required in each generation of tree breeding (e.g., personnel, site development, seedling production and planting, site maintenance, data collection and analyses). this benefit would provide strong economic incentives for investors to adopt new biotechnologies into tree improvement for planted forests. however, despite the exponential – and continuing – decrease in the cost of genotyping (a component of implementing genomic selection) over the past 10 years, cost remains a major hurdle in employing new biotechnology tools in tree improvement for planted forests (isik 2014, poland and rife 2012). because there are no published studies that compare the financial returns of genomic-assisted tree breeding to traditional breeding programs for planted forests (porth et al. 2015), there is a need to investigate the benefits of adopting genomicassisted tree breeding when breeding cycle time as well as research and development costs are included in the cost-benefit analysis framework. 5.2 wood quality the inverse correlation between wood quality (e.g., wood density) and quantity (e.g., growth rate in timber volume) traits continues to be a challenge for forest tree breeders (jayawickrama 2001, park et al. 2012). improved trees with fast growth rates usually reach sawlog size at younger ages and therefore are harvested at shortened optimal rotation ages. however, younger plantation trees tend to have a larger proportion of juvenile wood to mature wood, with a lower wood density and higher microfibril angle than in older more mature trees, both of which negatively affect the strength and stiffness of dimensional lumber. for example, kretschmann and bendtsen (1992) found that dimensional lumber cut from the juvenile wood core has only 50% to 70% of the strength and stiffness of lumber cut from mature wood, depending on the species and grade, which can significantly increase the manufacturing cost of dimensional lumber. mckeand et al. (2006) examined the benefits of planting the best loblolly pine in the southern u.s. and found that landowners might not receive the assumed stated stumpage prices for loblolly pine harvested at the shortened rotation ages (e.g., 17 instead of 20 years). this is because younger (15 to 20 year-old) plantation-grown loblolly pine trees have over 70% juvenile wood in their bole, which has much lower strength properties and a higher moisture content, resulting in lower stumpage prices compared with mature (25 to 30 year-old) trees. thus, the authors (mckeand et al. 2006) suggested that a price penalty for harvesting younger trees could be considered in the economic analysis by developing stumpage price structures for planted forests that recognize the strength, moisture content, and wood quality properties of trees with different amounts of juvenile versus mature wood. projected revenues can then be appropriately adjusted in the economic analysis that explicitly considers the quality traits, and optimal rotation ages can be modified if price penalties (premia) are chang et al. — economic evaluations of tree improvement for planted forests: a systematic review 9 imposed for trees with a high (low) percentage of juvenile wood (e.g., petrinovic et al. 2009, lee and watt 2012). ahtikoski et al. (2012) and jansson et al. (2017) commented that the inverse correlation between wood quality and growth rate from planted forests can be addressed in economic analyses by estimating the relative economic weights of different selected breeding traits in the profit function, which can be used as an index to measure the net economic gains derived from different selected breeding traits. according to ivković et al. (2006a, 2006b) and wu et al. (2007), there are six key steps to developing the optimal economic weights for breeding traits. however, this approach requires accurate information on growth rates and quality attributes, which is still difficult to obtain, according to ivković et al. (2010) and jansson et al. (2017). a simpler approach to quantifying the trade-offs that producers or end-users make between wood quantity and quality is the use of choice experiments or conjoint analysis, which is an experimental approach commonly used in the economics literature. for example, previous studies showed that negative genetic correlations are present between traits of interest; e.g., wood quality changes and log dimensions diminish because of faster growth rates (evans 2009). thus, the point at which the loss in wood quality exceeds the benefit from faster growth is an important economic question and may differ by species, stakeholder, and end user (see vossler et al. (2012) and holmes et al. (2014) for more specific econometric models, survey design issues, and sampling processes of the choice experiment method). economic analysis of tree improvement for planted forests, with respect to the wood quality issue, can also investigate the wood quality gains needed to justify a tree improvement program, if volume gains are not sufficient, through the use of sensitivity analysis under a cost-benefit analysis framework (mckenney et al. 1992). for example, if a given stumpage rate is not sufficient to justify tree improvement, then the difference between that stumpage rate and the break-even stumpage rate indicates the value of wood quality gain required to proceed with the project. this type of analysis could be complemented by expert surveys of geneticists/breeders and sawmill operators to gauge the likelihood of achieving the required gains as well as the costs involved (mckenney et al. 1992). as tree improvement programs are shifting to target wood quality (and biotic resistance) traits instead of only growth rates, it is important to consider the economic impact across the entire supply chain and the potentially different distributional effects. for example, the way in which different breeding objective traits affect the profitability and production efficiency of sawmills will likely be different from how they affect the end user or the grower. some sawmills may be willing to pay a price premium for logs of a particular age or with a minimum threshold density, and how these market signals are transmitted from processor to grower will affect planting and harvesting decisions (ivković et al. 2006a). moreover, of the 15 studies that we captured, only 1 study, conducted by ahtikoski et al. (2018), investigated whether using improved reforestation material would create simultaneous benefits for tree growers and a sawmill in finland. the remaining 14 studies were all investigated from a forest manager’s perspective to examine the profitability of using improved stock for planted forests. thus, a more comprehensive economic analysis of the entire supply chain that considers price pass-through, information feedback, and the effect of market power would help forest managers and the forestry industry better understand the trade-offs between the timber growth rate and wood properties and ensure better informed investment decisions regarding planted forests. 5.3 non-market trait values tree breeding and improvement programs traditionally focus on the genetic improvement of key production traits (e.g., height, diameter, and volume) that have clear economic values driven by short-term market forces, also called market trait values (olesen et al. 2000). for example, the market trait values of using disease-resistant seedling material for planted forests can be evaluated through the increased timber volume gain multiplied by stumpage prices. however, to have long-term biologically, ecologically, and sociologically sound breeding goals for the efficient use of resources and sustainable production systems, researchers proposed that the non-market trait values should also be considered in breeding and improvement programs (olesen et al. 1999, 2000). using animal breeding as an example, olesen et al. (2000) suggested that implementing both market and non-market trait values in the aggregated genotype (i.e., total trait values) could contribute to sustainable livestock production systems. the authors proposed that changes in the quality and quantity of animal traits have value, as they either change the benefits associ10 bioproducts business 4(1) 2019 ated with human activities or change the costs related to these activities, which have an impact on human welfare through established markets or through nonmarket activities (e.g., ethical values of improved animal welfare through less suffering from diseases or stress and a higher quality of life). the market value of the breeding traits could be reflected by the change in market prices, while the non-market value of the breeding traits could be reflected by improving the values of natural capital and ecosystem services by changes in traits (olesen et al. 2000). compared to animal breeding, using improved seedling materials from tree improvement could provide stronger positive externalities (e.g., carbon sequestration, watershed protection, or amenities) relative to unimproved materials; however, these non-market benefits were generally not targeted by tree breeders in the past, as they are not contingent on changes to the key production (market) traits achieved via tree improvement programs. in the tree breeding context, planting disease-resistant trees might also increase the aesthetic and recreational values, increase carbon sequestration and reduce degradation of the atmosphere over unimproved planting stock. such values should be represented by the non-market trait values in tree breeding and improvement programs. thus, the traits’ values in the aggregate genotype can be split into non-market trait values and market trait values (olesen et al. 2000). the genetic gain in objective traits will also include a non-market genetic gain (e.g., carbon sequestration) and a market genetic gain (volume). without considering the non-market trait values, the true trait values of tree improvement could be underestimated. while non-market valuation techniques have been used to evaluate ecological goods and services provided by planted forests (see table 2 for examples), to our knowledge, no existing literature has investigated the non-market trait values in forest tree improvement programs using these non-market valuation tools. further adopting the idea of non-market trait values from animal breeding to tree improvement would provide a holistic perspective from which to evaluate the extra benefits that tree breeding brings to non-market benefits and to give the natural capital stock that produces ecosystem services adequate weight in the decision-making process (costanza et al. 1997). 5.4 climate change another role envisioned for tree breeding programs and planted forests worldwide is mitigating anthropogenic global warming. for example, in canada, global warming is expected to have a profound impact on canadian forests, including planted forests, as tree growth responds directly to changes in co2 concentration, temperature, table 2. valuation methods for non-market benefits associated with planted forests. valuation method value captured non-market benefits valued benefits of approach limitations of approach relevant literature travel cost direct and indirect use recreational use of planted forests based on observed behavior non-use value cannot be captured; limited to direct use values and recreational benefits; difficulties arise when trips are made to multiple destinations. turner et al. (2011) hedonic pricing direct and indirect use value of wood quality/attributes based on market data very data-intensive; difficulties arise when the market structure shift due to non-marginal environmental change. alzamora and apiolaza (2010) contingent valuation use and non-use value of an afforestation or conservation program able to capture use and non-use values bias in survey design and sampling process due to the hypothetical nature of the market; resource-intensive method. yao and kaval (2010) choice experiment use and non-use trade-offs among wood attributes able to capture use and non-use values. able to measure the trade-offs among attributes and the marginal value of attributes similar to contingent valuation above, plus difficulties in choosing attributes and attribute levels. yao (2012) chang et al. — economic evaluations of tree improvement for planted forests: a systematic review 11 and nutrient and water availability. according to natural resources canada (2016), more frequent and longer lasting droughts are likely to induce changes in disturbance regimes, such as significantly increasing the annual burned forest area. the increasing atmospheric pollutants of particulates, nitrogen compounds, and ozone will also likely increase the intensity of insect outbreaks and disease problems (evans 2009). for instance, warmer winters have already contributed to the major infestation of the mountain pine beetle in the province of british columbia, canada; the pine beetle has also spread over the rocky mountains into alberta (natural resources canada 2016). with the realization and acceptance that the climate is changing and that these changes will affect the forestry sector, applying tree improvement for planted forests could reduce the negative impacts of climate change through carbon sequestration and adaptation. planted forests can be used to sequester carbon and have the potential to relieve pressure on natural forest harvesting. with fast-growing trees selected by tree improvement programs, there is a greater potential for carbon sequestration by using the improved tree stock. thus, investigating the economic effects of tree improvement as a management option for planted forests that addresses climate change is also an important part of the economic impact analysis process. in a case study in argentina, sedjo (1999) used a present-value approach to evaluate the costs and benefits of using improved seedling material for plantation forestry and found that the plantation investment can only be justified when the value of carbon sequestration is considered along with timber values. therefore, results that do not consider the value of carbon sequestration may be misleading and lead to inefficient policy decisions. yaron (2001) conducted a case study in tropical africa and estimated the total economic value of alternative land uses in the mount cameroon region.1 by comparing the total economic values of oil palm and rubber plantations, sustainable forest use, and subsistence-oriented agriculture, yaron (2001) found that sustainable forestry produces the highest economic return, when the value of carbon stored by the forest is explicitly considered. however, when private investors make plantation investment decisions, the economic benefits of carbon sequestration are typically not considered, which may lead to socially inefficient scenarios. thus, it is imperative that governments establish a proper carbon pricing policy or payment system to incentivize sustainable development and greenhouse gas reduction. another potential economic benefit provided by tree improvement programs is the use of improved seedlings for agroforestry, which is a farming method that combines crops, livestock, and trees to take advantage of complementarities. agroforestry is considered an effective and low-cost method of sequestering atmospheric carbon into vegetation and soil pools. a recent study by baah-acheamfour et al. (2014) supports the potential of an agroforestry approach to increase soil carbon sequestration in central alberta, canada. planting improved pestand disease-resistant tree species selected through tree improvement programs can also be part of climate change adaptation strategies and reduce potential losses caused by climate changeinduced pests and disease disturbances. a recent worldwide survey on insect and disease resistance suggested that certain targeted resistance programs have had a substantial effect on improving the health of planted forests, especially for major commercial species (yanchuk and allard 2009). the main concern with the traditional breeding approach is that it is resource demanding and time consuming, and it may be less effective under a rapid climate change scenario (yanchuk and allard 2009). marker-assisted selection has also been proposed as an effective approach to reduce the cost and timeline of the breeding process (xu and crouch 2008, el-kassaby et al. 2012). studies have demonstrated that when high mortality has occurred due to biotic or abiotic factors, genomic tools such as marker-assisted selection are preferable for estimating the future breeding potential (el-kassaby et al. 2012). future work should focus on quantifying the economic impacts of tree improvement programs that apply the new biotechnology (e.g., genomic technology) to address climate change challenges. 5.5 uncertainty of future markets the world is changing rapidly. what will the future look like and how does this affect forest tree improvement today? according to white et al. (2014), the forestry sector faces three future challenges: (1) changing economic conditions, such as new markets, new products and new patterns of forest ownership; (2) changing environmental 1 alternative land uses include: (1) direct use value, such as the value of crop production, plantation agriculture, and timber use; (2) indirect use value, such as carbon stored per hectare valued at internationally accepted rates; and (3) non-use value, such as value of knowing the existence of endangered species. chang et al. — economic evaluations of tree improvement for planted forests: a systematic review 12 conditions, such as climate change, the rise of invasive species, and competition for land with agriculture to feed a growing population; and (3) new technologies. however, addressing these future uncertainties in an informed and objective manner is exceedingly difficult. the use of sensitivity analyses and stochastic modelling approaches are often used to obviate the need to make seemingly ad hoc decisions regarding specific parameters, but can sometimes lead to imprecise results. nevertheless, it is important to recognize these challenges and develop a systematic approach that considers the entire system in order to encourage dialogue between tree breeders, natural/social scientists, and economists (porth et al. 2015). 6 conclusions and recommendations this paper conducted a systematic review and information gap analysis about the economic evaluations of tree improvement for planted forests. the main finding is that most of the studies we examined were conducted with the objective of wood production for commercial use and investigated from a forest manager’s perspective. studies have found that using improved reforestation stock for planted forests can realize financial benefits for tree growers and forest companies when compared with the use of unimproved material. economic incentives for wood production are the main reason for forest managers to deploy new biotechnology in tree improvement for planted forests, although the paradigm is shifting to recognize the need for resilient, healthy forests rather than a simple focus on increasing the volume of wood produced. cost-benefit analysis is the main economic application tool for examining the economic effects of tree improvement programs for planted forests. a sensitivity analysis and break-even approach should be conducted for program justification and to account for future uncertainties. systematic literature searches have also found that the non-market trait values (e.g., carbon sequestration, watershed protection, or conservation values of genetic diversity) in tree improvement are gaining attention; however, these non-market trait values were usually not investigated in the past, as they do not depend on changes to the market traits targeted by tree breeders. compared to traditional breeding approaches, new biotechnology in tree breeding, such as genomics-assisted tree breeding, not only can effectively increase timber volume and improve wood quality traits but can also significantly reduce breeding cycles, leading to a shorter rotation period, and therefore reduce uncertainty. thus, future economic evaluations of alternative tree improvement methods for planted forests should examine the benefits of time savings along with the consideration of research and overhead costs that may occur in the cost-benefit analysis framework. moreover, future research should investigate the trade-offs between timber volume and wood quality traits; examine the economic effects of tree improvement from the different stages of production systems, i.e., from tree growers to wood processors; and assess how new biotechnology in tree improvement might affect downstream wood product markets (e.g., prices and international trade). in addition, the non-market values of breeding objective traits should be explicitly accounted for and estimated, using non-market valuation techniques, to ensure that the total economic values, including both market (financial) and non-market (social) values, of the tree improvement programs are captured. economic analyses along these lines will help tree growers, private investors, and sawmill operators consider the trade-offs associated with alternative breeding objectives more comprehensively, thereby achieving more economically efficient investment decisions for planted forests. 7 references ahtikoski, a., and pulkkinen, p. 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(1984). applied tree improvement. wiley, new york. 448 p. http://www.poplar.ca/upload/documents/g2ppaper.pdf http://www.poplar.ca/upload/documents/g2ppaper.pdf http://hdl.handle.net/10289/6399 http://hdl.handle.net/10289/6399 ´ abstract cross laminated timber (clt) has, in recent years, grown from an invention to a much celebrated product and building technology revolutionizing the use of massive timber in construction. the clt industry is concentrated in alpine europe, where the technology was originally developed and where most clt is still produced. despite great interest, the rate of adoption of clt technology in the us is slow, reflecting uncertainty with regard to whether the european models can be successfully transplanted to the business environment of the usa. the goal of this project was to assist development of the clt industry by providing insights into the global sector’s structure, output potential, production profile, internal diversity, competitiveness, innovativeness, and perceived barriers to further expansion. survey data collected from 21 clt manufacturers was supplemented with information obtained from other sources. the primary finding is that the clt manufacturing industry is unique in the commodity-oriented forest sector in that most of its production is custom-made for specific projects. while much of the hype surrounding clt is focused on tall buildings, most of the clt is produced for small to mediumsize multi-family housing, public, and industrial structures. there is a high level of collaboration along the clt supply chain, including vertical integration. nearly one-third of respondents are involved in building construction. this first of its kind comprehensive review of the global clt industry provides insights for potential entrants into the clt manufacturing sector including businesses along its extensive supply chain. keywords: cross-laminated timber, innovativeness, manufacturing firms insights into the global crosslaminated timber industry lech muszynski1*, eric hansen1, shanuka fernando1, gabriel schwarzmann1, and jasmin rainer2 acknowledgements: the authors would like to thank the following people for their assistance in translation and/or data collection: myriam abdouli, raffaele de amicis, julian geisel, nathalie gitt, tomoko igarashi, manon jahan, thomas orskaug, and mariapaola riggio. 1 department of wood science and engineering, college of forestry, oregon state university, 119 richardson hall, corvallis, or 97331. 2 salzburg university of applied sciences, campus kuchl, austria. * corresponding author: e-mail: lech.muszynski@oregonstate.edu; tel.: 541-737-9479 bioproducts business 2(8), 2017, pp. 77-92. http://biobus.swst.org. https://doi.org/10.22382/bpb-2017-008 1.0 introduction cross-laminated timber (clt) is a relatively new product and building system originally developed in central europe during the early 1990s. it is a massive composite panel product comprised of cross-layered pieces of dimension lumber bound together in a way that the whole panel is acting as a single load bearing element for wall, roof, and floor assemblies. the importance of clt is that this new engineered composite product is enabling entirely new building technology, revolutionizing the use of timber in construction. the rise of clt technology from concept to a viable industry has taken about 20 years of high growth, mostly concentrated in the alpine region of europe. for example, austria, germany, and switzerland together held just under 80% of global production capacity in 2015, with 60% attributed to austria alone (plackner 2015a). although the adoption of the technology outside of the alpine cluster has been relatively slow to date, clt plants now operate in a number of other european countries, as well as in canada, the us, new zealand, and japan. the first clt line in new zealand was built in 2010 and started commercial operation in 2012 (xlam 2017). in 2014, three new clt lines were launched in japan (figure 1). as of 2015, the nation’s manufacturing output was approximately 10,000 m3 of clt annually, expected to grow to 50,000 m3 in 2016 and up to 500,000 m3 by 2024 (plackner 2015d, grasser 2015). in australia, at least two companies announced plans to build clt 78 bioproducts business 2(8) 2017 figure 1. global distribution of clt manufacturing plants in 2015/2016 (graphics by googlemaps). production lines which could dramatically increase the production capacity in that region. in north america, the adoption of clt technology was first championed by canada, where the first two production lines were founded: nordic in chibogameau, quebec and structurlam in penticton, british columbia. in recent study the total production capacity of canadian companies for 2015 was estimated at 110,000 m3 (espinoza et al. 2016). canada’s fp innovations committed itself to clt-related research and an information campaign, which resulted in two clt handbooks published for canada in 2010 and for the us in 2013, followed by an ansi/ apa prg320 clt product standard in 2011, which was subsequently updated in 2012. these developments eventually led to the adoption of clt in the international building code 2015 (icc 2015). while non-structural clt panels were produced in the us as early as 2010, the first structural grade clt products were offered in 2015 by dr johnson lumber co., located in riddle, oregon, and in 2016 by smartlam, located in whitefish, montana (espinoza et al. 2016). estimates made for the global annual production of clt in 2013 were between 600,000 m3 and one million m3 by 2015. (plackner 2013, stauder 2013). later, expected new growth of operations in france, the uk, finland, latvia, japan, and the us (espinoza et al. 2016) gave grounds for a projection of global production to reach three million m3 by 2025 (plackner 2015a). these estimates should be considered in the perspective of the annual consumption of softwood sawnwood in north america, which was nearly 91 million m3 in 2015 (unece 2016). muszyński et al. — insights into the global cross-laminated timber industry 79 2.0 methods the findings presented in this paper have been compiled from three principle sources: (1) the primary data source is an industry survey conducted in 2016 which aimed to canvas the global industry, and provide a snapshot of its mode of operation, capacity and innovativeness; (2) the secondary source, used to supplement and fill in blanks in the data collected through the survey, comprises three comprehensive reviews from austrian trade journal holzkurier on the alpine clt industry in 2011, 2013 and 2015 (plackner 2011, 2013, 2015c), as well as other market reports related to clt industry published in the journal (plackner 2014a, 2014b, 2015b, 2015c and 2015d); (3) when possible, data obtained from the two primary sources were supplemented with information collected by the primary author via interviews and participant observation during visits to 22 clt operations in europe and north america over the past six years. there are substantial differences in the modalities, geographical coverage, scope of information covered, as well as unique challenges and limitations related to each of these three data sources that must be discussed. data source #1: the questionnaire was developed in the beginning of 2016. it consisted of 20 questions covering topics of current ownership structure, output potential, production profile, internal diversity, competitive advantages, approaches to innovativeness, and perceived barriers to further expansion. the questionnaire was originally developed in english and subsequently translated into japanese, french, and german by native speakers of respective languages familiar with the forest sector and its terminology. each translation to a foreign language was then translated back to english by another native speaker familiar with the field. divergences between original and back-translated version were then discussed and corrected. conscious of the small and diverse nature of the clt industry, a substantial effort was invested in obtaining as high of a response rate as possible. the list of companies and contacts was derived from a database compiled gradually in 2010-2015 to guide the plant tours and was augmented by additional contacts provided by the surveyed companies. the interaction with the companies was conducted in 3 stages. historically, the primary market for clt has been residential construction, driven particularly by demand in central europe. by 2015, germany, austria, switzerland, italy and the uk were still identified as the biggest consumer markets for clt, absorbing 70% of european clt production output (grasser 2015). as users and producers gained a better understanding of the material, more multi-family units, larger public buildings, and office spaces are being built with clt. in recent years, the technology of tall wood buildings has been developed so that clt is being used to build mid-rise buildings (more than 9 storeys) in london; melbourne; vancouver, british columbia; and trondheim, norway (lanz 2016, espinoza et al. 2016). despite great interest on behalf of architects, investors, and increasing excitement in the forest sector, the rate of adoption of the new technology in the us is slow, reflecting uncertainty whether industry models developed in europe can be successfully transplanted to the business environment of the usa. existing clt operations, especially those in the alpine cluster, provide a living laboratory for understanding how the clt industry and its related supply chain may develop in the future in other regions of the globe. understanding the global development of the industry can provide many lessons for companies that may be contemplating manufacturing and marketing this new product. this understanding can also help identify key success factors and impediments affecting the growth of a robust and competitive clt industry and the related clt market, as well as identify and/or define conditions for replication of past success. with this in mind, the main objective of this paper is to capture a comprehensive snapshot of the nature of the global clt industry covering the sector’s structure, output potential, production profile, internal diversity, competitive advantages, approaches to innovativeness, and perceived barriers to further expansion. these insights are intended as assistance for potential entrants into the clt manufacturing sector, including businesses along its extensive supply chain. information was collected primarily through a 2016 industry survey sent to companies believed to operate clt manufacturing lines in 2015, and supported by secondary sources. the approach and the data sources are described in detail in the following sections. muszyński et al. — insights into the global cross-laminated timber industry 80 stage 1: the first contacts were made via english or bilingual (english and either french, german, italian or japanese) invitation emails in early february 2016. in this invitation email, the companies were introduced to the premise of the study, were inquired about their interest to participate, and asked to provide direct contact information of the employee most qualified to answer the questionnaire. stage 2: the following procedure depended on the reaction to the invitation. in case of a positive response, questionnaires in english and, when needed, in french, german, italian, or japanese were sent to the indicated contact in the company via email, with instructions to print, fill in, scan and email the questionnaire within four weeks. when companies did not respond, another email was sent and followed up by a direct phone call. companies indicating unwillingness to participate were excluded from further consideration. stage 3: companies that did not return the questionnaires within four weeks were sent email reminders once or twice a month. in july 2016, a summary of preliminary results of the survey (based on 21 responses) published as a research brief (muszyński et al. 2016) was attached to the communication to encourage participation. towards the end of the data collection period, attempts were made to contact persons in the non-responding companies by telephone. these efforts, however, did not bring any additional responses. reception of completed questionnaires was immediately acknowledged in a confirmation email in which the company contacts were asked to list all other clt companies known to them. this, as well as parallel online research, added several companies to our database. data collection began in early march and ended in late november with 21 responses out of the 47 companies (45% response rate) identified as producing clt or closely related panel products. it is important to note that some respondents selected to skip certain questions. consequently, item response varies from one question to another and is indicated in the results. data source #2: holzkurier (hk) is an influential austrian (german language) trade journal distributed weekly in paper form since 1952 by agraverlag, a large publisher in the country, claiming 16,000 readers of its b2b content, primarily from austria, germany, switzerland, and italy (g. ebner, personal communication, december 16, 2016). it is also offered online via timber-online.net in german, english, and italian. a knowledgeable group of editorial staff is working in parallel on a handful of wood and timber related journals and magazines, holzkurier being just one of them. holzkurier has been tracing the progress of the clt industry in the alpine region of europe (alpenraum) since 2008, providing news on line openings and closings, as well as clt industry production capacity summaries and predictions. holzkurier also informed its readers on the development of the clt industry in other regions of europe and overseas. to date, holzkurier has published three reviews covering various numbers of clt plants operating in central europe (figure 2; plackner 2011, 2013, 2015c). the 2011 summary (plackner 2011) covered 16 companies operating within the loosely defined alpine region, including companies in austria, switzerland, the italian southern tyrol region, germany, and the czech republic, but leaving out two other italian companies operating at that time. the 2013 summary (plackner 2013) covered 24 companies from roughly the same region, this time including all known italian manufacturers, plus some italian companies that were known to build with clt but did not manufacture clt. the 2015 summary (plackner 2015c) covered 17 companies in the alpine region. another summary published in the same year (plackner 2015a) listed 37 clt companies worldwide, but did not include the usual details regarding line parameters and capacities. the differences in the number of companies included in the three summaries with production data result mostly from new production line launches and a few closures, however, comparing the summaries, we were able to identify a few clear omissions. it is important to stress that this type of publication (e.g., trade journal) is not expected to meet the high standards of a refereed scientific publication regarding detailed characterization or assessment of the sources. the production data included actual output volumes (in m3 of finished clt) for the year of publication and one year preceding the publication attributed to each company (plackner 2011, 2013, 2015c), the maximum per-shift production volume, adhesive system and wood species used in production (plackner 2013, 2015c), maximum panel in-plane size (plackner 2013, 2015c), and additional comments (plackner 2011, 2013, 2015c). volumes for companies operating two lines or muszyński et al. — insights into the global cross-laminated timber industry 81 figure 2. summary of output volumes and per-shift capacities of clt in the loosely defined alpine region reported by hk in three reviews published in 2011, 2013 and 2015 (* denotes the publication years). captions on top of the bars mark the number of companies listed for each year (plackner 2011, 2013, 2015c) plants in two different locations were summed up and reported jointly. data source #3: site visits including interviews and participant observation by the primary author constitute the final data source. six site visits were undertaken by the primary author in 2011/2012, with the goal of gaining a basic understanding of the industry and were continued only when the diversity of the clt industry in terms of mode of operation, scale, ownership and market strategies became clear. in addition to these initial tours, two more sites were visited in 2012, four in 2013, seven in 2014, and two in 2015. it was only with time that a relatively uniform template of questions were developed and an effort made to collect the data according to that template. it should also be stressed that due to the extended period of time in which these tours took place, the data in some cases is dated. 2.1 source overlaps there is substantial overlap among the three data sources. only five of the companies have been covered by all three data sources; 16 by the survey and holzkurier publications; 19 by holzkurier and site visits; and seven by site visits and by the survey. interpreting results is somewhat complicated when the overlap in the output volumes represented by the companies covered by each source is considered. relative volumes and volume overlaps in production output volume data attributed to plants covered by the data sources discussed above are presented in figure 3. the areas of the rectangles in the top section of figure 3 represent relative volumes in the same scale. the top left square representing 1 million m3 of the estimated global clt output in 2015 (plackner 2013) serves as a convenient scale reference. it should be noted that plackner’s 2013 projection of the one million m3 of global clt output by 2015 proved to be quite accurate when compared with all data available to the authors to date and considering the number of existing plants for which no specific output volumes could be attributed. the dark orange square in the top center represents the total output volume (397,500 m3) attributed to 17 clt companies operating in central europe, as reported in hozkurier’s 2015 summary (plackner 2015c). it is important to keep in mind, however, that the volumes published in holzkurier summaries are affected by inconsistent definition of the geographical region being covered, resulting in arbitrary omissions (compare figure 2). the smaller yellow square in the top right part of the diagram represents the output volumes reported by responding companies (148,203 m3). it should be noted, however, that a number of companies did not provide any information on their output volumes, even though output volume data that could be specifically 15 17 17 24 16 17 100 200 300 400 500 600 2010 2011* 2012 2013* 2014 2015* co m bi ne d ou tp ut v ol um e, m 3 th ou sa nd s year produc�on volumes per-shi� capaci�es 82 bioproducts business 2(8) 2017 figure 3. relative volumes and volume overlaps in data attributed to plants covered by the data sources characterized above (the areas of the rectangles represent relative volumes in the same scale, compared to the square representing 1 million m3 of the estimated global clt output in 2015). total output a�ributed to plants by hk 2015 ~ 0.40 m m3 total output a�ributed to responding plants ~ 0.15 m m3 volume a�ributed to specific plants (all sources combined) ~ 0.66 m m3 no plant specific data available ~ 0.33 m m3 overlap of data reported in hk 2015 and in the survey ~ 0.09 m m3 survey responses with blank output data subs�tuted from hk 2015 ~ 0.42 m m3 es�mated global 2015 output (hk) ~ 1.00 m m3 reference scale 10,000 m3 attributed to these companies had already been available in the public domain (plackner 2015c). when this published data is substituted, the total output volume represented by responding companies reaches 421,203 m3, about three times the volume specifically declared by responding companies. this volume is represented by the light orange external square in the top right portion of the diagram in figure 3. the overlap of the annual output volumes attributed to the clt companies in 2015 covered by the sources discussed above is presented in the lower part of figure 3. a square representing the output volumes attributed to all specific plants known to be in operation in 2015 obtained from all available sources was added. in this estimate, the latest published volume is used whenever data for an existing plant is not available in the holzkurier 2015 summary, and the output volume information obtained during a site visit is used when no published data is available. using this approach, the total output volume that could be attributed to all companies comes to about 660,000 m3 in 2015. this scheme still leaves a number of companies for which no plant-specific data could be attributed. 2.2 data treatment and presentation while the default mode of presenting the survey data is by number of respondents selecting individual response options, the relevance of such a presentation must be muszyński et al. — insights into the global cross-laminated timber industry 83 critically assessed where the self-reported annual output volumes for 2015 range from 500 m3 to 45,000 m3, and up to 100,000 m3 when the blank responses are substituted with data available in the public domain. for some responses, it is important to qualify the responses by the scale of the operation of the respondent. this has been achieved by reporting aggregate production volumes represented by specific response options, or by weighing some responses by the output volumes attributed to the companies. such data treatments can significantly affect the general profile of the response. an extreme example of such differences is presented in figure 4, where simplified versions of the responses to one of the survey questions are presented a) by the number of respondents, b) by the production volume self-reported by the respondents, and c) by the production volumes attributed to the respondents from external sources (e.g., plackner 2015c). note that the bars in option (a) represent the number of respondents, but in options (b) and (c) they represent combined volumes, while the numbers of respondents for each response option are shown in labels on top of the bars. note also that in option (b) the number of respondents shown at the top of the bars reflects the numbers of non-blank responses to the question at hand and to the self-reported output volume estimate. in option (c) an output volume is attributed to all respondents, and thus, the numbers on top of the bars coincide with the number of respondents shown in graph (a). the comparison presented in figure 4 is also important for understanding that weighting the data based figure 4. an extreme example of the effect of data treatment on the summary survey outcome: a) responses summarized by number of respondents, b) responses summarized by number of respondents and weighed by output volumes attributed in the survey, and c) responses summarized by number of respondents and weighed by output volumes attributed to the respondents from combined sources. )c )b )a on the self-reported output volumes alone brings substantial risks of distorting the conclusions. therefore, the responses scaled exclusively by the survey reported output volumes are not used for presentation and analysis below. decisions on selection between presenting the data in the form of number of respondents and volumes represented by respondents (as in option c) have been made by the authors on a case-by-case basis, taking into account the nature of the presented data. the selections are noted in captions and in the description of each graph presented in the results section. in one case, both modes of presentation are included and the differences are discussed. finally, in some cases, such as when the authors felt that the diversity of the industry was not fully represented by the survey respondents, the combined data from all sources are presented, in which priority is given to the survey data, followed by the holzkurier summary data, beginning with the 2015 review (plackner 2015c), and the information obtained during a site visit is used when no published data is available. 3.0 results and discussion the overall findings indicate an industry with a substantial level of diversity in terms of the ownership structure, level of vertical integration, scale of operation and production profile. ownership and scale of operation: ownership ranges from privately held (12 respondents), cooperative (1), to parts of large, publicly traded companies (5). muszyński et al. — insights into the global cross-laminated timber industry 84 the information in figure 5 is derived from all three sources and represents all clt lines known to the authors, to which annual production volumes can be attributed from any available source. as evident from the bar labels representing the number of companies in each of the four scale categories, most of the manufacturing plants are on the small end of the scale. out of 31 lines for which the annual output capacity could be assessed, 22 fall below 10,000 m3 per shift, contributing less than 12% of current global capacity. by contrast, the six largest, highly automated plants with an annual capacity over 30,000 m3 represent more than 35% of the estimated global capacity and often secure projects executed overseas. discussion: observations collected during the site visits indicate that smaller companies can afford a relatively low level of automation, typically rely on manual labor, and mainly serve local markets. larger operations require a high level of automation for handling large volumes of raw material in tight press cycles. just three companies in the category between 20 and 30 thousand m3 capacity may indicate the watershed limit for transition from manual labor to full automation. apparent coexistence of companies of remarkably different sizes is one of the interesting characteristics of the cluster of clt plants concentrated in the alpine region. little is known about the markets served by companies of different sizes, specifics of their marketing strategies, and how much they compete in the same space. better understanding on how this coexistence is possible may shed light on whether the coexistence of large and small players is critical for overall market development. most of the responding companies plan to increase their production capacity within two years (12 respondents) and one plans a major expansion within 5 years (figure 6). figure 7 summarizes survey responses regarding the methods to be employed towards increasing production volume. most companies (10/13) focus their attention on line efficiency. the second most popular option (8/13) involves adding shifts. in fact, the responding companies indicated that in 2015 they worked, on average, 1.12 shifts, so there is a substantial incremental capacity reserve in the industry. other options include installing new equipment (7/13) and adding another line in the current plant location (6/13). one company plans to build another complete clt plant. discussion: this summary, naturally, does not reflect production capacity to be brought in by new entrants to the industry. it should also be stressed that currently, from the global forest products perspective, the clt industry with projected annual capacity of about 1 million m3 (plackner 2013) is still boutique size. holzkurier projected a production size of as much as 3 million m3 by 2024 (plackner 2015a). production profile: survey respondents identified over 96% of production volume as manufactured for custom orders (figure 8). in fact, only one of the respondents indicated production of 100% blank, nonmachined panels to be sold as generic clt products. this matches observations made during site visits, but sharply contrasts with much of the forest industry, which generally focuses on highly productive, commodityfocused operations (e.g., crespell et al. 2006). forest 22 6 3 6 50 100 150 200 250 300 350 400 <= 10000 <= 20000 <= 30000 > 30000 an nu al v ol um e i n m 3 th ou sa nd s annual output range in m3 figure 5. cumulative output of clt companies by size of operation (combined sources). labels above the bars designate number of companies in given operation size category. 0 1 2 3 4 5 6 7 8 9 within 12 months within 2 years within 5 years no increase planned # of re sp on de nt s figure 6. survey responses on plans to increase production volume (n=16/21). muszyński et al. — insights into the global cross-laminated timber industry 85 as ie neq al bp other 0 1 2 3 4 5 6 7 8 9 10 11 # of re sp on se s methods for increasing produc�on capacity [as] add shi�s [ie] increase efficiency [neq] install new equipment [al] add new line [bp] build another plant [other] figure 7. planned modes for increasing production capacity (n=13/21) figure 9. production profile in terms of the market segment by output volume (n=18/21) figure 8. production profile in terms of custom vs. commodity products by output volume (n=18/21) products manufacturing used to be focused either on manual crafting of unique objects or on mass production of repeatable elements. in the clt industry, a creative merging of digital design and fabrication substantially expands the range of manufacturing options and offers more freedom for developing innovative, adaptive, and material-oriented construction systems (r. de amicis, personal communication, march 28, 2017). with respect to market segments, respondents were focused primarily on multi-family housing, at nearly one-third of the attributed production volume (figure 9). medium-size public buildings was the second largest segment. large-scale buildings represent only seven percent of the market for responding companies. discussion: this small share of large projects in the global clt output is easily corroborated by the still small number of clt buildings over 10 storeys completed worldwide. what is fueling the industry are smallto medium-size projects within the specifications allowed under current building codes. the focus on custom projects is a result of the complex circumstances of the evolution of the clt industry in europe. the first circumstance involves the fact that clt technology has been a disruption in the building environment in europe. wood as a structural material has been suppressed to the margins of european building industries for over two centuries. in order to propose a revolutionary building technology that did not rely on technologies, practices, experiences, or skill sets existing in concrete, steel, brick and mortar or even in the traditional timber structure technologies, proponents were compelled to offer a finished package: clt-specific architectural design, engineering specifications, building materials, and a clt-conscious construction crew. this created a strong incentive for close collaboration. in fact, close collaboration among the architects, engineers, contractors and manufacturers is still commonplace today, 86 bioproducts business 2(8) 2017 alone (figure 11a), it can be said that nearly one-quarter of respondents are involved with architectural design, half of the respondents with building engineering, and just over half with building construction. when the responses are presented in the context of the attributed output volumes of the respondents (figure 11c), the overall importance of the vertical integration is confirmed, however, the priorities are somewhat shifted, suggesting the importance of integrated lumber manufacturing, log and lumber transportation for large players in the clt industry. the dimmed graph representing responses scaled by self-declared volumes illustrates the danger of reliance on the incomplete output volume data from the survey alone (see discussion in the methods section). discussion: while the graphic does not depict a highly integrated industry sector, relative to much of the forest and these functions are often vertically integrated within one company. this means that architects and engineers design with intimate knowledge of the intrinsic flexibilities of the specific manufacturing process, which allows the manufacturer to carefully optimize the product for a specific project (beyond just cutting to specified dimensions). in fact, many companies also integrate other elements of the extended clt supply chain incorporating transportation, lumber processing, and other functions typical to their forest products roots (figure 10). figure 11 provides an overview of vertical integration reported by the companies responding to the survey. interpretation of responses to this question is complicated by the great diversity in scale of operation between the respondents (up to 20 times between the smallest and the largest respondents), as discussed in the methods section above. analyzing by the number of responses figure 10. clt extended supply chain (based on site visit experiences) muszyński et al. — insights into the global cross-laminated timber industry 87 figure 11. level of vertical integration reported by responding companies (n=18/21) )a )b )c flo lgt lbm lbt ad be cltt reo bc other 0 2 4 6 8 10 12 nu m be r o f c om pa ni es ownership of value chain elements [flo] forestland ownership [lgt] log transporta�on [lbm] lumber manufacturing [lbt] lumber transporta�on [ad] architectural design [be] building engineering [cltt] clt transporta�on [reo] real estate ownership [bc] building construc�on [other] other elem. of supply chain 3 5 7 6 5 9 8 1 10 2 50 100 150 200 250 co m bi ne d an nu al p ro du c� on v ol um e [m 3 ] th ou sa nd s ownership of value chain elements [flo] forestland ownership [lgt] log transporta�on [lbm] lumber manufacturing [lbt] lumber transporta�on [be] building engineering [cltt] clt transporta�on [reo] real estate ownership [bc] building construc�on [other] other elem. of supply chain industry, multiple respondents are heavily involved in downstream integration. diversity: the organic growth of the industry in europe resulted in striking diversity not only in the scale of operation but also in the selection of manufacturing options, such as press types and sizes (figure 12) as well as adhesive or mechanical binder selection (figure 13). while large-area hydraulic presses are used in most of the plants, about 22% of clt lines (for which such information could be obtained from the combined muszyński et al. — insights into the global cross-laminated timber industry 88 figure 14. diversity of press sizes installed in clt manufacturing plants broken by a) press widths (b) press lengths (c) and press areas. note that some plants operate more than one press on the same site (based on combined sources). 0 5 10 15 20 25 30 <1 1-2 2-3 3-4 4-5 5+ press widths, meters press width 0 5 10 15 20 25 30 35 40 5 10 20 30 40 press lengths, meters press length a) b) 0 2 4 6 8 10 12 14 16 18 20 <100 100-300 300-500 500-700 700-900 900+ press area, m2 press area c) vacuum, 11, 24% hydraulic, 27, 59% pneuma�c, 3, 6% nails, 4, 9% other, 1, 2% pur 60% muf 24% other 7% nails/screws 9% figure 12. press technologies employed in clt plants (combined sources, by number of known companies) figure 13. adhesive systems and other types of binders (combined sources, by number of known companies) 0 5 10 15 20 25 30 <1 1-2 2-3 3-4 4-5 5+ press widths, meters press width 0 5 10 15 20 25 30 35 40 5 10 20 30 40 press lengths, meters press length a) b) sources) used vacuum presses and at least 9% used nails or other mechanical binders (figure 13). almost all vacuum presses are produced by a single company, which is a rare case of relatively standard equipment being used by a large group of companies. it should be stressed that nailed clt panels are different from traditional nail laminated timber (nlt), i.e., massive timber panels produced by arranging all layers in the same direction. these are obviously not crosslaminated, but unidirectional panels, and have not been targeted in this investigation. compared to traditional adhesive bonded wood composites, the adhesive selection for binding large area panels is limited to cold setting structural adhesive systems, because of the difficulty and expense of using heat to cure resins in a massive panel. of companies producing adhesive bonded clt, 25 (over 65%) run lines relying on polyurethane (pur) adhesives and 10 (about 26%) have lines using melamine urea-formaldehyde systems (muf). these numbers include one company that uses both systems on parallel lines. of the lines using muf systems, at least three use radio frequency presses to heat-cure the resin. in line with the custom nature of the global clt industry, to date, there is no standard regulating the in-plane dimensions of the massive panels. accordingly, the sizes of the presses vary widely. graphs in figure 14 illustrate the diversity of press sizes installed in clt manufacturing plants broken down by a) press width, b) press length and c) press area. the graphs represent either the dimensions of presses (known from plackner 2011, 2013 and 2015c, or from notes from site visits) or the largest in-plane dimensions of clt panels offered via the companies’ web-catalogues, considered a reliable muszyński et al. — insights into the global cross-laminated timber industry 89 figure 15. wood species used in clt products by output volume (n=19/21) spruce 88% fir 5% pine 6% larch 0.31% other 0.07% proxy for the press size. note that some plants operate more than one press on the same site. most of the surveyed plants use spruce as their primary raw material (88% of reported production volume) with smaller shares of pine (just over 6%) and fir (5%). the survey responses weighted by volumes attributed to the respondents are summarized in the pie chart in figure 15. competitive advantage: similar to many forest industry companies, survey respondents claimed quality as their primary competitive advantage (wagner et al. 2007). in figure 16, the responses reflect on the importance of items using a scale from 1 (low importance) to 5 (high importance). quality was closely followed by services they provide, offering custom products, and skill of their workforce. somewhat surprising is the lower importance attributed to processing and information technology. qlt cup cus par srv chn wfs rm pt it 1 2 3 4 5 m ea n im po rt an ce (1 =l o , 5 =h i) sources of compe��ve advantage [qlt] quality [cup] custom products [cus] customers [par] partners [srv] services [chn] channels [wfs] workforce skill [rm] raw materials [pt] processing technology [it] informa�on technology figure 16. perceived importance of factors of companies’ competitive advantage (n=19/21) figure 17. innovativeness focus of responding clt manufacturers (n=17/21) 1 2 3 4 5 product process business systems le ve l o f i nn ov a� ve ne ss (1 =l o . 5 =h i) type of innova�veness innovativeness: innovativeness was measured using the likert scale developed by knowles et al. (2008) and we average the four items in each dimension. although there were no major differences in the type of innovativeness respondents claimed with regard to their firm, it is interesting to note that product innovativeness was 90 bioproducts business 2(8) 2017 figure 18. perceived barriers to clt industry growth (nbc=18/21; nother=17/21) rated highest (figure 17). weighting the responses by the attributed output volumes produced very similar results. discussion: the level of product innovativeness among our respondents contrasts with other sectors of the forest industry where process innovativeness tends to dominate (hansen and nybakk 2016). this likely reflects the custommade nature of clt production among respondents (figure 8). it is also consistent with theory espoused by utterback (1994) regarding the evolution of the innovation focus within an industry. according to utterback, product innovation receives the most attention in the early stages of an industry. once a generally accepted design for the product is accepted in the marketplace, the focus tends to shift toward process innovation. barriers: figure 18 summarizes responses concerned with perceived barriers to the further growth of the clt industry. the original responses scaled 1 (low concern) to 5 (high concern) were weighted by reported output volumes. building codes were seen to be, by far, the biggest barrier, followed by the architectural community’s unfamiliarity with clt technology. costs, both raw material and production, were seen as rather low barriers, rated below the midpoint (3) of the scale. finally, lack of demand was seen as the least significant barrier to further growth of the industry, reflecting the prevailing optimism among manufacturers. 4.0 limitations the number of companies using nails and other mechanical binders in their products is certainly underrepresented in this study. as said earlier, nailed clt panels are different from traditional nail laminated timber (nlt), i.e., massive timber panels produced by arranging all layers in the same direction. these non-cross-laminated, unidirectional panels have not been targeted in this investigation. however, due to the unspoken assumption that clt is predominantly bonded with adhesives, many companies using alternative binders like nails, screws, or hardwood dowels do not advertise their products as clt and are often inconsistently represented, or not represented at all in clt tallies and surveys. unfortunately, our study was no exception. late in the process, the authors discovered at least 30 european companies operating under the same franchise, using specialized robotic equipment to bond massive cross laminated panels with aluminum nails. only a few of them were invited to participate in this study based on their self-identification as clt manufacturers or coverage in other reviews. although the output volume of plants producing the nailed clt is small when compared to plants producing adhesive bonded clt products, their actual contribution to the clt industry remains unknown due to inconsistent coverage. 5.0 conclusions despite its 20-plus year history, the global clt manufacturing industry can still be considered young and in the process of development, sending to the market relatively small volumes of products (compared to the commodity-oriented, traditional forest products industry). the highly custom nature of clt production is noteworthy muszyński et al. — insights into the global cross-laminated timber industry 91 as being different than much of the traditional forest sector. only one responding company was producing “blanks” rather than custom panels. creative merging of digital design and fabrication substantially expands the range of manufacturing options of the clt industry and offers more freedom for developing innovative, adaptive, and material-oriented construction systems. the industry is remarkably diverse in terms of mode of operation, scale of production, level of automation, ownership, and business models. the range in size of facilities by annual output volume is enormous (the largest produce about 20 times as much as the smallest). the ownership ranges from family to corporate. in contrast to the clt hype currently fixated almost exclusively on tall buildings, responding companies reported that most buildings constructed with their clt are small to medium-size multi-family housing, public, and industrial structures within the limits of current building codes. this is expected to remain the norm since this is the easiest route through existing building codes. an especially interesting aspect of the clt sector is the level of collaboration along the supply chain that takes place in order to realize successful construction projects. the summary of the survey responses and the observations from the site visits suggest that many companies have internalized key steps in the supply chain and have, for example, in-house engineers/designers. nearly a third of our respondents are directly involved in building construction, showing downstream vertical integration. a high level of collaboration and/or ownership of downstream steps in the supply chain appear to be important elements of a successful clt operation. most respondents indicated plans for expansion in the next two years. collectively, responding firms are not fully utilizing existing capacity at all times, which may be expected for an industry occupied with custom projects. these responses combined with plans to open new clt plants reported in the trade press suggest that the global sector is poised for significant growth. still, the hype around clt must be tempered by remembering that despite high levels of growth, it still represents a relatively tiny fraction of the global wood consumption (just over one percent of softwood sawnwood consumed in north america alone). the development of the sector is a rich laboratory that deserves further study to inform both theory and practice. new entrants to the clt sector, especially existing forest industry firms, are advised to carefully consider the unique character of the clt sector where success appears to require extensive involvement along the value chain and primarily custom-made products. future work: there is still very little research characterizing the clt industry. while this paper provides a static snapshot of the status quo for 2015 with limited context of historic data, only a well-designed series of such snapshots over an extended period of time can reveal the dynamic changes in the vital metrics of the clt industry, short-term trends, and early warning of potential issues. of interest are 1) changes in production capacity and dominant technologies in global clt production; 2) key success factors and constraints determining the emergence and growth of the contemporary clt industry; 3) differences in the perceptions of opportunities, risks, challenges, constraints, related business models, strategies, and contextual policies; and 4) the role of innovation systems in these strategies. more work is needed for insights regarding the businesses positioned within the existing or potential value chains of the clt industries in various regions. 6.0 references ansi/apa. 2012. ansi/apa prg 320-2012 standards for performance-rated cross-laminated timber. ansi/apa, tacoma, washington. 23 pp. crespell, p., knowles, c., & hansen, e. 2006. innovativeness in the north american softwood sawmilling industry. forest science, 52(5), 568-578. espinoza, o., buehlmann, u., laguarda, m., & trujillo, v.r. 2016. identification of research areas to advance the adoption of cross-laminated timber in north america. bioproducts business, 1-13. grasser, k.k. 2015. development of cross laminated timber in the united states of america. master’s thesis, university of tennessee, 2015. retrieved from http://trace.tennessee.edu/ utk_gradthes/3479. hansen, e., & nybakk, e. 2016. when innovativeness determines market orientation: the forest sector and the great recession. bioproducts business, 1(1), 1-12. international code council (icc). 2015. international building code, washington, d.c. knowles, c., hansen, e., & shook, s.r. 2008. assessing innovativeness in the north american softwood sawmilling industry using three methods. canadian journal of forest research, 38(2), 363-375. lanz, k. 2016. five 10 storey clt buildings under construction in trondheim. holzkurier.com (timber-online). retrieved from https://www.timber-online.net/timber_construction/2016/01/ five_10_storey_cltbuildingsunderconstructionintrondheim. html. last accessed december 12, 2016. muszyński, l., hansen, e., geisel, j., fernando, s., schwarzman, g., & rainer, j. 2016. the global clt industry: preliminary results, muszyński et al. — insights into the global cross-laminated timber industry 92 2016. forest business solutions research brief, 24(4). 2 pp. plackner, h. 2011. schon wieder 28% mehr bsp erzeugt. 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retrieved from https://www.holzkurier.com/ schnittholz/2015/09/bsp_wachstum_istabgeflaut.html. last accessed december 8, 2016. plackner, h. 2015d. first industrial clt manufacturer in japan starts in april. holzkurier.com (timber-online). retrieved from https:// www.timber-online.net/sawn_timber/2015/11/first_industrialcltmanufacturerinjapanstartsinapril.html. last accessed december 8, 2016. stauder, c. 2013. cross-laminated timber “an analysis of the austrian industry and ideas for fostering its development in america”. austrian marshall plan foundation september. 36 pp. united nations economic commission for europe (unece). 2016. forest products annual market review, 2015-2016. united nations economic commission for europe/food and agriculture organization of the united nations. geneva, switzerland. 161 pp. utterback, j., 1994. mastering the dynamics of innovation: how companies can seize opportunities in the face of technological change. harvard business school press, boston, massachusetts. 253 pp. wagner, e.r., hansen, e., & ungson, g. 2007. using quality function deployment to assess if a strategy is market-oriented. journal of forest products business research volume, 4(1), 1-16. xlam. 2017. http://www.xlam.co.nz. last access: january 17, 2017. abstract digitalization is reshaping traditional industries by interconnecting products, processes and services, and by transforming business models. businesses able to leverage digitalization to improve customer value are in a better position to differentiate themselves. development also provides opportunities for the wood products industry, where competitiveness has deteriorated throughout the 2010s. however, there is an apparent research gap in understanding how this industry could utilize digitalization to apply customer-oriented business strategies, and what development will be needed to achieve this goal. the present study aims to narrow this gap. this research analyzes qualitative interviews conducted among wood suppliers, sawmills, secondary wood processors, and the construction industry. the results show a seamless link between digitalization, improved customer orientation, and the functionality of wood value chains. business development ideas generally focused on improving process efficiency with digitalization. nevertheless, more knowledge is needed to unleash potential related to new product and service offerings, as well as to better understand innovative approaches to conducting business in the knowledge-based wood products industry. keywords: digitalization; digital transformation; wood products industry; customer value; service logic stakeholder perspectives on the business potential of digitalization in the wood products industry * vtt technical research centre of finland ltd., vuorimiehentie 3, fi-02044 vtt, marika makkonen* finland. email: marika.makkonen@gmail.com. tel. +358 41 469 5998. acknowledgements: this work was supported by the project varma (value added by optimal wood raw material allocation and processing), funded by tekes (the finnish funding agency for innovation) and the federation of the finnish woodworking industries. bioproducts business 3(6), 2018, pp. 63-80. issn 2378-1394. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-006 1. introduction the future success of the wood products industry depends entirely on progressively-minded entrepreneurs with customer-oriented management skills (spetic et al., 2016). the industry should be “like any other high-end, highly technological, and knowledge-based business,” where managers are able to tailor their manufacturing competencies according to their target markets (spetic et al., 2016, p. 25). this argumentation includes two interlinked perspectives on value creation that are disrupting prevailing business models in traditional manufacturing industries, namely service logic and digitalization. in the sawmill and secondary wood products industries, hereafter referred to as the “wood products industry,” there is scant research addressing these topics. in particular, there is a lack of empirical studies demonstrating a clear connection between knowledge management and firm profitability. if emerging technological advancements are neglected, firms in highly competitive industries are at risk of losing business opportunities (parviainen et al., 2017). the service logic (vargo & lusch, 2004; grönroos, 2008) emphasizes customer-firm interactions that contribute to improved customer orientation and higher customer value. it is a strategic business approach that manufacturing firms have increasingly adopted to differentiate from competitors with improved output (i.e., products and services) and to create customer value (kohtamäki et al., 2013; parida et al., 2015). the adoption of a customer-centered business approach may be enhanced by fast developing digital technologies and digitalization (bharadwaj et al., 2013), as it is viewed as a way to address complex customer interactions (lerch & 64 bioproducts business 3(6) 2018 gotsch, 2015; matt et al., 2015). it has even been claimed that digitalization is the core of the next industrial revolution (e.g. brynjolfsson & mcafee, 2012). interesting business development opportunities may also arise in the wood products industry, where competitiveness in countries such as finland has deteriorated in the 2010s (mattila et al., 2016). for example, cohen and kozak (2001) have suggested that knowledge orientation could be an upcoming trend within the industry, driven by the vast amount of information around us. however, despite the fact that digitalization has become a buzzword in today’s business, many manufacturing firms struggle to understand its real potential (parviainen et al., 2017). sawn timber value chains are long and complex, and include multiple log suppliers and sawn timber end users (larsson et al., 2016). as it is, different stakeholders are interconnected, affecting each other’s profitability. the industry also seems to consider itself customeroriented, yet, in practice, it still relies strongly on high production volumes and efficient production, (makkonen & sundqvist-andberg, 2017). firms engage in little strategic cooperation (toppinen et al., 2011), which means little consideration of their actions influence on others in the value chain, and on the overall profitability of the industry (katunzi, 2011). to maximize the overall benefit from a customeroriented business approach, the customer-centered thinking should pass through the value chain instead of merely being applied by each individual firm. this means coordinated and efficient inter-firm and intrafirm communication (han & hansen, 2017) that ensures effective processes, accurate and timely understanding of customers’ needs, and better opportunities to meet these needs. for instance, an information transfer from previous or subsequent processes can have a crucial effect on process efficiency in wood value chains (uusitalo, 2005). chain complexity, however, currently challenges information transformation about customers’ needs along the value chain (peltoniemi, 2013). although digitalization has increased interest among academic researchers, the present literature is fragmented, primarily covering topics related to technological innovations (e.g., mobile technologies, analytics solutions), and narrow in scope. research focusing on organizational aspects, such as business strategy or business model transformation, needs more attention (parviainen et al., 2017). in the wood products industry, related research generally treats general process efficiency and cost-competitiveness, for example, in the fields of forest mapping and monitoring applications (e.g. holopainen et al. 2014; bohlin et al. 2017; siipilehto et al. 2016), harvesting and logistics (e.g. manner et al. 2016; marques et al. 2014), and timber production (e.g. todoroki & rönnqvist 2002). having mainly similar motivations, such as operative efficiency and cost savings, previous research has also addressed business model renewal through developing collaborative transportation planning to improve coordination of wood fiber flows. in these studies, the focus has been on mathematical modeling (audy et al., 2007; beaudoin et al., 2007; carlsson & rönnqvist, 2007; frisk et al., 2010). utilization of advanced technologies to improve customer focus and to stay competitive is rare. as a notable exception, lehoux et al. (2014) investigated collaboration to reduce operational costs and better respond to market demand. more research is needed regarding the utilization of digitalization in a way that goes beyond a firm’s boundaries and integrates products, business processes, sales channels, and value chains (matt et al., 2015). this study analyzes the potential benefits of digitalization in the wood products industry. the study complements and extends earlier research on the industry’s performance by providing new knowledge on how customer orientation could be improved, and, consequently, how customer value could be generated through digitalization. both theoretical and empirical analysis is applied. the empirical study was carried out in finland, one of the countries in which the wood products industry occupies an important position in the overall industrial structure. the following research questions were formulated on the basis of the recognized research gap to guide the study: how could the utilization of digitalization improve the customer-orientation and competitive advantage of firms within the wood value chains as defined by the industry stakeholders themselves, and how should business be developed? the article is structured as follows. the second section includes the literature review and the conceptual framework. the first two sub-sections review prior research on customer orientation, customer value, and digitalization. these approaches are then integrated into a conceptual framework presented in the third sub-section. the third main section includes the description of the empirical data and methods. the results are presented in the fourth makkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 65 section, starting with results linked to the upstream value chain and continuing with results linked to the downstream value chain. the article concludes with a discussion, which includes a summary of the findings and an evaluation of the study. suggestions for future research are offered in the fifth section. 2. background literature 2.1 customer orientation and customer value creation customer orientation is considered to have a major impact on firm performance (frambach et al., 2016; kirca et al., 2005; woodruff, 1997). customer oriented firms may outperform their rivals by sensing fundamental changes in the business environment and by having an improved capability to recognize major technological shifts (khanagha et al., 2017). moreover, customer oriented manufacturing firms are found to be more innovative (wang et al., 2016). in order to transform the provider-customer interaction into customer value, firms need to identify, assess, and address specific customer needs as well as react proactively to customers’ changing and emerging demands (lenka et al., 2017). slater and narver (1994) conceptualize customer orientation as the firm’s actions to deliver superior value to their customers by utilizing knowledge about customer needs. through these actions, the firm can improve its financial performance and remain competitive (narver & slater, 1990). knowledge refers to customers’ current, latent, or future needs, which are potentially important but difficult to describe by the customer (blocker, 2011; slater & narver, 1998). an ability to respond to expressed needs refers to a firm’s responsivity to customers’ current needs, whilst an ability to address customers’ latent needs refers to proactivity (narver et al., 2004). a firm can implement responsivity, proactivity, or both dimensions simultaneously, but doing so may consume significant resources (ketchen et al., 2007). higher customer orientation does not always lead to higher customer value; the firm has to find an optimal level, where the added customer orientation does not offset the added value (narver et al., 1990). as follows, companies can apply customer-oriented business strategies in many ways and decisions are always firm-specific (korhonen, 2016). the importance of customer orientation is noted by many forestry researchers, who have suggested customer and service orientation (hansen et al., 2015; mattila, 2015; uusitalo, 2005), inter-firm collaboration (mattila et al., 2016; toppinen et al., 2011), and innovation (hansen et al., 2011) as sources of long-term competitiveness. for example, lehoux et al. (2014) discuss collaborations with suppliers, distributors and retailers to create customer value. their findings showed inter alia that sharing sensitive information and losing control over the supply chain were barriers for developing collaborations. by learning extensively from customers, manufacturers can improve their offerings and provide purposeful products and services (han & hansen, 2016; spetic et al., 2016). this kind of a strategy deviates from the traditional approach, having a focus on commodity products and production efficiency (e.g. brege et al., 2010; toppinen et al, 2013; pelli et al., 2017). in the marketing literature, such business logic is conceptualized as an industrial logic (schlesinger & heskett, 1991) or goods-dominant logic (vargo & lusch, 2004). characteristic of this view is that value is seen as embedded in the offerings (e.g., products and services) resulting from the production process and customers are seen to “destroy” this value in the consumption process (porter, 1985). according to this view, value is determined by an offering’s tangible aspects, such as functionality and utility (keränen & jalkala, 2013). goods-dominant logic is typical in traditional sectors, such as the wood products industry. as customers’ demands have become diverse and more complex (gustafsson, 2003; han & hansen, 2016), manufacturing firms have increasingly added services to their products to differentiate themselves from competitors (oliva & kallenberg, 2003; parida et al., 2014). along with this development, many scholars in marketing have shifted their research agendas from goods-focused towards service-focused thinking (vargo & lusch, 2004). the latter focus emphasizes conducting business collaboratively, rather than just passing thoughts from a provider to the customer. the literature on marketing commonly conceptualizes the customer-oriented view as a service logic (sl) view (e.g. grönroos, 2007; grönroos & voima, 2013) or a service-dominant logic (sdl) view (vargo & lusch, 2004). the service-dominant logic implies that value is primarily defined by the consumer and co-created by the customer and the provider (vargo & lusch, 2004). the main principles of sl and sdl are alike, and they can be seen as complementary in many ways. however, 66 bioproducts business 3(6) 2018 some differences exist. sdl explores the phenomenon of value creation, whereas sl provides more accurate managerial tools to implement it in business. one of the main differences between the two approaches relates to the realization of value creation. sdl highlights that both the provider and the customer participate in the value creation process (value co-creation) and the value-creating role of the customer is ubiquitous (vargo & lusch, 2004). sl considers the value-creating role of the customer primary and sees the co-creation as dependent on the actual interaction in the business relationship (grönroos, 2007). according to sl, a firm only facilitates customer value creation by integrating monetary or non-monetary resources (e.g., knowledge, skills, raw materials, or technology) into an offering (grönroos, 2011; grönroos & ravald, 2011; lindic & da silva, 2011). however, if a firm’s and a customer’s processes are integrated interactively, a firm becomes a value co-creator ( lehoux). value as perceived by the customer may be constituted in the product range, performance, quality, cost, delivery and services, as well as in routines, processes and communication (la rocca & snehota, 2014). 2.2 digitalization as a way to foster customer value a major factor affecting manufacturing firms´ performance in the increasingly complex business environment is their ability to utilize existing knowledge for innovativeness (brockman & morgan, 2003). as knowledge and technological resources are increasingly dispersed outside the firm’s boundaries (möller & svahn, 2006), firms should aim at greater value chain collaboration through close and frequent interactions with partner firms (cavusgil et al., 2003). these interactions provide access to partners’ knowledge, and most importantly, to tacit knowledge (cavusgil et al., 2003), which is widely agreed to have a major impact on a firm’s competitive advantage (e.g. cavusgil et al., 2003; johannessen et al., 2001; nonaka & takeuchi, 1995; teece et al., 1997). tacit knowledge is realized through an individual’s skills, techniques, know-how and routines (lam, 2000), and consequently, is difficult to be coded, transferred or interpreted by competitors (teece, 1998). by transferring personal-level tacit knowledge into organizational-level explicit knowledge, firms can generate organizational knowledge (johannessen et al., 2001). this, in turn, enables firms to adjust processes, products and services to develop new offerings and/or innovations (gassmann & zeschky, 2008) and to build customer value (martelo-landroguez & cegarra-navarro, 2014). from the value creation perspective, the main challenge resides in identifying the appropriate knowledge (malone, 2002). this identification is part of organizational learning, consisting of information acquisition, information dissemination, shared interpretation, and the development of organizational memory (tippins & sohi, 2003). in customer-centric business, firms need ways to gain information about customers’ needs, the ability to generate new knowledge through constant learning (tseng, 2016), and the ability to utilize this knowledge for the benefit of a customer. information technology, and particularly digitalization, provides powerful tools and mechanisms to enhance the development of customer-oriented business models (lenka et al., 2017). according to parviainen et al. (2017, p. 64) digitalization can be conceptualized as “changes in ways of working, roles, and business offering caused by adoption of digital technologies in an organization, or in the operation environment of the organization.” in essence, digitalization is more than just turning current processes into digital versions (parviainen et al., 2017). it should be not confused with a firm’s it strategy, as it is business-centric, with the aim being to improve the customer focus (matt et al., 2015). digitalization has created significant business opportunities, which have attracted a wide range of researchers. there is a growing body of literature indicating that digitalization, also known as digital transformation, is disrupting business models in manufacturing industries (e.g. beier et al., 2017; kowalkowski et al., 2013; lerch & gotsch, 2015). it can be applied for building infrastructures within value chains (lejeune & yakova, 2005; zimmermann et al., 2016) that enable quick and effective ways to acquire and disseminate information from various sources (tippins et al., 2003). the broader and deeper use of individuals’ unique and dispersed knowledge following from digitalization provides better premises for innovation (brynjolfsson & mcafee, 2012). in addition, interactive platforms enabled by digitalization foster engagement with customers and support the firm’s role as a co-creator of customer value (parida et al., 2015). digitalization as a concept is broad. it offers business opportunities for improved internal efficiency makkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 67 (processes), new product-service offerings and/or the development of completely new ways of doing business (parviainen et al., 2017). firms can, for example, integrate monetary and non-monetary resources into their offerings (grönroos, 2011; grönroos & ravald, 2011; lindic et al., 2011) to improve their internal efficiency. in practice, this could mean eliminating manual steps, improving process accuracy, using data analytics for creating business intelligence, and managing production, storage and distribution (parviainen et al., 2017). furthermore, firms can shorten response times (parviainen et al., 2017), find new ways to interact with customers (matt et al., 2015), add new functionalities to offerings, improve reliability and efficiency, as well as optimize processes (porter & heppelmann, 2014). according to matt et al. (2015), successful digital transformation requires close alignment of four dimensions: (1) the use of technologies, addressing a firm’s attitude toward new technologies as well as its ability to exploit them; (2) changes in value creation that are often connected to the adoption of new technologies; (3) structural changes concerning the integration of new digital activities into a firm’s other structures; and (4) financial aspects, either as a driver or a bounding force for the transformation. most importantly, digital transformation requires consistent processes and knowledge management in firms (berman, 2012). it is not self-evident that investments in digital technologies always pay off. several studies indicate that while technical understanding is required, organizational capabilities are more critical to a successful outcome (bharadwaj et al., 2013), including organizational learning (tippins et al., 2003), leadership style (seah et al., 2010; verdú-jover et al., 2014), and an adaptive organizational culture (alos-simo et al., 2017). the whole organization should be involved in the change process, including operational processes and resources, as well as internal and external users (henriette et al., 2015). figure 1 summarizes the benefits and barriers of digitalization in business. lenka et al. (2017) specified three digitalization capabilities that help firms to increase interaction between the provider and the customer, and to identify, assess, and address specific customer needs quickly and proactively. according to the authors, digital transformation often starts with developing intelligence capability, such as investments in hardware with smart subcomponents (e.g. sensors, digital user interfaces, software applications). next, the focus moves to connect capability, which refers to ports, antennas, software and internet protocols. the third capability, analytic capability, applies to the transformation of vast data as predictive insights and directions for actions through development rules, business logics and algorithms. ultimately, customer value creation results from improved firm effectiveness (e.g., doing the right things) and efficiency (e.g., doing things right). 2.3 conceptual framework based on the constructs of customer orientation and digitalization, a conceptual framework was developed figure 1. benefits of challenges to digitalization. challenges to digitalization: cultural resistance to change (alos-simo et al., 2017) incapability to exploit novel technologies (matt et al. 2015; bharadwaj et al., 2013) deficiency in leadership, i.e. inconsistent processes and lacking knowledge management practices (berman, 2012; bharadwaj et al., 2013) financial constraints (matt et al. 2015) benefits of digitalization: provides an access to various data sources for business intelligence building (tippins & sohi, 2003; parviainen et al. 2017) improves internal efficiency and enables renewal of an offering (parviainen et al., 2017) fosters innovation (brynjolfsson et al., 2012) improves engagement of customers and supports development of customer-centered business (parida et al., 2015; matt et al. 2015) 68 bioproducts business 3(6) 2018 to address the main objective of this study. figure 2 illustrates the theoretical framework, forming the basis of the empirical work (i.e., interview protocols and data analysis). the framework suggests that digitalization aims to improve customer orientation in firms (matt et al., 2015). customer oriented firms, in turn, can deliver superior value to their customers, resulting in the improved financial performance of the firm (slater et al., 1994). digitalization can benefit the firm in all those areas that have been considered essential in achieving the optimal level of customer orientation (narver & slater, 1990): internal efficiency, external opportunities, and disruptive change (parviainen et al., 2017). new offerings and/or innovations can be developed by adjusting processes, products and services, based on integrating external and internal knowledge sources (gassmann 2008). the critical sources are customers (slater & narver, 1994), suppliers, and other stakeholders (gianiodis et al., 2010). therefore, to gain access to the information that is increasingly dispersed outside the firm’s boundaries (möller & svahn, 2006), firms should collaborate with the value chain stakeholders (cavusgil et al., 2003). 3. data and methods the data included in this study was collected during a three-year international research project entitled varma (value added by optimal wood raw material allocation and processing). the study is exploratory, utilizing marketing literature to provide insights to customer orientation and customer value. further, literature on digitalization and digital transformation was used to explain the renewal of the wood products industry’s business models towards knowledge-based business. the phenomena were studied through the lens of the service logic (sl), which provides a suitable theoretical background when the interest is to understand providercustomer interactions profoundly and to derive managerial implications. the research was carried out as a qualitative interview study. this enabled an understanding of the context and meaning of subjects (maxwell, 1996), which evolve over time (gephart, 2004). in social and organizational research, interviewing is widely used to get an insight of people’s experiences, attitudes and perceptions (yin, 2014). as the aim was to understand interviewees’ opinions regarding customer orientation and digitalization from their point of view, a semi-structured interview protocol was used. the themes were structured in a way that made it possible to draw conclusions about factors affecting customer value creation from an information sharing perspective. digitalization as a concept was discussed to gain understanding about how the industry perceives its potential in business. 3.1 sampling the population of interest was criterion based, which, for a purposive sampling technique, was used to reach the target population (patton, 2002). this strategy is suitable for small-scale and in-depth studies (ritchie et al., figure 2. conceptual framework of the study. impact of digitalization to business internal efficiency: e.g. reduced manual steps, improved process accuracy, management of production, storage and distribution (parviainen et al., 2017) • customer needs • suppliers • other stakeholders external opportunities: e.g. interactive platforms (parida et al 2015), data analytics and business intelligence, improved response times (parviainen et al., 2017), greater efficiency and optimization (porter and heppelmann, 2014). disruptive change: e.g. completely new product-service offerings (lerch and gotsch, 2015), new ways to interact with customers (matt, hess and benlian, 2015) iin fo r m at io n o r g a n iz at io n a l k n o w le d g e customer value makkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 69 2003). the focus of this study was in the wood products industry, but because integrating supplier and customer processes is an essential part of customer value creation (holbrook, 2006; la rocca et al., 2014), data were collected throughout the wood value chain. in line with the research interest of the study, the scope was restricted, however, to business to business (b2b) relationships. the wood value chain includes wood supply, sawmills, secondary wood processors, and industrial end-customers. by interviewing industry experts and executives throughout the value chain, a systematic and comprehensive understanding was achieved of the stakeholders’ needs, firms´ capability to meet these needs, and their interactions. for example, the wood suppliers were included to gain understanding of the raw material suppliers’ impact on downstream value chain competitiveness. the industrial end-customers were restricted to construction, which represents the main customer segment of the wood products industry. the sample was versatile in terms of interviewee positions and specialties. this versatility intended to ensure that all key categories relevant to the subject matter were covered and that each category was as diverse as possible (ritchie et al., 2003). this enabled us to capture a wide range of different perspectives to detect differences within, as well as between, categories (ritchie et al., 2003), as the aim was to gain a broader understanding of the phenomena studied. this is significant for the aims to improve the reliability and validity of the study. the forest owners and consumers were excluded from the study since the focus was in b2b relationships. a researcher’s reliance on his/her own expertise and judgment in the sample selection (guarte & barrios, 2006) increases the risk of a biased sample. therefore, a subtype of purposive sampling, snowball sampling, was used during the interviews. in this method, the interviewee is asked for recommendations of other persons who fulfill the criteria defined by the researcher (spreen, 1992). in this study, the selection criterion included (1) the respondents had to represent upper management (e.g., top executives or experts of the wood products industry); (2) respondents of the firms were regarded as innovators or growth-oriented firms in respect to business development, which ensured that the most knowledgeable persons in the area of the research topic were incorporated into the sample (guarte & barrios, 2006); (3) firms of different size were incorporated to ensure diversity among the informants; and (4) firms represented different downstream processed products and industrial end-uses. a steering group was used as a starting point for the interviews by asking for suggestions from suitable interviewees. the group consisted of six people in the positions of sawmill manager, sawmill development manager, chief technology advisor at the finnish funding agency for innovation, principal scientist at vtt technical research centre of finland ltd., sawmill industry senior advisor and managing director at the federation of the finnish woodworking industries. thereafter, a snowball sampling technique was implemented in the following way. interviews started within industry associations to gain a better understanding of the business and to get recommendations for other interviewees. asking for recommendations continued during the rest of the interviews. more precisely, the respondents were asked who they could recommend to be interviewed based on the criteria of the study. the sample consisted of 14 firms in finland: medium and large sized sawmills, small and large-sized secondary wood processors (e.g., manufacturers of wood components, glulam, windows and doors and planed timber), and small and large-sized industrial end-customers (e.g., construction firms of prefabricated houses and apartment buildings, specialized in wood buildings). the number of interviews in each group is shown in table 1. the number in the wood supply sector is low. however, all sawmills had wood supply integrated into their other business, which enabled discussion of the limitations and possibilities of wood supply in the sawmill interviews. in addition, three persons from industry associations were interviewed, representing the sawmill industry (one interview) and secondary wood processing (two interviews). in the data analysis, these interviews were included in the sawmills group and the secondary wood processing group, respectively. 3.2 data collection the empirical data was collected between september 2015 and september 2016, consisting of 18 in-depth interviews in finland. compared to questionnaires, interviews allow a greater depth of information and the ability to detect contextual variations in meaning. the key informants were industry experts, ceos, development managers, and other vice president level executives. the unit of analysis was the input provided by an individual 70 bioproducts business 3(6) 2018 informant and more precisely, perspectives related to digitalization. the interviews lasted between 47 and 129 minutes. one of the interviews was conducted via telephone due to geographical reasons and the rest were conducted face-to-face. both face-to-face and telephone interviews are generally considered as acceptable methods for data gathering (aday & cornelius, 2006), but as in all methods, both have advantages and disadvantages that may affect the quality of the research. telephone interviews are cost-efficient and enable a wider geographical accessibility (sturges & hanrahan, 2004; sweet, 2002), but they lack an ability to observe the respondent and adapt to the situation, both of which are a strength of face-to-face interviews (szolnoki & hoffmann, 2013). moreover, a telephone interview lacks the opportunity of using visual aids (garbett & mccormack, 2001). on the other hand, a face-to-face interview may be biased if the interviewee’s responses are affected by the interviewer’s characteristics, or the interviewer gives signals of approval or disapproval (kreuter, 2008). 13 interviews were conducted by two interviewers whereas the rest of the five interviews were conducted by one interviewer. all interviews were recorded, transcribed, and coded. also, field notes were taken during each interview, containing key comments and points made by the interviewer. by incorporating two interviewers, potential sources of error caused by the interviewing method were diminished in two ways. firstly, this practice enabled one interviewer to focus on the questions while the other interviewer took notes. secondly, the second interviewer was able to ask specifying questions referring to additional questions during the interviews to gain better understanding of the subject matter. the interview protocols contained four key thematic blocks: (1) a general overview of the business and sources of future competitiveness, (2) customer orientation and customer value, (3) internal and external information needs, and (4) digitalization transforming the business. the first block aimed at providing necessary background knowledge; the other blocks were based on the theoretical ideas of this study. their aim was to provide knowledge about how improved information sharing and digitalization could improve the business from the perspectives of internal efficiency, external opportunities and disruptive change, in a way that customer orientation could be improved. the second, third, table 1. list of interviewees interview sector interviewees’ position turnover, m eur 1 industry association (sawmills) ceo 2 industry association (secondary processing) ceo 3 industry association (secondary processing) wood construction specialist 4 wood supply business development manager > 1 000 5 wood supply development manager > 1 000 6 sawmill ceo 16 7 sawmill ceo 30 8 sawmill development manager 264 9 sawmill svp, timber business > 1 000 10 sawmill manager, investments & technology > 1 000 11 secondary wood processing (planing of wood) ceo 1 12 secondary wood processing (components) ceo 1 13 secondary wood processing (glulam) ceo 5 14 secondary wood processing (windows, doors) manager, operations and sales 135 15 industrial end customer (prefabricated houses) ceo 9 16 industrial end customer (prefab. houses) ceo 12 17 industrial end customer (prefab. houses) ceo 21 18 industrial end customer (construction firm) ceo 25 makkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 71 and fourth thematic blocks are linked to the main issues that were later (in the analysis stage) specified to form the theoretical framework of the study (figure 2). the interview protocols were modified for each segment (wood supply, sawmills, further processing, and industrial end-customers), resulting in a total of four partly overlapping protocols. the thematic blocks remained the same in all interview protocols. however, the questions were modified according to the organization and position in the value chain. for example, the sawmills were asked what improvements in their business could improve the customer orientation, and what information would be needed from the wood supply or from the downstream supply chain actors to implement such actions. the industrial end-customers, in turn, were asked, for example, what kind of information from the upstream supply chain actors (e.g., suppliers) would improve their value perception. in sum, the questions for the wood suppliers, sawmills and secondary wood processors focused on the ways to improve the customer orientation within the wood value chain, whereas the focus in industrial end customers’ interviews was the development needs of the upstream value chain actors so that their own value could be maximized. 3.3 data analysis the data were analyzed according to qualitative research principles in four phases, as suggested by miles and huberman (1994): data reduction, data display, drawing conclusions, and verifying those conclusions. in the first phase, the interviews were read through several times by two researchers, after which the key phrases and points were summarized. the benefit of summaries is in detecting unique patterns before further analysis (eisenhardt, 1989). next, the data were categorized into three potential levels of digitalization impacting the business and corporate ways of working. these levels were derived from the research framework of this study and originally based on parviainen et al. (2017). they include: (1) internal efficiency, (2) external opportunities, and (3) disruptive change. internal efficiency relates to process efficiency by renewing internal processes through digital means (e.g., improved quality and consistency, a realtime view on operations, and data integration from internal and external sources). external opportunities refer to new ways of doing business and to the emergence of new business opportunities in existing business domains (e.g., new customers, new services or advanced offerings to customers, and improved response time). disruptive changes transform business roles completely (e.g., the termination of old business and the emergence of new business). all of the interviews were conducted in finnish and were translated to english. to avoid interpretation errors the translations were verified by two researchers. in the preliminary illustration of the results, the levels of digitalization were presented in columns whereas organizations (i.e., wood supply, sawmills, secondary wood processing, and industrial end customers) were presented in rows. furthermore, the rows were divided into the potential benefits of digitalization and into the development needs to achieve these benefits, as perceived by the interviewees. this division provided a clear and straightforward way of discovering the interviewees’ perceptions about the meaning and potential benefits of digitalization in customer value creation, as well as development needs within the value chain. all sectors (i.e., wood supply, sawmills, secondary wood processors, and industrial end customers) were analyzed in order to gain a comprehensive understanding of the factors that possibly impact the competitiveness of the wood products industry. the analysis took into account that the sawmills’ and secondary wood processors’ comments could refer to the development needs of either the upstream or the downstream value chain. in the presentation of the results, quotes from the key findings are presented to help the reader determine the accuracy of the interpretation. the conclusions were validated through discussions with the industry experts and the steering group of the project. 4. results this section addresses the results of this study, showing the potential benefits of digitalization in the business environment and corporate ways of working in the wood value chain. the results are presented starting from the upstream towards the downstream value chain. all of the quotes are from the interviews and are translated from finnish. table 2 summarizes the results according to the three impact levels of digitalization described in the former section and in the conceptual framework (cf. parviainen et al., 2017). the items in the table represent issues that were identified either by one or several interviewees. this allowed us to find weak signals regarding benefits. similar topics emerged in the subsequent interviews within each segment when internal efficiency 72 bioproducts business 3(6) 2018 table 2. summary of the potential benefits and development needs linked to digitalization: views of different sectors in the wood value chain the impact level of digitalization into business sector focus on internal efficiency focus on external opportunities focus on disruptive change wood supply potential benefits of digitalization • improved raw material efficiency (via better match between customers’ orders and tree stands) • reduced logistic costs • demand predictability • new, customer-oriented services (e.g. forest visualization and virtual tours, specific orders • at the individual log -level) • strategic planning decades ahead (e.g. mill locations, product portfolio) • dynamic forest management planning development needs to achieve potential benefits • digitalized and more precise forest inventory data • value chain collaboration, system integration and information transfer • collaboration, willingness to change • system integration and information transfer • analytics and visualization tools, new applications • information transfer and system interoperability within the value chain • applications and analytic tools for forecasting future forest resources sawmills potential benefits of digitalization • avoidance of re-measurement of data • better match between customers’ orders and tree stands • improved pricing • process optimization • demand predictability and shorter reaction times • reduced transportation cost by process streamlining (c.f. “uber”) • renewal of business models (e.g. business network utilizing common demand hub and transportation) • removal of unnecessary intermediaries development needs to achieve potential benefits • digital log identification system • retention and transfer of measured data • information transfer and system interoperability • more precise forest inventory data, forecasts of the inner quality of wood • information transfer and system interoperability (e.g. customers’ demand data) both within a firm and between firms • trust among the value chain partners • applications and analytic tools • information transfer and system interoperability • applications and analytic tools secondary wood processing potential benefits of digitalization • improved process efficiency (e.g. compatible formats of designs, • streamlined processes) • growth of large-scale wood construction • improved customer satisfaction by integrating the customer to manufacturer’s process • — development needs to achieve potential benefits • compatible information systems within value chain and information integration • common product standards • sound product tracing method(s) • information transfer and system interoperability, common product standards • new applications linking production into customer’s processes • — industrial end-customer potential benefits of digitalization • minimized raw material loss • efficient transportation • improved predictability and responsiveness to changes in demand • better understanding of cost effects • — development needs to achieve potential benefits • information transfer and system interoperability • new applications and analytics • real-time information sharing within a firm and with external partners • compatible information systems and information transfer • applications and analytic tools • genuine intent of firms to exploit • information for mutual success • — makkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 73 and external business opportunities were discussed. however, there were remarkably less ideas concerning the disruptive change-category. the potential of digitalization in improving current business was probably easier to comprehend by the respondents. although there is indication of data saturation, the results can be regarded as indicative only. 4.1 wood supply the interviewed wood suppliers pointed out two interlinked ways to improve value creation through digitalization: by means of digitalized forest inventory data and by improved interaction between wood value chain actors. the wood supply, sawmills and secondary wood processors were seen to operate too independently, which creates sub-optimization and inflexible value chains. closer collaboration should be conceived in a new way: as a practice in which all actors benefit from the success of one. more efficient transportation and improved operational planning were mentioned as examples. currently, decisions on harvesting are based on stand-level averages of wood volumes and qualities per hectare. during the purchase of a stand, it is not very well known how suitable the wood raw material is for a certain customer’s needs. this is not cost-efficient, and neither is it customer oriented. with an integrated control system and analytic tools, the customer’s order could be divided into sawn timber pieces, and further optimized into logs. thereafter, harvesting could be targeted more effectively to appropriate stands. the issue of how to organize interfirm collaboration requires research attention as the following quote emphasizes: “information flows will likely transfer quite easily, but the challenge is in making common applications. not enough research has been carried out.” (business development manager, wood supply) in the interviews, forest visualization and the ability to “walk” in the forest with virtual glasses was mentioned as an interesting possibility. improved forest data were also seen as important since the demands of the future industrial customer are expected to become more complex. the respondents anticipated that orders will likely request individual logs with specific characteristics. such orders have already been presented to wood supply agents, but technical capabilities have not yet been sufficient to enable the service. some other interesting opportunities to utilize information in business were mentioned. for example, future forest resources are well known already, and will become better understood in the future. this could be used in planning sawmills’ and other facilities’ locations, production portfolio, etc. moreover, improved forest inventory data would also enable dynamic forest management planning, providing potential for new service offerings to forest owners. the interviewees emphasized that the data have already been available for some time in different files and organizations, but traditional attitudes and the unwillingness to change have been big challenges. the following quote illustrates the generality of this problem. “…the attitudes of all persons within the value chain should be changed away from traditional way of thinking” (development manager, wood supply) 4.2 sawmills the interviews of sawmill representatives revealed that a massive amount of data is produced in wood value chains, but only a fraction of it is utilized. the emergence of technologies and applications supporting the exploitation of these data was considered to offer a remarkable potential for the sawmill industry. firstly, the data produced via measurements at different phases (forest, log sorting, sawing, etc.) should be retained so as to avoid re-measurement of the parameters in latter phases. this would require a log identification system that works digitally without physical marking. information about the position of the log during the measurements should be included for later decisions. to reduce waste wood and to improve wood pricing, several respondents pointed out the importance of better predicting the quality of standing trees, and especially their inner characteristics before sawing, as the following quote shows. “if you could know the inner characteristics of wood before sawing, it would be a huge advancement.” (ceo, industry association) in general, an integrated information transfer both within a firm and between firms was considered to include remarkable business potential. for example, a sawmill interacting with a group of several secondary wood processing firms could optimize its production, since it could use known sales data well in advance. unavoidable changes in consumer orders could be easily updated in the system, and the big picture would remain 74 bioproducts business 3(6) 2018 fairly stable, easing the sawmill’s production planning. this would be a considerable improvement compared to the prevailing operating model; the respondents judged that currently the wood processors work more to ensure their own flexibility by sending orders to the sawmill at the very last moment. the benefit of integrated information transfer would not only contribute to internal efficiency, but it would improve reactivity and customer orientation, and enable completely new business models. a sawmill representative described the change need as follows. “the overall business should be renewed quite significantly by streamlining value chains as much as possible so that intermediate money takers would be removed. but it should be done so that the consumer could get what they want – which is a house rather than just cladding, for example. this would improve customer satisfaction…there should be a hub, which includes all needs and locations where the products are needed. the products could be somehow allocated to different manufactures so that the whole chain would become cost efficient.” (ceo, sawmill) the removal of intermediaries was seen as possible and also important, and so was the reduction of transportation costs. the sawmill business was compared to the taxi business uber, having the same potential for streamlining transportation between different factories. some respondents highlighted the leap that digitalization has already taken within the industry. electronic wood trading, pre-harvest inventory methods, and the vast amounts of data collected during harvesting were mentioned as examples. the opposite view was crystallized in the comment “two terms – sawmills and digitalization – have a poor fit together.” this comment referred to industry practices that were regarded as conservative, being based above all on trust. 4.3 secondary wood processing the interviews revealed that a lot of data transfer in the wood products industry still takes place in the paper format. the data may be sent electronically but, due to its unsuitability, the receiver modifies it manually within a system. an example was provided by a wood component manufacturer. in most cases, this company received drawings in 2d-format from architects, electricity designers and hvac (heating, ventilation and air conditioning) designers. however, these drawings were needed in 3d-format in their process. this caused process inefficiency and customer dissatisfaction, as the following quote illustrates. “the 2d-designs tend to cause delays in our production process. if one of the designs changes, everybody has to make modifications to their designs… another consequence is poor design. because we usually get the designs at the last minute, we don’t have time to give feedback. then, unnecessary processing steps mean double work for us.” (ceo, component manufacturer) in general, it seems that compatible information systems are lacking between different organizations, particularly in wood construction value chains. based on the interviews, no change was anticipated in the near future. as the wood construction of elements/ prefabricated units is fairly new in finland, there is a considerable lack of knowledge, uniform standards, and previous experience. means to improve information transfer and knowledge levels are needed to support the expansion of firms to large-scale wood construction to maximize benefits. the following quote summarizes the current problems. “there are many sites in finland that are originally earmarked for wood construction, but they are built in concrete just because there is not the know-how, experience, raw material or necessary systems.” (ceo, component manufacturer) in many cases, the secondary processors of wood re-sort the sawn timber to ensure quality, strength, etc. this stage could be avoided with more exact product information, which the customer could scan into his/ her own process. for the secondary wood processors’ customers, product quality and production efficiency are becoming increasingly important, and current systems should be developed to support this trend. as an example, one of the interviewees described a situation in which their customer in the key export market asked for pictures to ensure their own quality requirements. instead of sending random pictures via email, the interviewed manufacturer got an idea of a system where the customer could select the products by themselves in their own location, but one is not yet in use. 4.4 industrial end-customers improving the process efficiency by means of digital tools was mentioned in many interviews. digitalization and the better information transfer linked to it were considered to have large potential to enhance responmakkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 75 siveness, predictability, and operational efficiency. these enhancements imply an improved ability to react to reclamations, to exploit sensor technology in inventory management, and to transfer up-to-date information between the supplier and the customer. for example, the interviewed prefabricated house manufacturer stated that he often seeks suitable raw materials after the order, without having precise pre-information about suppliers’ delivery capacity. the respondents emphasized that the information flows should be two-directional, also helping the supplier to improve their own planning and operations. if the supplier is informed as early as possible about the customer’s raw material needs, the customer benefits through more accurate delivery times and is more satisfied. an interviewee described this development need as follows. “information transfer from our side is not at all as good as it could be. we should have real-time knowledge about our short-term needs and it should be shared with our suppliers as early as possible. in the end, the question is how we could help our suppliers to succeed…we already have a lot of data, so if desired, the information would be available at a fairly early stage.... i don’t see any reason why we could not act in this way. the precondition is that the information would be really utilized on both sides.” (manager, window and door manufacturer) examples of operational efficiency focused mainly on cost savings, such as ways to minimize raw material loss, the integration of transportation with external actors, and a more profound understanding of the costs per unit. in prefabricated house manufacturing, the majority of raw material loss is wood. by exploiting new technologies and information integration, wood pieces could be pre-cut by the supplier or the cutting could be optimized in the customer’s process. the interviews showed that this method is already in use at one of the construction firm’s suppliers. their information systems were compatible, which enabled the supplier to pre-cut the needed pieces into the right dimensions and shapes, according to the constructor’s cad-designs. the interviewees suggested that there is high potential for improving transportation efficiency, and said developments have already partly begun. instead of making separate agreements with transport firms, a group of manufacturers had started to develop a common system for transportation optimization. regarding a more profound understanding of unit costs, the interviewees emphasized the significance of real-time cost analysis that could be traced back to production time, personnel, raw materials, and suppliers. real-time information allows an immediate intervention directed to the right cause, instead of using general-level weekly reports. based on the interview results, digital technologies seem to foster better customer understanding and satisfaction. firstly, real-time market studies make the manufacturer’s reaction time shorter in the increasingly competitive business environment. digital systems ensure that all necessary parts are included in the delivery, save firms’ resources, and improve customer satisfaction. in this way, post-deliveries can be avoided or at least known about beforehand, which is important as small inefficiencies can lead to significant damage in customer relationships. 5. discussion this study has examined the potential benefits of digitalization for firms in wood products industry. the study’s primary goal was finding ways to improve the wood products industry’s long-term competitiveness. a broader goal was gathering knowledge about how manufacturing firms in traditional industries could transform their business towards customer orientation via digitalization. the starting points of the study involve the views about the role of knowledge and customer orientation in today’s business. these views highlight that profitability is primarily affected by the firm’s ability to generate new knowledge through constant learning (tseng, 2016) and to exploit knowledge to create superior customer value (woodruff, 1997). digitalization is in the core of these strivings: it enables the analysis of vast amounts of data and interlinks actors throughout the value chain. it requires a fundamental change in current business operations (parviainen et al., 2017). the results of this study indicate that the wood products industry has interesting opportunities to leverage digitalization to derive customer value. customers seem to expect increasingly versatile offerings that go beyond improved product quality, delivery and price (makkonen & sundqvist-andberg, 2017). these customers’ needs drive change towards customer orientation; digitalization is a powerful tool to accelerate this change. on the other hand, the study reveals that the industry is still in the early stages of this development. depending on the firm’s goals, a firm can use digital tools to streamline 76 bioproducts business 3(6) 2018 operations and/or to develop products and services that stand out from rivals. in general, the interviewees’ attitudes towards digitalization were positive, and some interviewees considered the transformation urgent. however, the term “digitalization” was understood in different ways. there are many actors in the value chain who have not yet internalized what digitalization actually means, which leaves plenty of untapped business potential. some respondents perceived it to mean a change of currently existing processes into a digital format and, consequently, into a more efficient transfer of data. others expressed more comprehensive and profound views about its potential, including a new way of thinking about business models. regarding the ways in which digitalization can be exploited, many interviewees recognized that customer demands are increasingly complex, and the industry should prepare for it. it was foreseen that wood suppliers should be able to supply individual logs to meet specific demands. this is not possible without efficient interaction and information sharing between different stakeholders. the main emphasis in the development of ideas was, however, in the ways to improve internal or operational efficiency (e.g., monitoring costs, improving the pricing of wood raw material, resource optimization, improved process efficiency, transportation efficiency, warehouse monitoring, or faster reaction times). new ways to develop business in the existing domain, or to transform the business roles completely, were also discussed but significantly less so. consequently, the results indicate that the industry is still very production-focused, which is widely supported by previous research (e.g. brege et al., 2010; toppinen et al., 2013; pelli et al., 2017). some actions had already been taken to exploit information and digital technologies more effectively. for example, collaboration practices and information transfer were developed to optimize raw material utilization. r&d projects were launched to improve transportation efficiency and to gain more precise forest inventory data. wood suppliers were one of the most advanced sectors in pursuing this development. this is not surprising, as the forest industry has traditionally invested in developing wood procurement operations with efficient information exploitation. the views of the sawmill industry were more unexpected. they presented advanced ideas on the utilization of information to renew business models completely. for example, the creation of “a hub,” integrating demand information and optimizing deliveries in a business network, and virtual “forest tours” would break existing business models. a novel approach to business was also presented by the secondary wood processor, who considered a real-time integration of customers into the manufacturer’s production process. this would imply a new service provided to the customer, where a customer with a specific need could select the suitable products. here, the manufacturer would have an opportunity to interact with customers and become a co-creator of customer value (grönroos & voima, 2013). the wood suppliers, sawmills and secondary wood processors considered it particularly important to achieve information from the downstream value chain to improve their process predictability. the respondents strongly emphasized the need for more precise forest inventory data that could be utilized, for example, in matching the customers’ orders and tree stands better, and hence, to improve raw material efficiency. one reason for this strong emphasis may be the fact that research and development in this direction is underway and the issue has been widely discussed within the industry (see “data-driven bioeconomy” and “forest big data” projects). practical benefits in these areas are likely to emerge in a relatively short term. the industrial end-customers were the only sector emphasizing the importance of two-directional information transfer within the value chain. in addition to the possibility of benefiting from better information from the suppliers (e.g., delivery capacity), they would have an opportunity to help their suppliers succeed by providing timely information (e.g., demand information). this was expected to have two primary effects on business. firstly, operational efficiency would increase, and secondly, customer satisfaction could be improved via faster deliveries. this sector also differed from the other groups in considering the options to gain new knowledge from their customers. in all sectors, most of the future actions seemed to target cost competitiveness, leaving remarkable potential to differentiate from rivals. new applications based on digitalization could enhance, for example, learning from customers, the dynamic development of new productservice offerings, innovating, and domestic and global marketing. the results show that there is an urgent need to develop standards, compatible information systems makkonen — stakeholder perspectives on the business potential of digitalization in the wood products industry 77 for information transfer, and new applications based on digital technologies. as all the needed skills and knowledge are seldom found inside a single firm’s boundaries (möller & svahn, 2006), collaboration with other value chain partners is essential if a firm aims to exploit the full potential of digitalization. this supports the earlier discussion that links together strategic collaboration and a firm’s long-term competitiveness in wood value chains (e.g. mattila et al., 2016; toppinen et al., 2011). the need for collaboration was also acknowledged by the interviewees of this study. the expected benefits were seen as being realized on the basis of the improved internal efficiency and of the improved profitability of the whole wood value chain. as each firm is different, there are also different ways to implement digitalization. the financial aspects and a firm’s strategy are decisive in defining goals for a digital strategy. berman (2012) suggests that many firms start their digital transformation by discovering the factors that generate value for their customers and simultaneously develop operating models to address how the value can be delivered. in wood value chains, the first step towards a successful digital transformation requires the building of trust between value chain actors. many respondents in the interviews noted that the attitudes and the unwillingness to change are the major challenges to overcome when the business is transformed. currently, the very independent way of working was seen to cause chain inflexibility. in the same breath, however, many respondents emphasized the need for change and highlighted that one’s success in the wood value chain impacts the overall success of the industry. this indicates that an attitudinal change is on its way, and the industry will renew as soon as it has enough information and means to do so. in future studies, the focus should be on gaining a more profound understanding of the information needs of value chain actors. moreover, there should be more research about how the industry could utilize digitalization in developing customer-oriented business strategies. as the industry already has many ideas about improving the internal efficiency (e.g., processes) of firms, there should be more attention to new offerings (e.g., products and services) and to new ways of doing business (e.g., business roles and ways of communication) – a core issue is the application of the knowledge-based economy in the wood products industry. there was indication of data saturation as similar issues emerged in the interviews, particularly when discussing internal efficiency and external business opportunities. however, due to the small sample size and the restriction to a specific country, the findings of this study should be tested with larger samples and in broader geographic contexts; this would address the main limitations of the current study. the sample size was particularly small in wood supply, and the sample only represented large firms. this problem was slightly relieved by the fact that views on wood supply were also gained in the sawmill interviews. however, the findings of this study are not statistically generalizable, but should be regarded as indicative. an additional reason for this cautious view is that digitalization has not yet taken a leap within the value chain of wood products and construction industries, due to which the perceptions of the potential of digitalization may be constrained. in order to evaluate the potential more profoundly, interviews of professionals in pioneering industries could be one promising option. 6. references aday, l. 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(2016). the influence of supply chain on the innovation process: a systematic literature review. supply chain management, 21(3), 289–304. abstract according to several sources, clt construction systems are an excellent structural choice for tall commercial and residential buildings, have excellent environmental performance, and provide an additional market for softwood and hardwood lumber. besides and because of its engineered nature, clt panels can be an excellent market for low value timber (lesser known species, diseased trees, infested trees, and low-grade timber). however, the us construction industry is not yet taking full advantage of the benefits of clt construction systems due to several limiting factors including market and code acceptance, lack of knowledge, and local clt panel manufacturing capacity. this last limiting factor is considered critical for the expansion of the us clt market. therefore, this research aims to investigate through a case study methodology the main challenges and barriers that clt panel manufacturers in western europe had to overcome to successfully manufacture and commercialize clt panels. it is expected that current engineered wood products firms, investors, and policy-makers will benefit from these results. learning from failures, successes, and best practices of leading clt companies in western europe can help support the potential development of clt manufacturing capacity elsewhere. keywords: clt, building construction, clt production, clt drivers and barriers drivers and barriers of crosslaminated timber (clt) production and commercialization: a case study of western europe’s clt industry henry quesada1*, robert smith2, and günter berger3 1 associate professor, department of sustainable biomaterials, virginia tech, brooks forest products building, 1650 research center drive, blacksburg, va 24061. 2 professor and department head, department of sustainable biomaterials, virginia tech, email: rsmith4@vt.edu. 3 günter berger, professor, forest products technology and timber construction, salzburg university of applied sciences, email: guenter.berger@fh-salzburg.ac.at. * corresponding author: email: quesada@vt.edu; phone: 540-231-0978. bioproducts business 3(3), 2018, pp. 29-38. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-003 1.0 introduction the sustainable use of timber in the united states (us) for the manufacturing of value-added products has positive social, economic, and environmental impacts (lippke et al. 2004, lippke et al. 2011). currently in the us, the paper and forest products industry employs more than 1.1 million people and generates more than us$355 billion in value added per year (uscb 2017). the timber industry is a critical generator of employment in rural areas in the us where otherwise there would be very limited opportunity to create jobs and valuable social impacts. the ideation and commercialization of cross-laminated timber (clt) systems was developed in germany and austria around the year 1996 (klh 2017). a clt system is defined as a set of clt panels, joinery, other necessary ancillaries, logistics, transportation, and assembly instructions. different from a commodity wood product, such as structural lumber, a clt solution requires a great level of collaboration between the customer, architect, building engineer, clt manufacturer, logistics company, and builder during the whole execution of the construction project. today, european clt manufacturing companies have developed the most respected global reputation in the design and delivery of clt system solutions and provide over 80% of current clt production in the world (unece 2015) and it is important for potential clt manufacturers in other regions in the world to learn from their failures, successes, and best practices. the significance and impact of clt systems in the forest, forest products industries, the general public, and the natural environment has been addressed by many authors (apa 2012, brandner 2013, laguarda mallo & espinoza 2014, pei et al. 2016). as of 2018, there are over 15 clt structures that have been completed in 30 bioproducts business 3(3) 2018 figure 1. clt building at the university of british columbia in vancouver, canada. north america (thinkwood 2018), with many more in the planning stages. as an example, figure 1 shows the tallest (18 stories) clt building in north america on the university of british columbia campus in vancouver, canada, with a cost of cad$51.5 million. it has been demonstrated that the use of renewable materials for the construction of residential and commercial buildings such as clt systems is an important strategy to support global efforts to develop more sustainable construction systems (lippke et al. 2004, crespell & gagnon 2010, lippke et al. 2010, lippke et al. 2011, green 2012). however, current limitations on the manufacturing capacity of clt systems in the us are limiting the development and expansion of such building solutions. this article aims to provide an overview of the main drivers and barriers that clt manufacturers in western europe had to overcome to streamline production of clt systems. a case study methodology was used to collect data through semi-structured interviews and observation of the clt panel production facilities. in addition, suppliers of clt manufacturing equipment were asked about the main challenges to begin clt production to triangulate the data obtained from the interviews at the clt production facilities. interviews with suppliers were conducted during the 2017 ligna trade fair in hannover, germany. the results are useful for investors and policymakers who are interested in adding clt manufacturing capacity in the us and other countries as a way to increase markets for hardwood and softwood lumber. 2.0 literature review 2.1 potential new markets for timber in the us as indicated by the us forest service, less than 1% of harvested timber in the us comes from state and federally owned forests (oswalt et al. 2014). little has been implemented by state and federal agencies to increase the consumption of timber from publicly owned forests. in many cases, the extraction of low value timber (e.g., lesser known species, diseased or infected trees, or invasive species) is considered a good strategy to increase the value and health of the forest (potter & conkling 2014). in the u.s., privately-owned forest harvesting operations focus on recovering as much timber as possible from operations, including low value timber (jefferies 2016). however, there are significant factors such as regulations, logistical and harvesting conditions, as well as harvesting costs that impede similar harvesting strategies in national and state forests. in the last 8 years, there has been an increase in the use of forest biomass for bioenergy markets. the bioenergy market feeds primarily on wood residues produced in sawmills and other forestry operations. in addition, many logging companies have invested in chipping equipment to produce wood chips directly from low value timber in the forest that are used for bioenergy production (ekstrom 2017). this new market has been critical to support not only logging operations but also to create new outlets for forest and wood product residues (qian & mcdow 2013). sawmills and primary wood products industries that previously faced challenges in selling their residues are now seeing an important revenue stream from wood waste. however, other traditional industries that have relied on wood residues, such as the paper industry, are seeing an increase in biomass prices due to the rise of bioenergy markets (draxbiomass 2017). a critical aspect that drives a big quesada et al. — drivers and barriers of clt production and commercialization: a case study of western europe’s clt industry 31 part of the bioenergy market is the demand in europe for us wood pellets, which is mostly being driven by policy and environmental regulations. this could change at any time depending on the current political environment. in addition, the import of us wood pellets into the european union has been scrutinized by the general public and non-profit organizations due to its overall environmental impact not only on us forests but also because of the impact of logistics and transportation across the atlantic (drouin 2017). an alternative market for increasing the consumption of timber involves recent developments in wood nano-composites. by using new processing methods, woody biomass can be broken into cellulose, lignin and hemicellulose in a faster and more efficient way (lee et al. 2014) and incorporated into wood composite products for different industries including automotive and medical. however, the potential demand of cellulose, lignin and hemicellulose in these alternative markets is currently very low compared to traditional woody biomass markets such as paper, bioenergy, solid wood products, and wood composite products (sadhukhan et al. 2014). in the us southeast region, the most significant use of timber other than pulpwood involves the production of solid and composite wood products. the us softwood and hardwood lumber industries were able to survive the economic downturn of 2009 and beyond. over the last 6 years, both industries are enjoying a period of increased demand for their products (luppold & bumgardner 2016, howard & mckeever 2015) in local and international markets. new developments in the engineered timber construction industry, such as cross-laminated timber (clt), could provide a new market for both softwood and hardwood industries. current construction codes in the us vary by state, where in some cases no more than three stories are allowed and in others no more than six (torgelson 2017) when using solid softwood conventional timber. however, with the use of clt systems combined with glued laminated beams (a.k.a. ‘mass timber’), tall buildings made from engineered timber are now a reality (brandner 2013). 2.2 impacts of using wood products previous research have demonstrated that the use of timber for value-added products is a critical strategy to positively impact the environment (lippke et al. 2004, oliver et al. 2014, popovski & gavric 2016). studies conducted by corrim have shown that when comparing different construction systems with the same functional unit (e.g., area, timeframe, volume, etc.), the impacts on energy and global warming potential is 16% and 31% less when using timber instead of concrete. the same analysis revealed that when comparing steel construction against timber, energy and global warming the potential is 17% and 26% less for timber when compared to steel structures (lippke et al. 2004). other studies in the bioenergy sector indicate that the use of forest biomass to produce wood pellets has a lower environmental impact than using fossil fuels, even when accounting for transportation, logistics, and the actual burning of biomass (dwivedi et al. 2014). by implementing sustainable practices to manage, harvest, and manufacture forest products, the timber industry not only positively impacts human lives but also ecosystems and other natural resources that are interconnected with forests (lippke et al. 2011). in all cases, natural and planted forests need to be properly managed to avoid low timber yields, wildfires, water scarcity, and negative wildlife impacts. in the u.s., forest certification schemes such as the forest stewardship council (fsc) and program for the endorsement of forest certification (pefc) are recognized as effective strategies to incentivize the private sector to implement effective sustainable forestry practices. however, the impacts have not been the same in public forests and private forests. with over 400 million acres owned by the state and the federal government (usda 2015), a different approach might be necessary in the u.s. to reduce the negative impacts of diseases, infestations, and an increase in wildfires. 2.3 clt construction systems the ansi/apa prg 320-2012 (apa 2012) defines clt as “a prefabricated solid engineered wood panel made of at least three orthogonally bonded layers of solid-sawn lumber or structural composite lumber (scl) that are laminated by gluing of longitudinal and transverse layers with structural adhesives to form a solid rectangular-shaped, straight, and plane timber intended for roof, floor, or wall applications.” figure 2 shows a picture of a three-layer clt made of southern yellow pine (syp) at the department of sustainable biomaterials at virginia tech. the prg 320-2012 only accepts softwood lumber species that are recognized by the american lumber standards committee (alsc) under ps 20 or canadian lumber standards accreditation board (clsab). the 32 bioproducts business 3(3) 2018 • thermal performance and energy efficiency • environmental performance • resource efficiency in contrast with evans (2014), pei et al. (2016) indicate that clt construction systems face critical challenges that need to be overcome, including: • coordination of clt research across multiple organizations in north america • training of future leaders to advance a new generation of mass timber construction • clt panels resistance to lateral loads • building performance • fire safety • raw material sourcing even though clt technology has some unresolved critical challenges, the adoption of clt panels is showing an upward trend in north america. more clt-related construction projects are being considered, reaffirming that the benefits of clt technology may outweigh the potential challenges. minimum grade lumber in parallel layers should be at a 1200f-12e machine stress rated (msr) or visual grade no. 2 and in the perpendicular layers should be graded at a minimum no. 3. (apa 2012). moisture content of the lumber at the time of clt production should be 12±3%. the adhesives used in the manufacturing of clt panels must meet the requirements of aitc 405 for bonding, strength, and moisture durability (evans 2014). in addition, adhesives must be evaluated for heat performance in accordance with section 6.1.3.4 of doc psi (apa 2012). according to the wood products council, clt construction systems are designed to complement light and heavy-timber framing options (woodworks 2017). because of clt’s high strength and dimensional stability, clt can be used as an alternative to concrete, masonry, and steel in many building types. according to evans (2014), clt construction systems offer the following benefits: • speed and efficiency of installation • design flexibility • cost competitiveness • fire protection figure 2. clt panel made of southern yellow pine (hindman et al. 2012). quesada et al. — drivers and barriers of clt production and commercialization: a case study of western europe’s clt industry 33 3.0 methods a multiple case study methodology was used in this research to collect and analyze data because the authors wanted to get a deeper perspective of the selected clt manufacturers. case study is a research methodology used to deeply investigate a subject or group of subjects using observation, semi-structured interviews, and document analysis (yin 2013). case studies allow a researcher to investigate a topic in far more detail than when dealing with a large number of subjects. the data collected can be analyzed using different methods including grounded theory, text interpretation or even quantitative techniques. for this particular study, the researchers formulated the following questions: • what were the barriers that impacted the initial production and commercialization of clt systems in western european companies? • what are the more significant current drivers for the commercialization of clt systems? three clt manufacturers in western europe were selected to conduct the case studies. the reason that european clt companies were selected is because they have been pioneers in the manufacture of clt systems. in addition, clt equipment suppliers attending the 2017 ligna trade fair in hannover, germany were also asked about challenges and barriers to begin clt manufacturing. table 1 shows the main demographic aspects of the selected clt manufacturing companies. each company was contacted by one of the researchers who had worked with the company in another research project. in order to compare and conduct further analysis, the same questions were asked to each case study company and companies were told that their name would be kept confidential. the positions of the interviewees at companies 1, 2 and 3 were project manager, international product management, and managing director, respectively. the interviewees were told that the researchers would visit the production site to conduct a semi-structured interview and to observe the clt production facility. the observation of the clt production process was critical to better understand the responses and to make sure there was consistency in responses. as a strategy to triangulate the data obtained from the clt manufacturers, interviews were also conducted at the 2017 ligna trade fair in hannover, germany. the clt production equipment suppliers were selected for convenience by the researchers. each supplier was asked if they were willing to participate in the study and told that their name would remain confidential. a total of seven suppliers of clt equipment production were asked one question: what are the main challenges and drivers to start out production of clt panels? 4.0 results 4.1 major challenges to start clt production companies were asked how long it took to get to the production stage after deciding to move into clt systems production. one company indicated that it took from one and a half to two years. the other companies indicated three and two years, respectively. this time included the construction of the facility, purchasing and installation of the production technology, the product testing, and the fine-tuning of the clt operation. when the case study companies were asked about the main challenges or barriers to start clt production, several aspects were mentioned. three companies inditable 1. main demographic aspects of selected companies. demographic aspect company 1 company 2 company 3 clt production capacity 65-75 thousand m3/year 65-80 thousand m3/year 95,000 m3/year species spruce and fir spruce spruce geographic markets europe, australia and the usa global austria, germany, france, uk, italy, sweden, norway and the usa number of employees 50 40 175 year began producing clt systems since 2008 since 2012 since 1999 produced products before clt lumber and engineered wood products lumber and glulams none 34 bioproducts business 3(3) 2018 cated that the most difficult challenge to overcome was the lack of markets for clt systems. specifically, architects and engineers did not know about the product, so different strategies needed to be conducted to educate these two groups. for example, one of the case study companies started a pilot clt project to show potential customers the advantages of clt systems. two of the companies mentioned that finding a source near (20 miles or closer) the required raw material was also a challenge, as clt manufacturing requires specific sizes, quality, and species for the panels. related to this, another company mentioned that not having glued-laminated timber (glulams) production was a critical challenge, as the company had to partner with other companies to incorporate glulams into the clt projects. one company mentioned that another challenge was the certification process for the acceptance of clt systems in the construction industry. even today, there is not a common standard but just general quality guidelines included in the european union agreements that all companies must follow. finally, one of the companies mentioned that staff and production workers did not know anything about clt systems production, therefore, they needed to train their employees in order to start clt production. 4.2 current clt commercialization barriers the case study companies were also asked about current barriers preventing the expansion and acceptance of clt systems in europe and in global markets. two companies mentioned that building regulations are different in each country and that in most cases, the large majority of architects, engineers and builders do not have clt experience. it was also mentioned by these two companies that there is still a large number of fire science engineers in europe that do not support wood as a construction material. another company mentioned that transportation outside of the european market is very challenging because clt elements must be containerized. the companies in the study were asked about specific strategies they have formulated to overcome barriers for expansion of clt systems. two companies indicated that they need to increase clt production capacity as current capacity is booked for several months. for example, one company indicated that the lead-time for an average size clt project is 8 weeks. it was also indicated by one of these two companies that advantages of the clt system are not very well known yet. for instance, most of the current use of clt is for commercial applications and little clt production goes into residential construction. a reason for this could be the need to improve the transition process from the architect to the design and manufacturing stages. in terms of support from local government and from the european union to overcome current barriers, two companies indicated that more should be done to increase awareness of using wood as a construction material for residential and commercial buildings. for example, one company indicated that tax breaks could be implemented and that it should be mandatory that a new construction project should include at least 20 to 30% of wood in the mix of construction materials. another company suggested that the local governments should do more to promote the use of clt and wood products in general in public buildings, such as schools. 4.3 drivers for clt production companies were asked about their motivation to start clt production. two companies indicated that they saw an opportunity to increase revenue and profits. for example, one company had been manufacturing glulams before introducing clt production, so they thought both products would complement each other very well. for the third company, clt production was their first product (this company is a pioneer in clt production) and the plan to start clt production was supported through a collaboration with a university in germany. when the companies were asked about the drivers that have led to their success in the clt market, several reasons were mentioned. company 1 indicated that the uniqueness of the production process is a key competitive advantage as this company glues the layers (edge glue) before the panel itself is constructed. in addition, this company can provide very good clt prices, as they have a large transportation network and infrastructure that can handle very competitive shipping rates compared to their competitors. company 2 mentioned that their main drivers involves the integration they have with their lumber, glulam and clt manufacturing. in addition, this company indicated they have created a smooth and highly integrated collaboration process with their customers (architects and engineers). a complete clt project (including glulams) can be shipped together decreasing the project time quesada et al. — drivers and barriers of clt production and commercialization: a case study of western europe’s clt industry 35 and complexity but also ensuring standardization and ease of assembly at the construction site. similar to company 2, company 3 indicated that owning and controlling a nearby sawmill operation guarantees the supply of a consistent and high quality raw material. additionally, this company provides excellent support to clt projects including technical and educational support to their customers. but perhaps the most important competitive advantage is the fact that this is the pioneer company in the clt market. the company started in 1999 and has delivered more than 20,000 clt projects around the world. 4.4 perception of clt production equipment suppliers about challenges and barriers a total of seven suppliers of clt equipment production were also interviewed during the 2017 ligna trade fair in hannover, germany. these suppliers were asked the following question: what are the main challenges and drivers to start out production of clt panels? the answers can be found below in table 2. from table 2, it can be seen that 6 out of 7 suppliers indicated that raw material supply (in terms of quality and availability) is the main issue impacting clt manufacturing. other important challenges that emerge more than once include the integration with glulam production and the financial aspects of the project. for example, one supplier indicated that a 50,000 m3/year capacity clt plant requires an investment in the range of us$10us$15 million. the results of the interviews with the clt equipment suppliers were very useful to validate the answers from the clt manufacturers. 5.0 discussion it has been more than 17 years since the first clt panels were produced and commercialized in germany and austria and the product, the information flow, the production technology, the logistic and building operations, and yet the market continues to evolve. the acceptance and potential of clt construction systems around the world continues to grow as more projects are completed and introduced to the public opinion. the cases studies conducted in western europe and the interviews of clt manufacturing equipment suppliers in the ligna trade fair in germany helped to understand the main challenges, barriers, and current drivers of the manufacturing and commercialization of clt construction systems. the interviews of suppliers during the ligna trade fair were important to triangulate the main challenges indicated by the manufacturers. figure 3 summarizes the main challenges and barriers that the case study companies had to overcome to successfully commercialize clt construction systems. following, a detailed explanation of each factor is discussed. markets: when the product was introduced in 1999, there was some familiarity with engineered products such as glulams in europe. this knowledge could have helped the european market to slowly accept clt construction systems. in the us, the situation is very similar to what it was in europe 15 years ago. the construction community in the us is familiar with massive timber products, such as solid timber, glulams and laminatedveneer lumber (lvl). this could be used as a strategy to table 2. challenges and barriers to start out clt manufacturing supplier number equipment main challenges 1 finger jointing high quality lumber, availability of raw material, market for clt products 2 pressing equipment for clt production lumber supply, integration with glulam production, financial and marketing aspects 3 integrated clt production systems integration of different production processes with architects and builders, savings in raw material is critical, high quality lumber supply 4 material handling systems for clt production press needs including size, type cost. also raw material supply 5 pressing equipment for clt production layout configuration 6 material handling equipment for clt production financial aspects, standardization vs customization, integration with glulam, and nearby availability of lumber supply 7 cnc equipment lead times from planning to production 36 bioproducts business 3(3) 2018 figure 3. barriers and challenges impacting the success of clt manufacturing and commercialization. promote the advantages of clt as many construction projects will need both (i.e. clt panels and glulams). information flow: because clt construction projects must be customized, the level of communication and integration among customer, architect, clt manufacturer, glulam manufacturer, raw materials supplier, clt logistics companies, and builders must be at the highest level. even for the case study companies, this is still an issue that could prevent a project from becoming successful. performance of clt systems: even though wood and wood products are highly accepted in europe, there is still a concern about the performance of wood construction products against fire, decay, and earthquake resistance. private and public institutions such as universities have conducted numerous independent studies to measure the performance of clt construction systems against different building codes and it has been proven that these systems meet or exceed requirements (hindman et al 2012, popovski & gavric 2016). as the case study companies indicated, there are some construction industry groups that resist the idea of using clt construction systems over traditional construction materials, such as steel and concrete. manufacturing technology: case study firms indicated that it took from 1.5 to 3 years to move from clt planning to production. the required technology to produce clt panels has a price tag that varies from us$10 to us$18 million for a 50,000 m3/year capacity production plant. production equipment includes sophisticated machinery to inspect dimensions, defects and moisture content of lumber, finger jointing equipment, massive presses to form panels, computer numerical control (cnc) machines to cut the panels, and massive material handling capabilities. in addition, final inspection and repair of the clt panels still requires a lot of manual labor involvement. raw material supply and vertical integration: all case study firms indicated that a consistent and high quality supply of lumber is required for the successful production of clt panels. in all cases, the case study firms owned a sawmill located within 20 miles of the clt production facility. as indicated earlier, incoming lumber is checked quesada et al. — drivers and barriers of clt production and commercialization: a case study of western europe’s clt industry 37 for the proper dimensions, grade, and moisture content. in the case of installing clt manufacturing capacity in the us, this could be very challenging if lumber is coming from different suppliers. the amount of raw material required to produce 50,000 m3/year of clt panels is equivalent to 25 million board feet (at 80% yield), whichwill require strong business relationships with several suppliers if the clt production mill needs to buy their raw material. all three case study companies mentioned that having some level of vertical integration is a key success factor for them. logistic operations: all case study companies have worked very hard to develop a proper logistics system for the packing, loading, transportation, unloading, and installation of clt panels. keeping track of every panel could be a challenging task that requires an efficient use of information technologies, as well as strong project management skills. a clt construction project will most likely require extensive planning to coordinate manufacturing, logistics, and assembly of the panels. each project will need to have clear instructions on how to packed, shipped, and assembled each panel. education activities: a key challenge that impacts the consumption of clt construction systems is the lack of knowledge by architects, civil engineers and builders related to the advantages and disadvantages of wood products in construction. at higher education institutions, there is a belief that the proportion of courses that emphasizes the use of wood for residential and commercial construction is minimal compared to steel and concrete. as the clt manufacturers and suppliers indicated, much more must be done to elevate the awareness level of using wood as a construction material. the more knowledge these professionals have, the better the chances the market could increase consumption of wood products and especially of clt construction systems. 6.0 conclusions the results of this research indicate that current challenges for clt panel manufacturing are related to the following factors: consistent supply of high quality raw material, vertical integration with lumber suppliers and glulam producers, efficient and effective management of the information flow, and proper logistic and transportation operations. these results were validated by clt equipment and materials suppliers at the ligna trade fair. the acceptance of wood and wood products such as clt as safe and high-performance construction material is still rejected by many groups in europe. organizations supporting wood products such as universities still need to continue to educate architects, the general public, and policy groups to fully embrace clt construction systems as a construction material that performs equally or better than steel and concrete. it was mentioned by the case study companies that government support of clt construction systems could be significant in incorporating wood products in new or the remodeling of public buildings, such as hospitals, schools, fire stations, windmills, towers, etc. these projects could serve as case studies and demonstrations to showcase the advantages of clt construction systems the potential installation of manufacturing capacity of clt panels in other regions of the world such as in north america could be translated into an additional market for hardwood and softwood lumber in the north america. however, the current clt code only accepts some softwood species and hardwood species are still not accepted as a clt panel raw material. another entry barrier is the capital investment required to install clt manufacturing capacity where according to one clt equipment supplier, the cost of a clt production line ranges from us$10 to us$ 15 million for a 50,000 m3/ year clt mill. 7.0 literature cited american plywood association (apa). 2012. ansi/apa prg 3202012: standard for performance-rated cross-laminated timber. apa: the engineered wood association. tacoma, wa. brandner, r. 2013. production and technology of cross-laminated timber (clt): a state-of-the-art report. the institute of materials, minerals, and mining. available at http://www.iom3.org. last access august 2017. crespell, p., and gagnon, s. 2010. cross laminated timber: a primer. fpinnovations. special publication #52. draxbiomass. 2017. how wood pellets are revitalizing a community. available at http://www.draxbiomass.com/wood-pelletsrevitalizing-community/. last access august 2017. drouin, r. 2017. wood pellets: green energy or new source of c02 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(2013). case study research: design and methods. sage publications. 1 (2013) 1-23. abstract this study investigated manufacturing, business, and sustainability factors that were considered to be critical for the future success of british columbia’s secondary wood products sector. a qualitative research methodology was used to address the study’s objectives. findings indicate that improvements in the quality of managerial and entrepreneurial capacity will be particularly important. in addition, it appears that sustainability and competitiveness may become increasingly intertwined in the industry in the near future. the main contributions of this study are of an empirical nature and include the delineation of factors that may impact the competitiveness of bc’s secondary wood products industry and the exploration of potential benefits that may be gained from sustainable business practices. results may be used to inform firms’ management and their stakeholders about internal manufacturing and business competencies that will likely have the most influence on firms’ future strategies, as well as the importance of incorporating environmental sustainability into business strategies. keywords: secondary wood products, british columbia, sustainability, competitiveness critical areas where management and policy makers should be centering their efforts to strategically advance the competitiveness and sustainability of this industry have yet to be identified. importantly, recent global events, namely the 2008 global financial crisis and increasing globalization (and localization) (buehlmann & schuler, 2013), have introduced new challenges and opportunities for secondary wood products manufacturers. the search for new economies of scope, such as access to low-cost factors of production and new customers (hesterly & barney, 2015), coupled with the internationalization of markets and production strategies (buehlmann & schuler, 2013), have recently put increasing pressure on the competitiveness of bc’s secondary wood products industry. since the 1990s, bc’s secondary wood products industry has been slowly, but profitably, evolving (stennes et al., 2005, schultz et al., 2013). opportunities arising from a more globalized economy, advances in information and communications technologies, and generational and capability changes in ownership and management have been cited as major drivers (schuetze, 2005). more recently, a number of efforts from different government and industry actorsi have attempted to catalyze bc’s secondary wood products industry by addressing critical factors of competitiveness for the british columbia secondary wood products industry wellington c. spetic,1* robert a. kozak,2 and natalia g. vidal1 1.1 introduction historically, structural wood uses have dominated demand for commodity softwood lumber in north america, with british columbia (bc) being a top supplier of such products. conversely, bc’s secondary or value-added wood products manufacturers have yet to achieve the success of their upstream relatives. further investment in and development of the secondary wood products industry may have not only economic, but also social and environmental benefits to the province (kozak, 2005; schultz et al., 2013). some authors have previously discussed the impediments and potential solutions for further developments of bc’s secondary wood products segments (kozak & maness, 2001; kozak et al., 2003; kozak 2005, 2007; delong et al., 2007; schultz et al., 2013). however, there have been limited efforts in enabling and fostering growth in this sector and the 1 anderson school of management, university of new mexico, 1924 las lomas rd ne, albuquerque, nm 87106, usa 2 faculty of forestry, university of british columbia, vancouver, bc, canada * corresponding author: e-mail: spetic@unm.edu. tel.: (505) 277-2525. bioproducts business 1(2), 2016, pp. 13-31. http://biobus.swst.org. https://doi.org/10.22382/bpb-2016-002 14 bioproducts business 1(2) 2016 various constraints along the industry’s value chain and by fostering a more enabling business environment (schultz et al., 2013). however, bc’s secondary wood industries continue to trail other producing regions (e.g. eastern canada, the united states’ great lakes region, and scandinavia) in the development and alignment of manufacturing and business strategies (kozak & maness, 2001; kozak et al., 2003; kozak, 2005; delong et al., 2007, buehlmann & schuler, 2013). schultz et al. (2013, p. 19) note that there are “…numerous visions in play, different interests are pursuing different visions, and they are not necessarily in harmony.” as such, and as a first step, there is a pressing need for consistent information that serves to identify the internal and external business issues deemed to be critical for further advancements of this industry. while this analysis needs to occur at an industry-wide level, it can be argued that the viewpoints of more prosperous firms are of particular interest in the identification of these factors of success. accordingly, this study uses a qualitative research design and inducts from empirical data and existing literature to identify manufacturing, business, and sustainability factors facing the secondary wood products industry of bc. it does so by drawing on extant strategic management theories to steer the inductive processes of data collection and analyses, as well as to structure the findings. based on the results, this study puts forth a set of recommendations necessary to achieve a successful secondary wood products industry in the long run by advancing aspects of firm competitiveness in and alignment with the current and future market environments. specifically, the following research questions were examined: what are the key manufacturing and business issues that will drive the future success of the secondary wood products industry in british columbia and what role can sustainability play in fostering this success? the contributions of this study are of an empirical nature. based on our data, we map factors that have the greatest chance of impacting the competitiveness of bc’s secondary wood products industry according to their level of control and their position in the value chain. we also explore the potential benefits that can be gained from efforts revolving around sustainability. practitioners and policy-makers can use this map to identify the issues that are most relevant to them and tackle these issues accordingly. in addition, we make a number of more specific recommendations that may assist practitioners and policy-makers to determine actions that may increase the competitiveness and ensure the future success of bc’s secondary wood products sector. in the following section, a review of theoretical and empirical works that are pertinent to our research question is presented. next, the methodology is described, including the presentation of the unit of analysis (i.e. the studied industry). the last three sections of the study present the findings and a discussion which contains recommendations for both internal and external decision-makers, the study’s limitations, and the potential for future research. 1.2 background understanding competitiveness and firms’ abilities to achieve competitive advantages has been the basis of theoretical developments by strategic management scholars for decades. since the 1950s, several schools of thought have emerged and are usually categorized into two major realms, most notably market-based and resource-based frameworks. according to the former, competitive advantage arises from market power (porter, 1980, 1985) by anticipating or influencing rivals’ strategic moves within the market environment in order to gain a positional advantage (shapiro, 1989; teece et al., 1997). in the latter (schumpeterian), rents stem from firms’ innovations and differentiations based on unique and costly-to-imitate internal capabilities that are (re) deployed to contribute to overall performance (grant, 1991; s. hart, 1995; teece et al., 1997; teece, 1998; ward & duray, 2000). “these [frameworks] are in many ways complementary and a full understanding of firm-level, competitive advantage requires an appreciation of all approaches and more” (teece et al., 1997, p. 511). additionally, firms’ links to the task environment (e.g. customers, suppliers, creditors, associations, and unions) and to the societal environment (e.g. economic, technological, political and legal, and socio-cultural contexts) invariably affect competitiveness (wheelen & hunger, 1983; ward et al., 1996). in general, the further the sources of competitiveness depart from a firm’s internal variables (i.e. moving toward the societal environment), the more difficult they are for management to control (swamidass & newell, 1987; ward & duray, 2000; husso & nybakk 2010). spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 15 more recently, it has been posited that strategic management must now recognize the need to not only integrate different strategic frameworks, but to also adapt to rapidly evolving, complex external environments and trends related to internationalization, technology, and sustainability (drejer, 2002; harris & twomey, 2010). in particular, and given the increasing calls for firms to advance their social and environmental legitimacy over the past two decades (elkington, 1994; s. hart, 1995; bansal & roth, 2000; savitz & weber, 2006; harris & twomey, 2010), the role that sustainability plays on internal and external strategic issues may be of interest to theoreticians and practitioners alike. based on the aforementioned observations, firm-level competitiveness of this industry could be defined as the ability to identify internal (controllable) manufacturing and business strategies that take into consideration external (uncontrollable) factors, as well as sustainability issues, to profitably deliver products and services to their customers (s. hart, 1995; bansal & roth, 2000; ward & duray, 2000; robinson, 2004; brown & blackmon, 2005). the differences between, as well as the importance of, manufacturing and business strategies are discussed below, followed by a discussion of the literature connecting sustainability and business strategy. 1.2.1 business and manufacturing strategies in today’s dynamic and global marketplace, the alignment and synchronization of manufacturing and business strategies are critical factors in determining firms’ abilities to be competitive. from skinner’s (1969, 1974, 1985) “manufacturing mission” to brown and blackmon’s (2005) more recent “strategic resonance,” frameworks and terminologies surrounding competitiveness have evolved over the past decades to reflect changes in manufacturing and business strategies (teece et al., 1997). understanding these different perspectives can help to clarify some of the issues affecting the secondary wood products sector in bc. manufacturing strategy determines how firms’ resources are best allocated and transformed, and how manufacturing processes contribute to overall performance (hill, 1980; hayes & wheelwright, 1984; ward & duray, 2000). manufacturing strategy involves the best combination of internal competencies that make up the functions of operations (amoako-gyampah & acquaah, 2008), such as cost, flexibility, dependability, innovativeness, quality of products, and processes (corbett & van wassenhove, 1993). conceptually, manufacturing strategy is often associated with the resource-based theory of the firm (brown & blackmon, 2005; paiva et al., 2008), which states that firms’ competitive advantages stem from idiosyncratic and difficult-to-imitate resources and capabilities (grant, 1991). in contrast, business strategy is marketand customer-oriented and deals with competition competencies. business strategy involves the identification of target markets and the deployment of core competencies to continuously and profitably deliver products and services that customers value more than those of competitors (drejer, 2002; imd, 2005; ward et al., 2007). significantly, business strategy can be related to the literature on marketing, e.g. marketing mix (price, product, promotion, and place), marketing orientation (corbett & van wassenhove, 1993; hunt & lambe, 2000), and the marketbased theory of the firm (brown & blackmon, 2005). the latter also argues that competitive advantages (porter, 1980, 1985) stem from firms’ abilities to foresee and create barriers to competitors. skinner’s (1969) contribution to the literature had a long-lasting influence on the dominant view of competition in which manufacturing was at the core of firm success. manufacturing was sovereign and firms would outperform competitors by being as efficient as possible in all internal competencies. in other words, manufacturing drove business strategy. this view of competition was later revisited and a number of fundamental changes have occurred to inform more recent competition contexts, namely: “(1) static to dynamic rates of change; (2) stable to volatile environments; (3) mass production to responsive and customized production contexts; (4) enterprise-specific to network industry structures; (5) transformation of physical assets to information and knowledge; and (6) top-down to two-way path strategic processes” (brown & blackmon, 2005, p. 798). in today’s global production systems and markets, manufacturing competencies must be carefully aligned with market requirements. a well-defined business strategy will guide the corresponding manufacturing strategy needed to produce the best products to compete in the market(s) selected. the literature offers a number of theoretical and empirical studies highlighting the importance of a clear and efficient relationship between a firm’s 16 bioproducts business 1(2) 2016 manufacturing and business strategies (williams et al., 1995; ward et al., 1996, 2007; ward & duray, 2000; sun & hong, 2002; chang et al., 2003; bell et al., 2004). corbett & van wassenhove (1993, p. 109) argue that there need not be a trade-off between the two strategies and that they are, in fact, “two sides of the same coin”. the authors also state that developing a link of internal competencies with the competitiveness requirements of the market is a means of securing long-term survival. terminologies, such as strategic fit (miller, 1992; miles & snow, 1994) and strategic flexibility, gained the favor of practitioners and researchers with the introduction of production initiatives like lean manufacturing (warneckea & hüser, 1995), just-in-time (schonberger, 1982a, 1982b), flexible manufacturing (goldhar & jelinek, 1983; nemetz & fry, 1988), total quality management (kanji, 1990), mass customization (pine, 1993; c. hart, 1995), and supply chain management (chen & paulraj, 2004). recently, strategic resonance has been proposed as a more updated theoretical framework relating manufacturing and business strategies (brown & blackmon, 2005). the authors propose that strategic resonance combines market-led and resource-driven views to “…prevent the firm from being excellent in the wrong things…” and “…from chasing after businesses and markets in which it cannot hope to compete. the strategy process becomes ongoing and changing, adapting to ensure that customer requirements and organization-wide capabilities continue to resonate” (brown & blackmon, 2005, p. 800). such resonances, therefore, must stem primarily from firms’ human capital; that is, the ability of (strategic) management to recognize the nuances of manufacturing and business priorities (youndt et al., 1996; mathews, 2006). 1.2.2 sustainability and strategic management usually, manufacturing and business strategies must continually deal with internal and controllable sources of changes along the value chain in order to enhance the competitiveness of organizations. however, strategic decisions are also contingent on environmental dynamism, that is, “the degree of turbulence in products, technologies, and demand for products in a market” (ward & duray, 2000, p.124). accordingly, the task and societal environments (e.g. external and uncontrollable factors) that affect both manufacturing and business strategies of firms also play a critical role (wheelen & hunger, 1983; swamidass & newell, 1987; ward et al., 1996; ward & duray, 2000). these uncontrollable factors can include, but are not limited to, competitors, input and demand conditions, the natural environment, business culture, government fiscal, monetary, and trade policies (porter, 1985; martin & porter, 2000; hunt & lambe, 2000), and business megatrendsii, such as the “sustainability imperative” of the last decade (lubin & esty, 2010, p. 44). with the aforementioned megatrend, a significant field of study on the relationship between sustainabilityiii, as a new variable in the external environment of firms, and competitiveness has emerged (s. hart, 1995; carroll, 1999; bansal & roth, 2000; wagner & schaltegger 2003; harris & twomey, 2010); the concepts of the triple-bottom-line and corporate social responsibility (or corporate responsibility) are notable examples of this trend (elkington 1994; van marrewijk & werre, 2003). the central arguments underpinning these sorts of concepts revolve around firms’ abilities to demonstrate the financial dimension of businesses (i.e. economic sustainability), as well as greater accountability, transparency, and contributions to long-term societal well-being (i.e. social and environmental sustainability) (adams et al., 2004; carroll, 1999). during the 1990’s, concerns about the quality of the natural environment were becoming increasingly commonplace, and a number of environmental management tools emerged as a means for businesses to legitimize their environmental performance (for a review of these tools and systems, see kolk & mauser, 2002). concomitantly, organizations have also recognized the need to legitimize and demonstrate the social dimensions of their activities (robinson & tinker, 1997; von geibler et al., 2006). some benefits to companies incorporating sustainable practices include the potential for increased competitiveness, legitimacy, and ecological responsibility, access to potential new markets and to ethical investment funds, the ability to attract and retain top human resources, and the creation of non-tangible product values (bansal & roth, 2000; lubin & esty, 2010). for smalland medium-sized enterprises (smes), improved sustainable practices have benefited businesses by creating first-mover market access (wagner & schaltegger 2003) and providing certain reputational advantages (miles & covin, 2000). furthermore, some dimensions of business sustainability, such as environmental performance and initiatives, governance and management, stakeholder and community engagement, and improvements in environmental processes, products, spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 17 and services, were found to positively impact the competitiveness of smes (lefebvre et al., 2003; hitchens et al., 2003; thorpe & prakash-mani, 2003). little in the way of research on the secondary wood products industry in bc fully considers the interrelationships between firms’ sustainable practices and competitiveness (sharma & henriques, 2005; kozak, 2005). therefore, this study also addresses the perceived significance that sustainability issues may have for the long-term competitiveness of bc’s secondary wood products industry. the arguments that frame the analysis are summarized in figure 1. 1.3 methods the methodological approach used in this study is based on qualitative analysis techniques, which are appropriate for the description, categorization, and exploration of connections from qualitative data for use in the development of fields that are difficult to communicate with quantitative methods (tesch, 1990; strauss & corbin, 1998). this technique aims at building theory from textual information or data and is inductive in nature. in this vein, this study drew on two major sources of data for analyses: desk research (i.e. existing literature); and fieldwork (i.e. longiv interviews). for the fieldwork, miles and huberman’s (1994) three sequential procedures of defining the unit of analysis, sampling, and instrumentation were considered and are presented next. subsequently, a description of the data analysis, which followed a grounded theory approach (strauss, 1997; strauss & corbin, 1998; bazeley, 2007), is presented. 1.3.1 unit of analysis the focus and bounding of data collection was delimited to bc’s secondary wood products manufacturing sector. in general, this industry is involved in the transformation of primary wood products (e.g. commodities traded in the open market, such as logs and lumber) into other (higher value) wood products with higher degrees of differentiation, higher degrees of finishing (directed to end-users rather than intermediaries), higher associated rates of employment per volume of raw material, and lower associated rates of use for raw materials (kozak & maness, 2001; wilson et al., 2001; schuetze, 2005; cohen & kozak, 2006). examples of secondary wood products and processes, in ascending order of value addition, include: remanufacturing (i.e. further processing of commodity products); paneling; millwork; windows and doors; cabinetry; prefabricated homes and buildings; commodity furniture; and custom furniture (kozak maness, 2001). the vast majority of bc’s secondary wood manufacturers are categorized as smallor medium-sized business factors (e.g. markets, customers) manufacturing factors (e.g. inputs, processes) external factors (including sustainability) competitiveness critical themes (drivers) figure 1. framework guiding the implementation of this study 18 bioproducts business 1(2) 2016 enterprises (cohen & kozak, 2006). in canada, small enterprises are comprised of firms with less than one hundred employees, while medium enterprises are those that have between one hundred and five hundred employees (strategis, 2007). for smes, limitations of financial and human capital may hinder the implementation of sophisticated organizational strategies. on the other hand, management and ownership in the majority of smes comprise one or a few persons, which arguably should allow for faster and more efficient linkages between manufacturing and business decisions. 1.3.2 sampling this study drew from a small and purposive, rather than large and random, sample for an in-depth and contextual investigation (kuzel, 1999; carter & dresner, 2001). the level of expertise of participants and the length of the interviews, not the number of participants, allow for a homogenization of the sample (kuzel, 1999). in studies aimed at developing substantive theories – as opposed to more general or formal theories – as few as eight units will generally suffice when long, in-depth, or focused interviews are used (mccracken, 1988, p. 17; strauss & corbin, 1998; kuzel, 1999). the choice for small and purposive samples is based on the idea that “the issue is not one of generalizability. it is that of access. it is more important to work longer, and with greater care with a few people than more superficially with many of them” (mccracken 1988, p. 17). participants were selected according to their potential contribution to the study’s objectives and their knowledge of and expertise in, one or more aspects of bc’s secondary wood products industries. specifically, two potential key informantsv were identified and interviewed first. secondly, theoretical sampling – i.e., “sampling on the basis of emerging concepts,” (strauss & corbin, 1998, p. 73) – was used to the extent that the drawing of sample elements was also dependent on reaching theoretical saturation – i.e. when no substantive additional data is found to further develop properties of the studied category (strauss & corbin, 1998; merkens, 2004). the selection of subsequent participants followed the basics of snowballing and gradual sampling techniques, where participants were asked to indicate other specialists for the themes under study (kuzel, 1999; flick, 2006). these procedures entail data analysis after each interview. data collection took place between september 2007 and january 2008. theoretical saturation was reached at 11 interviews and the final sample included experts from different groups of stakeholders representing firm owners, manufacturing and business specialists, research and development institutions, and three levels of government (federal, provincial, and municipal). the final representation of the sample with a summary of the research process is presented in table 1. 1.3.3 instrumentation semi-structured interviews were used as the instruments for collecting data (miles & huberman, 1994; bansal & roth, 2000; carter & dresner, 2001; flick, 2006). semistructured interviews allow for better focus, avoidance of data overload, and comparability between cases, thus enhancing internal validity (weller & romney, 1988; miles & huberman, 1994). after pretesting with nonparticipants, a final interview guide was developed. the interview guide was designed to address general and broad topics first and then to focus on specific topics about the study’s research questionsvi. examples of questions in the guide included: what are some of the key factors for bc’s secondary wood products manufacturers to increase and sustain their competitiveness in the long run? which stakeholder(s) will have to play the major roles and why? do you believe that there is a business case to incorporate sustainability initiatives into firms’ strategies? if so, which and how should sustainability issues should be considered? upon request, a copy of the topics and questions were made available to interviewees in advance. all participants formally agreed to digitally recorded interviews and were given a copy of the consent forms. interviews lasted, on average, one hour with the exception of the interviews with participants from the industry, which lasted more than two hours and included site visits. all recorded interviews were transcribed and, along with field notes (e.g. memos and diagrams) and existing literature, formed the bulk of data for analyses. 1.3.4 data analyses fieldwork and secondary data were combined for analysis. data analyses were performed with the assistance of computer software (nvivo version 8) and followed the procedures suggested by bazeley (2007). transcripts, field notes, and existing literature formed one single file for the software. transcriptsvii and field notes were analyzed through coding and additional documents were hyperlinked to these emerging codes in electronic formats. spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 19 as proposed by strauss (1987) and stauss and corbin (1998), the analytical process consists of developing open codes (with an initial examination of the data), which represent relevant ideas and concepts emerging from the text. open coding allows for an overall description of the data and may represent ideas contained in a single word, a sentence, or an entire paragraph of all data sources, including the field notes. open coding was performed with a microanalysis of the data (i.e. line-byline analysis of textual data). after further inspection of all available data, open codes were dropped, merged, and moved into higher-level categories to form, through conceptual ordering, axial codes; i.e., the initial concepts preceding the central (final) categories. the last analytical process involved the use of selective coding to theorize (e.g. to integrate and refine) relationships within and between axial codes, serving as the grounding of the central categories. these sequential and circular analytical processes of describing, conceptually ordering, and theorizing served as the basis for this study’s findings. the relationships between emergent central categories or themes, along with the revisited literature, served to support the recommendations presented later. during data collection and analysis, several procedures were adopted in order to enhance the internal validityviii and reliability of the study (flick, 1992; 2006; miles & huberman, 1994; strauss & corbin, 1998; stendahl et al., 2007), including the use of key informant and theoretical sampling with snowballing techniques, semistructured interview instruments, digital audio recordings, different transcribers, direct coding of audio files, coding for theoretical saturation, and original quotes in the findings. data were coded by one of the authors and verified by the other authors. 1.4 findings analyses of internal and external manufacturing and business-related factors are presented first, followed by the results of the data analysis on the role of sustainability. throughout, excerpts from the stakeholder interviews are used to illustrate key points. later, in the discussion section, these results are aggregated and their theoretical interrelationships are used to guide the recommendations put forward. 1.4.1 manufacturing and business themes the central categories or themes that emerged during the coding processes are summarized in figure 2. themes were first ranked (denoted by the relative sizes of the circle) and then positioned in a two-dimensional space. coding frequencies or critical points (e.g. total number of open codesix) were used for the ranking, while the positioning was more conceptual, but aligned with the study objectives. table 1. the research process stakeholder group (n=11) sampling analytical processes coding central category/theme business consultant key informant description open n/a operations and management executive description open n/a business owner theoretical with snowball techniques conceptual ordering open axial ms, gp research and development specialist conceptual ordering theorizing open axial selective ms, gp, lb product and process design and innovation specialist ms, gp, lb, rm research and development specialist ms, gp, lb, rm, tm, pr, gp*operations and management executive federal government representative provincial government representative ms, gp, lb, rm, tm, pr city mayor product and process design and innovation specialist ms, gp, lb, rm, tm, pr, sh, vc* notes: ms=management skills; gp=government policy; lb=labor; rm=raw material; tm=target markets; pr=products; sh=stakeholders. * sustainability-related themes: gp=“green” promotion; vc=value chain. field notes (memos and diagrams) were also used for the analytical processes and coding procedures. computer software allowed for the coding of relationships; that is, the types and directions of associations between codes were inductively recorded. 20 bioproducts business 1(2) 2016 the horizontal dimension represents internal activities along firms’ value chains. the vertical dimension represents level of control and influence that can be exerted by the firm on each of the emerged themes. for example, themes placed on quadrant 3 were considered to be: a) related to business-oriented strategies that are focused on the customer end of the value chain; and b) controllable and able to be dealt with internally. in total, seven major themes emerged from this study: 1) management skills; 2) government policies; 3) labor; 4) raw materials; 5) target markets; 6) products; and 7) stakeholders. management skills emerged as the theme with the largest number of critical points gathered from the data analysis. issues revolving around the need for businessoriented management skills and business-focused entrepreneurship were considered to be the most critical adjustments to be made for the achievement of a more successful secondary wood products sector. not surprisingly, this is also directly related to brown and blackmon’s (2005) concept of strategic resonance presented earlier, where skillful management is constantly realigning manufacturing and business strategies. many managerial capabilities and competencies, such as organizational climate and commitment to innovativeness (crespell & hansen 2009), are more intangible and socially complex by nature, thus making them hard-to-copy resources (bonsi et al., 2008). in our study, there was a belief among participants that broader business-related issues were far more important to success than manufacturing issues, and that management and entrepreneurs in bc’s secondary wood industry have not yet recognized this. some of the criticisms within different aspects of management and entrepreneurship cited by participants included, but were not limited to: a lack of business orientation; risk aversion; entrepreneurs’ manufacturing-oriented backgrounds; and an inability to enter the marketplace in a meaningful way. historical and cultural characteristics of canadian managers and entrepreneurs have been cited as hindrances to change, innovation, and business-oriented decisions (martin & porter, 2000). for example, one participant stated the following: “…canada has a huge problem with ‘cultural change’. we are a manufacturing society…which means that people are paid very good wages to work in manufacturing plants, good benefits figure 2. ranking and placement of emergent themes along the value chain according to the degree of firm control 1 2 34 external/uncontrollable management skills target markets final customer inputs labor stakeholdersraw material internal/controllable product government policy spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 21 and all that…so how do you get a society to understand that knowledge, knowledge of the marketplace, and that a different business model is required? when all of the examples that exist are almost in conflict with them…the reality is that we have a huge population that has a very good standard of living that is not based on knowledge.” moreover, in bc, many secondary wood products manufacturers evolved from (and with) a primary (commodity) sector mindset. the primary commodity sector has unquestionably been the driving force of bc’s economy for decades, and the business of adding value to wood products in the secondary sector represents a very different paradigm. another participant shed some light on this argument by stating that: “there are very few companies in bc’s secondary industry, in my view, that really understand the business they are in… a lot of entrepreneurs [managers] come out of the primary industry, so they come with certain historical background, training, and experience…they come with a bias to a particular model that is in conflict to what they really need to be doing. they believe that if they focus on manufacturing they can ultimately be successful. being a good manufacturer is critical in all businesses. it is not the driver in this [secondary wood products] business.” the criticisms mentioned earlier regarding some management and entrepreneurs’ lacking capabilities were exacerbated by difficulties that some firms have in accessing capital. access to capital has often been mentioned in the literature as being a critical deterrent to the bc secondary industry’s investments in manufacturing and business innovations (stennes et al., 2005; schultz & gorley, 2006; delong et al., 2007). however, our data showed that managements’ inability to take advantage of existing and available capital was perhaps a more tangible issue. participants from leading firms cited a lack of financial expertise in management as a likely reason for why it is difficult for firms to access capital (as opposed to capital being generally unavailable). one manager noted the following: “a lot of these guys, frankly, are not very skilled at presenting their stories to a banker; your average secondary manufacturer doesn’t sell themselves very well. typically, they pledge their assets to the point that they cannot borrow any more money from the local government or banker. they don’t know [that] they could finance due receivables, that there might be some private capital or some venture capital out there. the managing side started at the shop and wore every hat…they have to keep the company going, but you get to a certain size and you’ve got to start bringing in professionals. there is a lot of r&d in the industry, but most don’t even understand the r&d tax credits. there is a huge hole in this industry in that regard…a lot of investors are actually interested in the manufacturing world. what you have to do is to help the manufacturers tell their story right…put together these angel [investment] forms…pitch it in a way that helps the investor.” not surprisingly, the literature indicates that management capabilities are the key requirements for venture capital and angel investment providers (mason & stark, 2004; madill et al., 2005). government policy emerged as the second most discussed theme in the data analysis. most of the critical issues under this theme related to government policies that could bring business-related benefits and, to some extent, manufacturing benefits, to the secondary industry. this theme presents something of a conundrum as policy reform is considered key for the future success of the secondary industry according to participants and, yet, it is challenging for smes’ management to generate a competitive advantage from it. despite its evident importance, the uncertainty of the benefits from such policies compromises the potential for strategic resonances between manufacturing and business activities. a lingering dependency on merely adequate business-oriented policies has historically been a critical competitive disadvantage to bc’s secondary wood industry when compared to other producing regions of the world (jaakko poyry, 2001). one informant said the following about potential business-oriented policies that could spur on current businesses and attract new skilled management and entrepreneurship: “to create an environment of aggressive business acumen…policies [are required] in terms of developing technology, innovation, and product development costs write-offs…faster write-downs on technology so that they can try things…to get out there and be in a position to be innovative and create some competitiveness.” synergies between the primary (commodity) and secondary industries, particularly in value chain activities, 22 bioproducts business 1(2) 2016 our firm is actually one of the few that will actually send people for training, but i know the vast majority never will.” access to skilled labor is cited as having different impacts on firms depending on the degree of value addition. the furniture segment, for instance, suffers because it requires a more skilled work force than the remanufacturing segment. interestingly, though, the management of some successful high value-added firms in bc seems to be able to attract and train their workforce to be in line with the business strategies of their firms. issues categorized under the theme raw materials ranked fourth in the analysis. the raw materials theme shares some similarities with the labor theme, as they are the two manufacturing competencies that present the greatest challenges to management for future success according to participants and the existing literature (cohen & kozak, 2006). raw materials, however, offer fewer options for management to internalize challenges. the inherent characteristics of bc’s imperfect wood fiber markets (i.e. the government owns the majority of forest resources in this province) and traditional preferences to attend to the needs of the commodity sector mean that raw materials are constantly cited as a key deterrent to virtually all segments of the secondary industry, as stated by one informant: “all secondary manufacturers complain about the supply-side. there is a problem there for them. our manufacturers would have to have access to good quality and competitive wood fiber prices. that would be probably step number one...” security of raw materials for bc’s firms is almost entirely external to their value chains. upon further analysis, and despite variation among participants, some opinions and examples from successful firms indicate a paradigm change occurring in the raw materials market. one participant punctually stated that: “[the] secondary industry is about market focus and, if your focus is getting wood, then you are looking in the wrong direction.” a business consultant added: “access to a new wood fiber basket that is international, not just local. i don’t think the local supply of wood is the biggest advantage to the secondary industry. i think that technology and design and business expertise to develop brand products is where the opportunities are.” such as distribution and access to markets, were cited by other participants and in the existing literature (schultz & gorley, 2006) as a potential source of advantage to the secondary sector, exemplified in the following quote by a participant: “provincial government, on both forestry and economic development, can be instrumental…i think that developing linkages, business linkages and operating clusters between the primary and secondary sectors will offer some opportunities. those linkages have never been strong and there is tremendous mistrust between the two, and usually a battle over access to fiber, which seems to be pretty absurd, but it is deep-rooted.” government policies were also cited as having great potential to soften the historic antagonism between the commodity and secondary sectors and to facilitate strategic management decisions and entrepreneurship on other critical issues, including tax incentives and improvements to accessing raw materials and labor markets. labor was the third most discussed theme to emerge from the analysis. critical issues under this theme specifically refer to labor as a manufacturing competence and, therefore, offers an attainable level of control for management. access to skilled labor in bc was cited by some participants and in the literature (stennes et al., 2005; schultz & gorley, 2006; delong et al., 2007) as being an endemic hindrance to the secondary industry and something that government policy should address. delving further into the analysis, it seems that the bc secondary industry must compete with the commodity sector, as well as with eastern secondary industries to attract skilled labor, particularly for entry-level positions in management. some participants noted that training and upgrading the quality of existing labor could be an alternative. here, partnerships between firms and government through post-secondary institutions could alleviate costs for those already doing in-house training and serve as an incentive for those firms currently not upgrading to improve the knowledge of their workforce. one firm’s manager made the following point: “the training aspect is really hurting [the industry]...there is very little of it now…we have an industry that is unwilling to pay significant portions of the training cost; it is low on their priority list. what happens…is that if you don’t subsidize it heavily…then training will not happen. i mean, spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 23 two successful firms in the higher end of valueaddition observed that they have either diversified to international wood suppliers and/or secured long-term contracts with local wood suppliers that tend to their specific demands. the last point is a good illustration of brown and blackmon’s (2005) concept of strategic resonance. in these cases, managers aligned manufacturing with their business strategies and were able to internalize the challenges posed by raw material unavailability. the theme target markets appeared next and comprised critical issues about having a business strategy in place that reaches both local and international markets. analysis showed that most of the challenges of having such a business strategy when it comes to target markets could be dealt with internally by management. the participation of other stakeholders (i.e. industry associations) and even government were cited as possibly having a role in assisting firms to find newer markets. however, upon further review of the data from the more successful firms, target markets can also be considered a controllable part of firms’ value chains. for example, some successful firms find newer markets by experimenting with customer-orientation and marketfocused strategies in local markets. then, when they find themselves higher up on the learning curve, they take a risk and venture out more internationally. when asked to describe what a successful model for operating in bc’s secondary industry in the future would be, one interviewee recounted: “large components on export…so you are competing into high-end product lines, high-end niche markets, where you can get a decent margin to offset high costs and small markets for operating in bc.” another marketing specialist made the following comment when asked a similar question: “manufactures have to pay attention to what is needed in the market, to be more innovative, and to see how society is changing…they have to be more market savvy.” products is a theme that emerged with a collection of critical issues mainly involving, but not limited to, product innovation, development, and design. product development and customization are cited in the literature as part of business strategies and, therefore, a dimension of competitiveness (corbett & van wassenhove, 1993; tollin, 2002). product development is also closely related to the theme of management skills discussed previously. our data suggest that successful product development programs of the future will be advanced in an almost diametrically opposed direction compared to today’s model. that is, future products will be designed and produced only after a specific target market has been found, researched, and market-tested (and not the other way around, or worse, haphazardly). the manufacturing competencies necessary to generate new products will be set up accordingly. here, once again, management of strategic resonance will be fundamental to aligning business strategies, focusing on specific markets, and using appropriate manufacturing strategies for getting the new products to markets. participants also stated that a lack of design and a disconnection with designers were two crucial issues that needed to be resolved and that paradigm changes in product development would be required for the future secondary industry. as one product development consultant commented: “designers are trained to look at and to really understand the users. i don’t think that our manufacturers take that whole product development process. i think that they are little bit more superficial. they look at their competitor’s catalogue and say, ‘these products are selling well, we will make something like that’…they just simply knock it off, doing something very similar without really being original.” a manager of a forward-thinking firm (according to participants) shed some light on this topic with the following remark: “we operate on a higher end and customized product [market]…that people are willing to pay a premium for. that is where i see the future of bc. i mean, those companies that are making commodity products of any kind…taking low grade [wood] from the primary [industry] and upgrading it…pretty tough...the margins are awfully tight…i don’t hold much hope for the secondary side in the commodities business.” stakeholders was the next theme to emerge following target markets and products. in this study, critical points under the theme stakeholders specifically related to the role of industry associations and research and development (r&d) institutions. as mentioned earlier, smes may have an advantage over larger companies when it comes to linking operations with management. 24 bioproducts business 1(2) 2016 smes usually have only one or a few people in charge of these sorts of activities. on the other hand, many activities related to business strategies (e.g. developing target markets) are likely understaffed, underperformed, or even nonexistent. a successful small business owner spoke to this issue: “my focus is to keep the company going day after day. i don’t have the opportunity to think about what i can do globally when i am so focused on what i should be doing locally to keep everybody busy and going forward…i want to grow the company for the future, [but] i have to think of it in smaller increments…the bulk of the people in small businesses in bc are not going to think of it globally and they will be tied up in their own problems.” in this context, stakeholders were cited as potentially having a key role in advancing the strategic business agendas of secondary wood products smes. results show that the secondary wood sector in bc is closer to industry associations and research institutions than to the provincial and federal governments. industry associations are, in fact, said to play a mediating role between the secondary industry and policy makers in the government. participants agreed that bc’s secondary industry associations and r&d institutions are on the right track in supporting all levels of manufacturing and business activities of firms. they also agree, nonetheless, that the supporting role of associations and institutions has to reach a higher level, particularly on business strategy fronts. examples of suggested roles emerging from the data included: identifying firms with the highest potential and progressive business strategies; encouraging these firms to cluster, exchange expertise, and jointly pitch proposals and ideas; helping these firms to develop target markets and products; and helping to foster and showcase a role-model type of business that other firms and new entrants could emulate. 1.4.2 sustainability this study also gathered information regarding perceptions of sustainability and the potential impacts of considering these sorts of issues on smes operating in bc’s secondary wood industry. when asked whether or not there was a business case to incorporate sustainability issues into smes’ strategies, participants responded favorably. a similar pattern was observed when participants were asked whether or not there existed a relationship between sustainable business practices and long-term competitiveness. three major themes emerged as having the greatest potential for bc’s secondary industry. the first two themes revolved around the idea of “green” promotion; that is, the promotion of the “greenness” or “environmental friendliness” of the industry itself and its products. the third theme reflected firms’ value chains as being a potential driver to smes’ (environmental) sustainability and competitiveness. the following passage exemplifies these opinions: “i think if they [the secondary industry] do not look at it [sustainability], their survival is in peril. fundamentally, i do not believe that you can conduct business in today’s world without being cognizant of the question of sustainability or environmental friendliness. i think it really comes down to the recognition that we are in an evolving [market] that does not change direction instantaneously.” another participant added: “it is a very long and complex process to start greening manufacturing. it changes every day. as there is new information, what was really environmental yesterday, today is an environmental nightmare. it is an ongoing thing and it is complicated…i would definitely say that every manufacturer today should start stepping toward that. i think it is a challenge, but i think it is a necessity. i don’t think you are to be in business in five years if you are not moving in that direction.” table 2 illustrates many of the major points made regarding promoting the “greenness” of the industry and its products, and the importance of firms’ value chains on smes’ environmental sustainability. 1.5 discussion and conclusions this study examined many of the aspects that a successful secondary wood products sector in bc will have to consider in order to ensure future success, and leads to a number of recommendations for doing so. recommendations were grounded upon the relationships that emerged within and between concepts and categories recorded during the coding processes. while themes were presented in the findings section based on a conceptual ordering, in this section, themes (and the consequent recommendations) are conveyed in a more logical, explanatory manner (see figure 3). specifically, spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 25 management skills to further develop business competencies are seen to have the most influence on firms’ future strategies. the role of external agents, such as government policy makers, industry associations, and r&d institutions, are also seen as vital for advancing these competencies. finally, the importance of incorporating environmental sustainability into business strategies is also discussed. manufacturing competencies have steadily improved in bc during the past decades with great advances in r&d, particularly in processing technologies. such advancements were diffused throughout the commodity and secondary industries. nevertheless, with limited or non-existent customer-oriented business strategies, several segments in the secondary industry were caught unprepared to compete against new entrants in an increasingly global business environment. as can be seen from the third quadrant in figure 2, advancements in the quality of business-related factors will be imperative for the future of bc’s secondary industry. for such business-related strategies to evolve requires both management skills and progressively-minded entrepreneurs. the model for a successful secondary firm in the future is one of customer-orientation. proximity, availability, and quality of fiber will not be enough to ensure advantage. a successful model will be one that attracts talent by favorable business-related policies and incentives to open and operate businesses in bc. in other words, it would need to be like any other high-end, highly technological, and knowledge-based business, with the exception that it happens to use wood as a raw materialx. the few existing value-oriented secondary wood manufactures that currently exist in bc epitomize brown and blackmon’s (2005) strategic resonance concept; that is, managers in successful firms are able to identify their target markets and tailor their manufacturing competencies accordingly. in the process, these managers are also able to internalize some of the traditional uncontrollable factors hindering business and manufacturing activities (e.g. business-oriented policies, resource-market supplies) and to integrate megatrends (e.g. sustainability) into strategy. conversely, ordinary firms generally excel table 2. themes relating sustainability and business strategies industry “greenness” product “greenness” value chain impacts “we need a strong association like [existing association] to lobby not only governments, but the world on our behalf. unfortunately, it is made up of small business and those people don’t support it as much as they should, because they don’t understand the benefit of it. we are thinking too small.” –business owner. “i think that we need to focus on niche markets and not on the mass consumer products anymore… there is still room for niche products, higherend, specialty markets, ultra-contemporary, or children’s furniture, or eco-certified furniture. there is a growing market for products that are stamp certified.” –designer. “we are seeing a major influence on the value chain. architects have a real strong desire to get the leed* points. so we have been urging our new supplier to get fsc** certified. i mean, there is no other way and we understand that they are going to proceed with that.” – operations and management executive. “there is absolutely no way that the industry, particularly the solid wood sector, does not meet the criteria of renewability…a lighter footprint. so, you are in a privileged position.” –business and r&d consultant. “we have to do it with the green bandwagon. the north americans are not going to pay for it, but the rest of the world is. we sell nothing but formaldehyde-free, green products to japan…. so we can be on the leading edge today. we have to make sure that we are starting right now and then we can lead the rest of the world with formaldehydefree green products.” –business owner. “the green building…it’s taken off, it’s going ballistic and if we don’t get on the bandwagon… in two years’ time, 50 percent of the [product] we provide will be fsc certified. we just finished putting a biomass heater and we will make sure that the glues we use are as environmentally friendly as they possibly can.” –operations and management executive. “is there a secondary industry infrastructure initiative that is supporting value-added products from a green sustainable perspective? there isn’t one that i know of. can you do it as an individual company? individual branding? possibly, if you are big enough.” –business consultant. “i think it is a huge opportunity to effectively promote secondary wood products along the lines of green sustainability compared to the alternatives that are out there. it’s green wood products compared to other alternative products in the same valueadded category, whether it is furniture or finishings or accessories or whatever.” –business and r&d consultant. “there is a business case [to incorporate sustainability initiatives into smes’ strategies], but we have to go slowly with it…the smaller people like me…will not do it as readily as the big guys who have the dollars sitting with them.” –business owner “you happen to have a product that fits most of the [renewability] criteria, you got to go with it. it may not be your prime feature, but it is one of the features, because as time goes by, it will become increasingly important and you need to practice for it when it is not as important.” –r&d specialist. * leadership in energy and environmental design, a third-party green building certification system. ** forest stewardship council, a third-party forest and chain of custody certification scheme. 26 bioproducts business 1(2) 2016 at the wrong things, either by chasing after markets in which they cannot compete, by developing and maintaining products that are unwanted or uncompetitive in the marketplace, or by responding to megatrends in tactical, as opposed to strategic, ways. these considerations lead to the first set of study recommendations for bc’s secondary wood industry. there is a need for current and new entrants to expand on managerial and entrepreneurial skills that are more business-oriented, as opposed to manufacturing-oriented. it is recommended that managers and entrepreneurs be able to: r1a. develop product bundles that are compatible with their target markets by offering higher levels of customization and diversity; r1b. offset high costs of developing and maintaining the supply of a skilled workforce with higher returns from more business-oriented, customerfocused strategies; r1c. learn from local markets and then expand into more demanding and profitable national and international markets; r1d. diversify access to capital and showcase their businesses to a host of investor types; r1e. diversify raw material markets or secure contractual relations with local suppliers. in the bc secondary wood products industry, sme management generally seems to be overly engaged in addressing daily activities, and even the most entrepreneurial need help with advancing their business strategies. for existing firms, governments and especially industry associations will need to play a bigger role in helping smes to consider and venture into export markets. successful cases could potentially then encourage others to follow suit. for new entrants, tax reliefs and incentives in the capital market would likely be a valid option to attract and retain entrepreneurial talent. bc’s governmentxi must still acknowledge the stronger political and economic influence of the commodity industry and the fact that the commodity sector is rooted in tradition and has a more entrenched culture. for example, during data collection, eventual discussions about the competitive advantage of bc’s commodity sector were commonly about the large and unorthodox role of government. these facts, coupled with bc’s generally undeveloped business conditions for secondary industries, are likely why the theme government policy ranked second in the analysis (figure 2, quadrant 2). structurally, the secondary wood industry has greater potential to be less dependent on the government. it follows then that the second set of recommendations for external stakeholders would be that: r2a. industry associations and r&d institutions focus on improving business strategies of smes by helping in the development of target markets, products, and collaborative strategies; figure 3. conceptual framework representing the study’s recommendations provincial government industry associations, r&d sustainability management, entrepreneurs target environmentally conscious markets (local and international); customer-focused product development & design; capital access diversification. • • public-private partnerships to train and upgrade labor; diversify sources or secure contractual relations with raw material suppliers. • • • manufacturing factors business factors r3 (a, b) r1 (a, b, c, d) r1 (e) r2 (b) r2 (a) spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 27 r2b. governments should be proactive and instrumental in removing barriers to skilled labor by offering public-private partnerships in training and upgrading labor. with regards to sustainability, there seems to be a tendency in the industry and among other stakeholders – including the participants of this study – to treat environmental issues as a proxy for sustainability, a much more encompassing term. even in the literature, quantitative and qualitative studies on the environmental sustainability of smes are common (talbot et al., 2001). some of these studies have shown positive relationships between environmental sustainability and sme performance (lefebvre et al., 2003; rao & holt, 2005; roy & thérin, 2007), while others have not (clement & hansen, 2002; hitchens et al., 2003). at a point in time where environmental sustainability will likely need to be addressed by most industrial sectors, the wood products industries may be at an advantageous position as far as environmental footprints are concerned. due to the natural and renewable characteristics of wood as a raw material and advances in manufacturing technologies, secondary wood industries and their products are oftentimes perceived as being ahead of substitutes on the environmental sustainability agenda. in bc, however, these advantages have yet to be capitalized upon. concepts, such as “green buildings” and “healthy housing,” should be the major drivers for a variety of secondary wood products companies (from lowto high-value-added) to incorporate environmental sustainability into their strategies. although some smes may be able tackle sustainability issues in the marketplace on their own, it makes sense for many to engage as part of value chains of larger companies selling to more environmentally conscious (niche) markets. the final recommendation states that environmental sustainability should be incorporated into firms’ business strategies, which in turn, could help firms to: r3a. promote the comparative advantage of wood products and wood industries against competing substitutes; r3b. focus on more demanding and environmentally conscious target markets, both locally and abroad. one successful firm in this study exemplifies the benefits of targeting the right markets by selling to both environmentally conscious and “regular” markets locally and abroad. this, according to the owner, helps in economic downturns, where premiums for environmentally friendly products may diminish over time. the existing literature indicates that the secondary wood industry in bc is smaller and lags behind other competing regions in terms of value-creation (jaakko poyry, 2001; wilson et al., 2001; kozak & maness, 2001; delong et al., 2007). these studies also point to the fact that the industry has faced constant challenges in accessing basic inputs, like raw materials and labor. access to these inputs was also found in this study to still be a hindrance for most firms. however, results from this study suggest that management and entrepreneurship are likely more critical factors. this is confirmed by examples of existing successful firms and their ability to overcome most of these challenges by aligning manufacturing competencies with their business strategies. management of these forward-thinking firms has also recognized the role of sustainability issues to their firms’ future strategies. as such, this study suggests that sustainability should be incorporated into firms’ core business strategies in the future. ultimately, and as a contribution to the existing body of knowledge, this study indicates that the ability to attract forward-thinking and entrepreneurial managerial capacity is perhaps the most critical factor for the future of bc’s secondary wood industry. skillful management is required to increase firms’ competitiveness with strategic thinking that internalizes external obstacles and integrates issues of sustainability. 1.5.1 future research results from this study can be used as an entry point for the development of more formal theories that could expand the framework put forth for the studied industry into a more generalizable scheme. the emergent themes and their respective interrelationships may also serve as the basis for more quantitative types of research aimed at validating the interrelationships observed in this study. for example, if management skills are pivotal for the future success of this industry, research assessing the industry’s attractiveness (or the lack thereof ) for undergraduate and graduate business management students ought to be undertaken. moreover, the province’s extant sectoral innovation institutions, such as r&d institutions and universities, could play a greater role by transferring not only manufacturing and operations competencies, but also business-oriented ones. in this vein, future research could also include the efficacy 28 bioproducts business 1(2) 2016 of business-oriented knowledge (if any) that is being mobilized into the management of existing firms. 1.5.2 study limitations data used in this study was part of a larger research project that was carried out in 2008 and 2009. although bc’s secondary wood products sector remains largely unchanged since then, implying that the aforementioned themes are current, contextual circumstances related to industrial, fiscal, and trade policies, as well as the global economic backdrop at the time of the study may have influenced the data from fieldwork. the research processes used in this study aimed at developing a conceptual framework that reflects the opinions of a specific group. as such, it is intended to explain phenomena of this specific population (e.g. bc’s secondary wood products industry) and is, therefore, limited as far as inferences beyond the study context are concerned. the final sample contained a limited number of managers or owners representing the industry. although interviewees referred to these participants as “successful cases” during the snowballing sampling process, the sample size was limited and additional research on this topic would benefit from a larger number 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(1996). “human resource management, manufacturing strategy, and firm performance” academy of management journal, vol. 39 no. 4, pp. 836-866. 1.7 endnotes i see, for example, the british columbia government’s “forestry revitalization plan,” “generating more value from our forests,” and “working roundtable on forestry,” the forest innovation investment’s “value-added strategy,” the “vision 2020” document from the forest products association of canada, or the “wood works!” program from the canadian wood council. ii previous business megatrends include, for instance, the quality and information technology movements (lubin & esty, 2010). spetic et al. — critical factors of competitiveness for the british columbia secondary wood products industry 31 iii in this study, the term sustainability refers to actions in the form of sustainable business practices taken by organizations in response to environmental and social demands. iv the term “long” is used here, but the study also used interviewing techniques based on other, similar methods, such as in-depth and focused interviews (weiss, 1994; gilchrist & williams, 1999). v key informant sampling involves selecting participants having an “information-rich connection with the research topic…[and] special knowledge and access to perspectives or observations denied the researcher through other means” (gilchrist & williams, 1999, p. 73), thus serving as convenient starting points. vi following grounded theory procedures, questions were complemented as gradual sampling continued and as relevant concepts and categories emerged. a complete copy of the interview guide can be provided by contacting the authors. vii the computer software used for data analyses allowed for direct coding of digital audio files. this resource was used in addition to the transcribed data and also served as a means of improving the study’s reliability. viii in this study, explanations are provided that are group-specific, therefore, generalizability is not the main objective. consequently, issues of external validity are not as much of a concern as internal validity and reliability (see strauss & corbin, 1998 and miles & huberman, 1994). ix for the most important theme, management skills, there were several hundred open codes within 36 different references (references here refer to the sources of data that were coded and included all interviews, field notes, and existing literature). in order to determine the relative importance of each theme (i.e., the size of each theme’s circle), management skills, with the most references, was set as 1, and the size of the remaining themes were set in relation to this reference as follows: government policies 0.7; labor 0.6; raw materials 0.5; target markets 0.5; products 0.4; and stakeholders 0.4. x the secondary wood products sectors of countries like denmark and germany epitomize such highly technological and knowledgebased business models, where strong links between local suppliers and manufacturers facilitate product and process innovations. xi it is worth noting the significant role placed on governments in the bc forestry context. this is likely related to the enormous influence which the government has had, as the primary owner of the publicly held resource, in the development of bc’s commodity industry. xii the amount of data from the successful cases, not the number of successful ones, coupled with data triangulation (the use of multiple stakeholders), improves the legitimacy of the data by confirming whether the reasons for the perceived success are shared among other stakeholders as a viable strategy or emerged simply by chance. abstract second generation (cellulosic) biofuels provide an attractive solution to reduce the dependence on fossil fuels and to address concerns about competition with food crops and land use change confronting the u.s. first generation biofuels. however, the production of cellulosic biofuels has not yet become widely commercialized. the integrated production of second generation cellulosic biofuels and biochemicals, that is, the integrated cellulosic biorefinery (icbr), offers an opportunity to effectively utilize feedstock fractions, diversify value stream outputs, improve financial performance, and mitigate risks. a dearth of literature exists addressing potential barriers to the scale-up of this industry. thus, this study deployed a mixed methods approach with an initial qualitative phase for construct development, followed by a quantitative phase for construct confirmation and validity. in phase i, a qualitative e-survey was conducted among eighteen academic and industrial experts, which identified a list of eight barriers to the scale-up of the icbr. in phase ii, 228 experts (34% response rate) responded to the quantitative surveys, which included rating (5-point likert-type scale from 1=not a barrier to 5=very high barrier) and ranking (top three highest barriers) questions of the eight identified barriers. rating results, validated by ranking results, showed that competition vs. petro-chemicals, high production costs, and policy uncertainty represented the top three barriers to the u.s. icbr scale-up. also, phase i experts indicated that consistent government funding & incentives and, to a lesser extent, new technology development and education of end-use consumer will be required to address these barriers. overall, results highlight the mixed methods exploratory research approach and contribute to extant debates on the future commercial development of the u.s. icbr. keywords: integrated cellulosic biorefinery; cellulosic biofuels; energy security; food vs. fuel; renewable fuel standard (rfs); mixed methods research mixed methods research of integrated cellulosic biorefinery (icbr) scale-up barriers in the united states: a case study min chen1 and paul m. smith2* 1 senior wood scientist, phd, troy chemical corporation, florham park, nj 07932, usa 2 professor of bioproducts marketing, department of agricultural and biological engineering, the pennsylvania state university, university park, pa 16802, usa * corresponding author: email: pms6@psu.edu acknowledgements: this work, as part of the northwest advanced renewables alliance (nara), was funded by the agriculture and food research initiative competitive grant no. 2011-68005-30146 from the usda national institute of food and agriculture. bioproducts business 3(5), 2018, pp. 51-62. issn 2378-1394. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-005 1.0 introduction due to increasing concerns over greenhouse gas (ghg) emissions from the combustion of fossil fuels and associated climate change impacts, the u.s. department of state (dos) submitted an intended nationally determined contribution (indc) to the united nations framework convention on climate change (unfccc) to cut net ghg emissions by 26-28 percent below 2005 levels by 2025 (the white house, 2015). at the g20 summit held on september 4, 2016, the u.s. formally committed to the paris climate accord, which sets a long-term goal of keeping the increase in global average temperature to well below 2°c above the pre-industrial level (chemnick, 2016; european commission, 2016). the u.s. will continue its commitments under the agreement through november 4, 2020, in accordance with article 28 of the paris agreement, even though the current administration announced a u.s. withdrawl from the agreement on august 4, 2017. supported by these government policies, the quest for environmentally benign sources of energy for our needs has become urgent in recent years. a variety of renewable energy sources are being studied in the u.s., including solar, 52 bioproducts business 3(5) 2018 wind, hydro, nuclear, and biomass. renewable biofuels recovered from biomass are key to promoting rural economic development while mitigating several key negative aspects associated with petroleum products, including unreliable global supply, price volatility, and carbon emissions (gegg et al., 2014). the u.s. biofuels industry is currently dominanted by first generation biofuels produced directly from crops, e.g. corn-grain ethanol and biodiesel, which account for over 90% of the total renewable biofuels within the u.s. (chen et al., 2017; environmental protection agency, 2015). however, first generation biofuels seem to create some controversy among scientists and policymakers. concerns exist about the sourcing of feedstocks, including competition with food, land use change, and the impact of edible feedstock on biodiversity (chen et al., 2016; naik et al., 2010). as a result, many industrial, governmental, and research interests have a renewed interest in second generation (cellulosic) biofuels (brown & brown, 2013; mohr & raman, 2013). compared to first generation biofuels, cellulosic biofuels provide a potential solution to address the food-fuel and land use debates by utilizing non-food feedstocks that can grow on lands that are not necessarily suitable for food crops, while meeting the strigent targets of ghg emission reductions. nevertheless, u.s. cellulosic biofuels have yet to become widely commercialized due to a variety of issues, including high production costs, policy uncertainty, and strong competition from petroleumbased counterparts (balan et al., 2013; chen & smith, 2017; chen et al., 2016; fitzpatrick et al., 2010). on july 5, 2017, the environmental protection agency (epa) proposed volume requirements under the renewable fuel standard (rfs) program for biofuels for calendar year 2018. according to this proposal, the production volume of cellulosic biofuel will be reduced by 30% from 312 million gallons (mg) in 2017 to 238 mg in 2018 due to unexpected slow development (environmental protection agency, 2017; lane, 2017). facing these issues, several researchers have suggested a short-to-medium term strategy for the sustainable development of the u.s. cellulosic biofuels industry; that is, to integrate the production of biochemicals with cellulosic biofuels (bozell, 2008; bozell & petersen, 2010; cherubini, 2010; cherubini & strømman, 2011; fitzpatrick et al., 2010). biochemicals represented approximately 4% of u.s. chemical production in 2014 (golden et al., 2015) and are forecasted to account for at least 45 percent of all u.s. chemicals by 2025 (bardhan et al., 2015). according to a 2014 usda report, the u.s. production of bio-based chemicals could generate $775 million in added value by 2017 and $3 billion per year by 2022 (nexant, 2014). the emerging biochemicals industry may also contribute to the u.s. rural economy by providing 19,000 jobs in 2022 (nexant, 2014). more recently, according to a new biotechnology innovation organization (bio) report, the renewable chemical industry is estimated to make up 11 percent of the $3,401 billion global chemical market by 2020 (de guzman, 2016). as a result, this integrated cellulosic biorefinery (icbr) scenario can contribute to the effective utilization of feedstock fractions, to diversified value stream outputs, to the improvement of financial performance, and to the mitigation of potential market and political fluctuations (bozell, 2008; bozell & petersen, 2010; fernando et al., 2006; fitzpatrick et al., 2010). to date, research on icbr has largely been conducted to improve and optimize the performance of individual conversion processes with techno-economic studies (andiappan et al., 2015; dang et al., 2016; ng et al., 2013). however, apart from technology development, a variety of issues should be taken into acount to commercialize icbr, such as political, environmental, and market issues. the overall goal of this paper is to develop a list of major barriers and potential solutions to the scale-up of the u.s. icbr and to quantitatively assess the relative degree that these barriers inhibit the commercialization of u.s. icbr via a mixed methods research approach. 2.0 research design this research deployed a mixed methods sequential exploratory design for “developing and testing a new instrument” (creswell & clark, 2011; dillman et al., 2014; jick, 1979; sandelowski, 2000). specifically, this research design is characterized by an initial phase of qualitative data collection and analysis for issue and/or factor identification, followed by a phase of quantitative data collection and analysis for factor confirmation and validation (fig. 1). phase i conducted a pilot study with “select” academic and industrial experts to develop a list of barriers to the scale-up of the u.s. icbr and to explore potential solutions to identified barriers. phase ii implemented a quantitative study with nationwide academic and industrial experts to evaluate and validate identified barriers via rating and ranking questions. chen and smith — mixed methods research of integrated cellulosic biorefinery scale-up barriers in the united states: a case study 53 2.1 phase i: qualitative pilot/exploratory study 2.1.1 the pool of experts a nonprobability purposive sampling method was employed to reach a targeted sample quickly and to ensure the assembly of a sample with known or demonstrable experience and expertise in the u.s. bioenergy, biofuel and bio-based products areas (trochim, 2000). this qualitative pilot study identified eighteen experts from universities, national labs, and the industrial sector through exploratory documentary analysis and internet searches (table 1). university and industrial experts were identified by searching recent publications (2010 to 2015) via google scholar with the following four keywords/phrases: advanced biofuels, cellulosic biofuels, second generation biofuels, and integrated biorefinery. the ten most cited articles for each keyword were used to identify “experts.” overall, forty articles published in peer-reviewed journals, including alche journal, biofuels, bioprocessing and biorefining (biofpr), biomass & bioenergy, bioresource technology, biotechnology and bioengineering, chemical engineering journal, chemical engineering research and design, energy policy, energy & environmental science, environmental science & technology, fuel, green chemistry, renewable energy, and renewable & sustainable energy reviews, were selected. of the forty articles, only the corresponding authors were included in our sample frame, resulting in forty identified experts who received our qualitative survey. ten university experts and five industrial experts participated in this pilot study, resulting in a response rate of 37.5 percent (15/40). in addition, government experts were solicited from the four u.s. national labs devoted to research and development of renewable liquid transportation fuels: (1) the forest products laboratory in madison, wi; (2) the national renewable energy laboratory in golden, co; (3) the oak ridge national laboratory in oak ridge, tn; and (4) the pacific northwest national laboratory in richland, wa. experts from three of the four (75%) national labs participated in the pilot study. 2.1.2 factor measurement and data collection the data for this pilot study were obtained from an online survey (e-survey) conducted june to july, 2015 via surveymonkey® to decrease time and costs and to provide access to geographically dispersed subjects (burns, 2010; james, 2007). a three-email strategy was applied for the data collection. the first email included problem: barriers to the commercialization of integrated cellulosic biorefinery (icbr) / integrated production of cellulosic biofuels and biochemicals phase i: qualitative pilot/exploratory study phase ii: quantitative confirmatory study objective: develop and collate potential barriers confronting the commercialization of the u.s. icbr industry & explore potential solutions to these identified barriers. objective: quantitatively evaluate and validate barriers to icbr commercialization via rating and ranking questions. implications: • results highlight issues to existing industrial players and new entrants when designing and managing an icbr system; • findings may be used by government researchers to better inform policies aimed at encouraging this industry. figure 1. mixed methods design for research on barriers to the commercialization of integrated cellulosic biorefineries. 54 bioproducts business 3(5) 2018 an embedded url link to a surveymonkey® website, followed by two reminder emails at one-week intervals (dillman et al., 2014). the e-survey instrument consisted of two open-ended questions designed to address the following topics: (1) barriers to the integrated production of biochemicals and cellulosic biofuels; and (2) potential solutions to identified barriers. thematic analysis was deployed for processing the qualitative information and coding the survey results into categories (boyatzis, 1998). in this study, three coders, consisting of graduate students at pennsylvania state university, were used. this three-coder protocol increases the reliability of thematic analysis and serves as a tie-breaking mechanism. in cases in which coders did not agree, themes were assigned by the two-thirds majority.1 2.2 phase ii: quantitative confirmatory study 2.2.1 study population to test and validate the identified variables confronting the scale-up and development of the u.s. icbr, expert perspectives throughout the u.s. biorefinery supply chain from feedstock to end-use value streams were pursued. the data used for analysis in phase ii were collected via quantitative surveys conducted from july to november, 2015. the sample population for this study included all attendees of the 2015 annual meetings of the seven u.s. department of agriculture (usda) national institute of food and agriculture (nifa) coordinated agricultural projects (caps) (table 2) (nifa, 2015). to balance industrial expert group representation, attendees to the following two industrial conferences were added to our sample population: (1) the 5th national advanced biofuel conference & expo (nabc&e) and (2) the 12th advanced bioeconomy leadership conference (ablc) (table 2). the nabc&e is tailored to industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules. the ablc provides a venue for senior leadership in the advanced bioeconomy focusing on advanced low carbon fuels, chemicals, and materials, plus advanced policies and financing strategies. the phase ii quantitative surveys were administered to 678 academic and industrial expert participants, resulting in 228 respondents (34% response rate) (table 2). the samples analyzed in this paper are non-probability contable 1. list of participants for phase i – qualitative pilot/exploratory study. participant sector expertise/job title a university technology of bio-based chemicals & products b university technology of integrated cellulosic biorefineries c university technology of cellulosic biofuels d university energy systems of biofuels e university technology of cellulosic biofuels & biorefineries f university economics of bio-based products g university policy of cellulosic biofuels h university technology of bio-based chemicals i university policy of bio-based products j university policy of cellulosic biofuels k national lab technology of cellulosic biofuels & bio-based chemicals l national lab environmental science of biofuels & bioproducts m national lab technology of cellulosic biofuels & biorefining n industrial consultant technology and policy of biofuels & biochemical o industrial consultant energy systems of biofuels p industrial consultant energy systems of biofuels q industrial consultant technology of biofuels & biochemical r industrial producer ceo of bio-based chemicals & products plant 1 if the three coders had different interpretations, they were required to provide one general theme after further discussion. however, this did not apply to our study. chen and smith — mixed methods research of integrated cellulosic biorefinery scale-up barriers in the united states: a case study 55 venience samples which, arguably, represent a unique set of knowledge and experience throughout the u.s. biorefinery supply chain from feedstock logistics, process development, economic/business, and sustainability analysis (chen & smith, 2017). 2.2.2 factor confirmation and data collection based on campbell and fiske (1959) and cuzzocrea and sawilowsky (2009), a multitrait-multimethod matrix (mtmm) was proposed as a valid method to measure each of several traits by each of several methods to ensure construct validity. the semi-structured survey instrument for phase ii consisted of rating questions designed to examine the degree of each identified barrier from phase i. a follow-up ranking question was designed to force differences which may not have been produced in the rating questions (dillman et al., 2014) and to validate the relevance of these barriers to the integrated production of biofuels and biochemicals (campbell & fiske, 1959; cuzzocrea & sawilowsky, 2009). administration of the quantitative surveys included both onsite paper-based surveys during each 2015 annual afri cap meeting and industrial conference, plus follow-up e-surveys, administered within a 4-week window following each venue, to increase response rates and address nonresponse bias issues. to assess non-response bias, two separate early-late respondent comparisons were conducted using a two-sample t-test on select survey questions: (1) those who responded to the initial onsite paper-based surveys (early respondents; n=147) were compared to the follow-up e-survey (late respondents; n=89); and (2) e-survey early respondents (1st email; n=52) were compared to e-survey late respondents (2nd and 3rd email; n=37). this methodology assumes late respondents generally behave more like non-respondents and therefore, may be used as a proxy for non-respondents (armstrong & overton, 1977; miller & smith, 1983; trc, 2009; welch & barlau, 2013). the variables used for this comparison were years of experience and two measures of barriers to the integrated production of cellulosic biofuels and biochemicals: (1) the degree of competition vs. petro-chemicals and (2) policy uncertainty. the t-test indicated that, with 95% confidence, no significant differences were found between early and late respondents on their mean years of experience and perceptions of the two identified barriers, thus, setting aside nonresponse bias concerns. according to modern scientific studies (gary, 2007; national center for research methods, 2009; trc, 2009; welch & barlau, 2013), post-stratification is a technique to adjust for nonresponse bias by weighting, which includes two essential steps: (1) identifying a set of “control totals” for the population that the survey ought to match; and (2) calculating weights to adjust the sample totals to the control totals. in this study’s quantitative survey, the population and sample distribution of usda caps and industrial conferences were available. the weights for each program or conference were calculated as [“weight = population % / sample %”] and applied to the responses to reflect the total sample population. unadjusted and weighting-adjusted responses on the three variables previously tested by early-late respondent comparisons were also compared with a two-sample ttest. no significant difference at the 0.05 level was found between unadjusted and weighting-adjusted responses. therefore, no evidence of significant nonresponse bias exists for this sample. table 2. academic and industrial participants of seven usda coordinated agricultural projects (caps) and two industrial conferences. regional caps and industrial conferences academic researchers (& participants) industrial experts (& participants) advanced hardwood biofuels northwest (ahb) 82 (n=24) 14 (n=5) bioenergy alliance network of the rockies (banr) 63 (n=7) 6(n=1) cenusa bioenergy 57 (n=13) 8 (n=6) southeast partnership for integrated biomass supply systems (ibss) 74 (n=26) 6 (n=3) northwest advanced renewable alliance (nara) 98 (n=47) 22 (n=5) the northeast woody/warm-season biomass consortium (newbio) 83 (n=52) 6 (n=5) sustainable bioproduct initiative (subi) 54 (n=9) 5 (n=1) national advanced biofuel conference & expo (nabc&e) 40 (n=14) the 12th advanced bioeconomy leadership conference (ablc) 60 (n=10) total: 511 (n=178) 167 (n=50) 56 bioproducts business 3(5) 2018 3.0 results and discussion this section starts with the barriers identified through exploratory qualitative open-ended survey questions with the phase i academic and industrial participants (n=18). secondly, a discussion considers potential solutions to salient icbr scale-up barriers from the phase i qualitative pilot survey. thirdly, we compare the average rating of the identified barriers based on the responses from the phase ii survey respondents (n=228), followed by the ranking results to validate the rating results and to better delineate the top three barriers in a meaningful and interpretable way. 3.1 identification of barriers to the icbr from phase i (qualitative pilot study) question: in your opinion, what is the highest barrier to the integrated production of cellulosic biofuels and biochemicals? this open-ended question provided insightful thoughts regarding the highest perceived barriers to the integrated production of cellulosic biofuels and biochemicals from the phase i experts (n=18). the authors interpreted responses to suggest eight common icbr scale-up barriers (fig. 2). many of these barriers were linked to each other. for instance, technology uncertainty was associated with capital availability, and policy uncertainty influenced direct investments into the icbr. 3.1.1 new technology availability four of the eighteen expert participants indicated new technology availability as the highest integrated production barrier (fig. 2). the integrated production of both cellulosic biofuels and biochemicals requires additional processes to convert lignocellulosic biomass to renewable biochemicals. also, two of the participants mentioned that technology is still at early stages of development and that additional challenges will be faced in transitioning to full, industrial scale production. “adding coproduct production potentially involves more ‘new’ steps that will require time/effort to learn how to operate well.” (participant a) “the availability of broad based technology to carry out production of chemicals, and the technology still has to be proven at large scale – struggling to get beyond pilot stage still –needs clear independent evidence of performance.” (participant l) 3.1.2 capital availability four respondents acknowledged that the icbr faced the challenge of capital availability (fig. 2). of these, three respondents believed that unproven new technology was linked to the level of investment or funding. “adding another production process increases biorefinery capital cost – imposes a bigger financing hurdle to overcome.” (participant c) figure 2. perceived barriers to the integrated production of cellulosic biofuels & biochemicals solicited from the qualitative pilot study with experts [n=18]. compatibility with existing infrastructure process/market expertise competition vs. petro-chemicals process complexity high production costs policy uncertainty capital availability new technology availability number of respondents (#) 0 1 2 3 4 5 chen and smith — mixed methods research of integrated cellulosic biorefinery scale-up barriers in the united states: a case study 57 “from an industry perspective, capital availability will be the major barrier to the integrated manufacturing of bioproduct and biofuel, and investors are hesitant to invest in technologies that have not been set-up for commercial manufacture yet.” (participant r) 3.1.3 policy uncertainty policy uncertainty was acknowledged by three participants as the highest barrier to the integrated production scenario (fig. 2). also, policy uncertainty was associated with a negative impact on attracting investment. “stable and consistent policy will attract longterm investment, which is critical to drive forward biofuel technology as well as biochemical sector.” (participant g) 3.1.4 high production cost another three of the eighteen expert participants considered high production costs as the highest barrier to integrated cellulosic brs (fig. 2). “…the cost of biofuels and bio-based chemicals derived from integrated cellulosic biorefineries given current technologies will be higher than that of petrochemically-derived materials or non-cellulosic biobased chemicals.” (participant h) 3.1.5 additional barriers additional barriers to the scale-up of integrated cellulosic biorefineries included process complexity, competition vs. petro-chemicals, product/market expertise, and compatibility with existing infrastructure.2 3.2 potential solutions to the barriers to icbr from the qualitative pilot study in order to explore potential solutions to the significant barriers to the commercialization of the icbr identified in phase i, and thus, to develop managerial implications, the phase i pilot study concluded with an open-ended question as follows: question: can this highest barrier be overcome? how so or why not? according to the responses from eighteen expert participants, three common solutions were identified, including consistent government funding & incentives, new technology development, and education of the end-use consumer. 3.2.1 consistent government funding & incentives eleven of our eighteen participants indicated the importance and necessity of consistent government funding & incentives for a successful integrated cellulosic br scenario. most participants suggested that policy stability was critical to attract long-term investment. one participant advocated the need of equal government policies for both biofuels and biochemicals. “yes. political commitment can drive investment and support for technology development through necessary loan guarantee or other forms of support.” (participant l suggested a solution to new technology availability) “yes. need consistent and long-term government policies that level playing field of biofuels and bioproducts production. consistent policy can help in access to capital. costs can be reduced given research and development funding.” (participant m suggested a solution to high production costs) “yes. the government needs to encourage investors to invest in these integrated bioproduct/biofuel technologies just as it has encouraged them to invest in traditional corn ethanol biorefineries. additional boost in investment in research on developing/ improving integrated bioproduct/biofuel processes is required. (participant r suggested a solution to capital availability) also, government plays an important role – through the taxation of carbon – in contributing to economic competitiveness of integrated cellulosic brs. “yes. if there is economic incentive to do so, e.g., by implementation of policies that incentivize such production, e.g., imposition of attributes of carbon tax. foremost, much greater policy certainty is needed, certainty that the improved sustainability attributes of cellulosic biofuels and biochemical technology will be valued such that their higher costs of production compared to current (fossil fuelbased) technologies can be justified.” (participant j suggested a solution to high production costs) 3.2.2 new technology development new technology development was the second most frequently mentioned solution to the successful integrated production of cellulosic biofuels and bio-based chemicals. four participants stated that new technol2 each variable was mentioned by only one expert; therefore, no statement was provided. 58 bioproducts business 3(5) 2018 ogy development, such as r&d in enzymes, conversion yields, and microbial technology, will ensure the scale-up of integrated cellulosic biorefineries. meanwhile, the cooperation between industry and academic sectors were suggested by participant b as a promising solution to the technological barrier confronting the integrated production of cellulosic biofuels and biochemical. “yes, the scale-up needs new technology development, which could be achieved via cooperation and engagement between industry and academia.” (participant b suggested a solution to process complexity) 3.2.3 education of end-use consumer one participant mentioned the lack of customer preference in terms of price premium when comparing bio-based chemicals with petroleum-based alternatives and emphasized the importance of education of enduse consumer regarding the environmental benefits of bio-based products. 3.3 confirmation of barriers to the icbr by phase ii rating (quantitative confirmatory study) in phase ii’s quantitative paper-based surveys and esurveys, the study’s 228 respondents were asked to rate the relative “degree” of the eight barriers by answering the following fixed-format question: question: please indicate the degree to which you consider the following 8 factors as barriers to the integrated production of biochemical and cellulosic biofuels.3 this study’s 221 participants, collectively, rated the eight barriers as moderate to high, which underscores the relevance of the eight factors, identified from the former pilot study, to the integrated production of biofuels and biochemicals. overall, competition vs. petro-chemicals, high production costs, policy uncertainty, and capital availability were rated as significantly higher barriers4 versus the remaining four, with overall mean values of 3.97, 3.89, 3.86, and 3.75 (table 3). the high production costs of cellulosic biofuels and biochemicals was highlighted by a cost competitiveness analysis in a recent usda report (nexant, 2014), which stated that with higher production costs, cellulosic biofuels and biochemicals are less likely to be economically competitive with traditional petroleum-based alternatives. policy uncertainty, the third highest barrier, is supported by several studies indicating the adverse impact of unreliable policies on the large-scale production of bio-based chemicals (carus et al., 2011; carus & dammer, 2013). capital availability was rated as the fourth highest barrier overall, which highlights the difficulty for the business community to attract capital investment with nascent technology and an uncertain political environment (maity, 2015). the second tier of icbr scale-up barriers included process complexity (3.48), new technology availability (3.40), compatibility with existing infrastructure (3.39), and product/market expertise (3.32) (table 3). these results are in line with existing literature suggesting that the availability of new conversion processes for biochemicals and the compatibility with existing infrastructure are critical to the commercial development of the icbr (bozell & petersen, 2010; de jong et al., 2012; richard, 2010). also, the fuel and chemical value stream outputs of the icbr will require unique knowledge about products, channels, and end-use consumers. respondents were organized according to their selfdescribed expertise into four groups: (1) feedstock (f); (2) processing (p); (3) economics/business (e/b); and (4) sustainability (s) (table 3). significant differences between respondent group mean values were found at the p=0.10 significance level (using anova) for three out of the eight drivers identified in this study (table 3). in particular, economics/business experts (e-b) largely viewed potential icbr industry scale-up barriers differently than the other three groups. e-b participants viewed product/market expertise as relatively higher impeding factors compared to the other three expert groups. on the other hand, e-b and sustainability (s) experts rated competition vs. petro-chemicals as a lower obstacle to integrated cellulosic br than feedstock (f) specialists and processing (p) scientists. meanwhile, processing scientists (p) rated process complexity as a significantly higher barrier to the commercialization of icbr than the other experts. the comparison among research groups provides a basic understanding of the commonality between bioenergy researchers. 3 the degree of these eight barriers were measured using a 5-point likert-type scale, from 1=not a barrier to 2=low barrier to 3=moderate barrier to 4=high barrier to 5=very high barrier. 4 using pairwise comparisons based on two-sample t-tests at the p=.10 level. chen and smith — mixed methods research of integrated cellulosic biorefinery scale-up barriers in the united states: a case study 59 3.4 validation of barriers to the icbr by phase ii ranking (quantitative confirmatory study) a follow-up ranking question was designed to better explain and validate the rating scale responses regarding potential barriers to the scale-up of the u.s. icbr (dillman et al., 2014). question: please indicate the top 3 highest barriers to integrate the production of biochemicals into a second generation (cellulosic) plant, by using the pull-down menu of the 8 barriers listed in former rating question. all responses were given a value weighting of 3 points for the “#1 ranked commercialization barrier,” 2 points for the “#2 ranked commercialization barrier” and 1 point for the “#3 ranked commercialization barrier.” interestingly, the three highest rated barriers to integrated cellulosic biorefinery (table 3) were also identified as the highest ranked barriers in figure 3, providing a measure of construct validity. competition vs. petro-chemicals was the #1 ranked “highest barrier” by 56 expert participants and with a cumulative score of 239 when participants were forced into a rank-ordering (fig. 3). the second ranked commercialization barrier table 3. the mean value of the rating1 of the eight barriers to the integrated production of biochemicals and cellulosic biofuels and significant differences of perceived barriers among four participant categories: feedstock (f), processing (p), economics/business (e-b), and sustainability (s). overall (n=2212) f (n=85) p (n=71) e-b (n=39) s (n=26) scale-up barriers mean value sig.3 pairwise comparisons4 1. competition vs. petro-chemicals 3.97 4.08 4.10 3.68 3.65 0.031 p, f > e-b, s 2. high production costs 3.89 4.01 3.80 3.82 3.88 0.393 3. policy uncertainty 3.86 3.87 3.86 3.81 3.88 0.992 4. capital availability 3.75 3.71 3.79 3.84 3.60 0.730 5. process complexity 3.48 3.36 3.69 3.42 3.38 0.071 p > f, s, e-b 6. new technology availability 3.40 3.33 3.59 3.26 3.35 0.172 7. compatibility with existing infrastructure 3.39 3.44 3.39 3.37 3.30 0.866 8. product/market expertise 3.32 3.32 3.29 3.55 3.04 0.074 e-b > s pairwise comparisons4 1-4>5-8 1,2>3-8; 1-7>8 1>5-8; 1-7>8 2>3-8 1-3>4-8 1 rating was measured using a 5-point likert-type scale, from 1=not a barrier to 2=low barrier to 3=moderate barrier to 4=high barrier to 5=very high barrier. 2 seven incomplete responses were deleted, resulting in 221 responses entering the final analysis. 3 based on a parametric analysis of variance (anova) test, bold = significant at the 0.10 level. 4 based on a two-sample t-test at the 0.10 significance level. 56 69 91 107 111 159 177 239 product/market expertise (n=9) compatibility with existing infrastructure (n=12) process complexity (n=10) capital availability (n=14) new technology availability (n=25) policy uncertainty (n=32) high production costs (n=34) competition vs. petro-chemicals (n=56) cumulative score #1 ranked barrier to icbr scale-up 0 100 200 300 figure 3. number of “#1 ranked commercialization barrier” and cumulative score for the eight barriers by all respondents [n=204]. 60 bioproducts business 3(5) 2018 was high production costs with a cumulative score of 177, followed by policy uncertainty with a cumulative score of 159 (fig. 3). 4.0 conclusions cellulosic biofuels represent a promising solution to reduce u.s. dependence on fossil fuels and increase energy security, while addressing the food-vs.-fuel debate confronting the u.s. corn-grain ethanol industry. significant progress has been made in the last decade with respect to research and development. however, the u.s. cellulosic biofuels industry has yet to become widely commercialized due to a variety of reasons, such as high production costs, policy uncertainty, and strong competition from petroleum-based fuels. the integrated cellulosic biorefinery scenario provides many practical benefits including the effective use of feedstock fractions, diversified value stream outputs, improved financial performance and risk mitigation. overall, the results of this study illustrate the applicability of the mixed-methods exploratory sequential design for the u.s. cellulosic biorefinery industry. specifically, the phase i qualitative e-survey, administered to eighteen “select” experts, identified eight barriers confronting the commercial development of the u.s. integrated cellulosic biorefinery (icbr) (producing both cellulosic biofuels and biochemicals). in phase ii, 228 academic research and industrial experts from seven usda caps and two pertinent industrial conferences confirmed the importance of these eight barriers by rating them as moderate to high. most importantly, results from a combination of rating and ranking questions revealed that the top three successful scale-up barriers to the icbr include competition vs. petro-chemicals, followed by high productions costs and policy uncertainty. while mixed methods research can provide rich insights into the barriers to the integrated production of cellulosic biofuels and biochemicals in the united states, these results may not be generalizable to the worldwide cellulosic biorefinery industry as a whole. the types of barriers are likely to vary across different geographic, political, and socioeconomic contexts. the comparison among research groups provides a basic understanding of the commonality between bioenergy researchers. this study’s results also highlighted the differences among self-described participant groups. in particular, economics/business experts rated product/ market expertise as a relatively higher impeding factor compared to the other three expert groups, and viewed competition vs. petro-chemicals as a significantly lower obstacle to the icbr scale-up versus feedstock specialists and processing scientists. meanwhile, processing scientists rated process complexity as a significantly higher barrier to the commercialization of the icbr than the other experts. the identified perceptional differences among participants regarding the factors confronting the u.s. cellulosic biofuels industry are understandable since each expert group has their own research focus and interests. these findings also highlight the significance of examining issues from multiple perspectives and highlight the value of the integrated usda nifa cap research program. this paper highlights a number of implications for existing industrial players, new entrants and policymakers. icbr success is perceived to require supportive and consistent government funding & incentives. as discussed in this study, the successful icbr calls for a level playing field of policy support for both biofuels and biochemicals. among the government policies and incentives, loan guarantees, r&d funding and monetizing carbon were suggested to help renewable biofuels and biochemicals achieve cost-competitiveness with petroleum-based counterparts. additionally, competition with petroleum-based alternatives requires new technology development to reduce overall production costs, and more importantly necessitates the education of 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(2013). addressing survey nonresponse issues: implications for ate principal investigators, evaluators, and researchers. university of colorado boulder. retrieved from http://www.colorado.edu/ibs/decaproject/pubs/survey%20nonresponse%20issues%20implications%20for%20 ate%20pis%20researchers%20%20evaluators.pdf abstract oriented strand board (osb) manufacturers would like to reduce panel weight to save on costs and provide a lighter panel for handling during construction. this study explored the possibility of making a lighter and cheaper oriented strand board (osb) through the addition of lignin-retained cellulose nanofibers (lcnf). the main novelty of this study was that we created a standardized “cost ratio” table, which allows for a company to take their confidential adhesive and lcnf costs and easily determine if there is a projected increase or decrease in panel material costs (%) for lighter weight panels. to summarize the methodology, engineering and multivariate statistical methods were first used to develop predictive models of panel performance in the presence of a lower density and increased lcnf, for various adhesive amounts. next, we used these models to calculate the amount of materials needed to achieve the same strength or stiffness. we then calculated the recipe costs for each scenario generated by the model. our models revealed that a maximum density reduction of 0.05 g/cm3 might be possible if the cost of lcnf (solid basis) is equivalent to pmdi (1:1 ratio); conversely, it was determined that lcnf was not cost effective if it was 7 times more expensive than pmdi (7:1 ratio). keywords: lignin, nanocellulose, low density, osb, techno-economic cost analysis of lightweight wood panels strengthened with lignincellulose nanofibrils 1 forest products development center, school of forestry and wildlife sciences, auburn university, auburn, al usa * corresponding author. email: bkv0003@auburn.edu; tel: 334-844-1088 acknowledgements: this work was supported by the hatch grant [project number ala013-1-17004] titled development of new wood composites for packaging applications, in which, osb is used for pallet or crate applications. materials for this work were also supported by a donation from regions bank, and the corresponding author’s time was a reflection of the regions bank professorship, which was donated to encourage faculty to develop new products. brian k. via1* and maria s. peresin1 bioproducts business 5(6), 2020, pp. 63–68. issn 2378-1394 https://doi.org/10.22382/bpb-2020-006 1. introduction oriented strand board (osb) manufacturers would like to reduce panel weight to save on costs and provide a lighter panel for handling during construction. lighter panels would also help to reduce petroleum used during transportation within the supply chain. but reducing the density is not an easy task because most wood composite mechanical properties decrease with a decline in density (schwarzkopf 2020). as such, osb manufacturers have turned to engineering protocols as a way to reduce panel weight. key past novel ideas toward osb weight reduction include strategic placement of strands within the mat and manipulation of the vertical density profile (xu and suchsland 2007, stürzenbecher et al. 2010). today, improvements through engineering and efficiency have become very difficult, and new technologies are necessary to further weight reductions. cellulose nanocrystals (cnc) have been proposed as a way to either increase composite strength while lowering panel weight or increasing strength by 16% (veigel et al. 2012). the area of nanotechnology has been classified as an emerging new sector in the forest business industry (hansen et al. 2018). cncs are derived from mechanical, chemical, or enzymatic treatment that yields rod-like structures of 2–10 nm in width and > 100 nm in length (iglesias et al. 2020). the dry manufacturing cost of cnc has been reported to be $1.82 to $2.21/lb (de assis et al. 2017). the overall all price may be higher/double after allowing for transportation and value upgrades to the final customer. one way to lower the cost is to leave residual lignin on the fiber during pulping. one study demonstrated a significant reduction in costs per dry pound, when residual lignin was left on the nanofiber (lcnf) (delgado-aguilar et al. 2016). based on this review, it is anticipated that lcnf is less than the $2.21 as reported by de assis et al. (2017). but 64 bioproducts business 5(6) 2020 realistically, these lcnf costs are just estimates and not derived from a real manufacturing process. additionally, companies are not likely to report their real pmdi costs because of competition and antitrust concerns. in order to anticipate this uncertainty in costs, an analysis that standardizes the costs would be very useful. polymethylene poly(phenyl isocyanates) or polymeric mdi (pmdi) is an isocyanate polymer that is increasingly being used in osb as an alternative to phenol formaldehyde (pf). phenol formaldehyde is a concern due to the end-customer perception of hazardous formaldehyde emissions within the home. often during manufacturing, a mixed production system is used where pf is applied to the surface layer while pmdi is applied to the core. however, over the last decade, more companies are using pmdi in both the surface and core, even though the pmdi will stick to the platen during pressing (asafuadjaye et al. 2020). the advantages of pmdi for this study are that it reacts well with lcnf, resulting in strength improvement (chen et al. 2019). a good bond between lcnf and pmdi is important, if we want to reduce costs by removing wood flakes. this paper develops a “cost ratio” such that a manufacturer can reference our tables and determine if their input costs of lcnf and pmdi will yield cost savings on an equal strength basis (as determined through engineering methods). a target of equal strength is important because it means the product will meet the same strength requirement at a lower input materials cost. 2. methods and materials the methods for materials selection, lcnf mixing/addition, osb manufacture, and mechanical testing can be viewed in hornus (2019). the softwood fiber was produced through a kraft pulping process (hornus 2019). for this study, we modeled the response of these properties to changes in panel density, adhesive loading, and lcnf addition (substitution into pmdi adhesive). the properties modeled from hornus (2019) were dry modulus of elasticity (moe) and modulus of rupture (mor). it should be noted that internal bond (ib) and panel thickness swell with water exposure were also tested, but were not modeled in this study because moe and mor were the limiting factors for this data set (see hornus 2019 for details around all properties tested). it should also be pointed out, for the sake of transparency, that ib exhibited some decrease with lcnf addition. so from a business perspective, a mill would not benefit from this cost reduction study if ib is their limiting factor; more work is needed beyond this study for ib improvement. 2.1 statistical modeling for statistical model formulation, a factorial design was employed in which the mechanical, physical, and internal bond properties were the dependent variables, while lcnf, density, and adhesive loading were key factors. specifically, the density was varied between 0.45, 0.55, and 0.65 g/cm3; the pmdi adhesive loading was varied between 2.7%, 4.4%, and 6.2%; and the lcnf substitution into pmdi was varied between 0%, 3%, and 6%. for this data set, there were no interaction effects between adhesive and nanofiber for any of the mechanical or physical properties (hornus 2019). therefore, only the main effects were used in building the models of the mechanical and physical properties: i.e., local density, lcnf, and pmdi adhesive loading. 2.2 panel cost estimation it was desirable to compute the costs of total raw materials as a function of density or weight per cubic dimension. the following calculations were performed to estimate total material costs. board weight (lb) = (lb / ft3) / (width * length * thickness) [1] square footage per board (ft2) = width*length [2] number of boards per msf = 1000 ft2 / square footage per board [3] cost of pmdi per board ($) = board weight * (pmdi cost in $/lb) * %pmdi loading [4] cost of wood per board ($) = board weight * (wood cost in $/lb) * % * wood weight [5] cost of lcnf per board ($) = board weight * (lcnf cost in $/lb) * % lcnf dry weight [6] total cost per board ($) = cost of pmdi per board + cost of wood per board + cost of dry lcnf per board [7] cost per msf ($) = total cost per board * number of boards per msf [8] then the difference in cost as computed by equation [8] for the control versus the lighter weight lcnf wood via and peresin — cost analysis of lightweight wood panels strengthened with lignin-cellulose nanofibrils 65 composite was calculated as a percent increase or decrease. equation [7] could have also been used to achieve the same outcome. it should be noted that tables 2 and 3 allow for any cost range to be entered as long as the cost of lcnf is 1 to 10 times higher than pmdi. for our study, we assumed wax was $1/lb, but since this was not a factor in the design, it had no impact on the cost analysis. the cost of wood and pmdi for this study was $0.10/lb and $1.00/lb respectively. it is important to note here that that wood costs were 1/10th of pmdi costs. companies who use tables 2 and 3 should ensure this 1/10th relationship/assumption is still true for their cost scenarios. if this is considerably different, then the company may need to prorate or inflate the output of this table, a method which is beyond the scope of our paper. 3. results and discussion the data are not shown, but our analysis found no interaction between the independent variables for any of the seven properties tested. this simplified the final models to be a simple multiple linear regression with no interaction terms (table 1). of the seven properties tested, all had positive slopes except ib, but only dry moe and mor were significant (lcnf p-value < 0.05). thus, we only analyzed dry moe and mor for determining cost estimates for this study. table 1 shows the effect of each variable on moe and mor. as can be seen, lcnf% and density were most important in determining moe and mor. these models were next used to determine what combination of adhesive, lcnf, and density was needed to reach the same moe or mor. this strategy will allow us to determine if cost savings are possible through lcnf addition followed by a reduction in density. for example, in 2017 we had a confidential contact tell us that the lcnf cost would be greater than $1.00/lb, while an osb company advised that the costs of pmdi and wood were $1.00/lb and $0.10/lb, respectively. under these assumptions, the following graph was created to show how one can make a lighter and cheaper panel by substituting 6% lcnf into pmdi, while maintaining panel strength (figure 1). a savings of approximately $23 per msf was possible, while a lighter and equally strong board was available for the consumer. it should be emphasized that figure 1 is hypothetical, and that, realistically, we do not know the cost of lcnf or pmdi. lcnf is not yet commercial in many parts of the world, and we have to rely on experimental studies to estimate this value. likewise, we have found that companies tend to give us inflated costs for pmdi, presumably so that they can keep their cost advantage confidential and avoid an antitrust lawsuit. in the future, one also does not know the impacts of inflation on material costs. as such, there is a need for a standardized method to this analysis, where companies can input their own costs into the model to see whether cost savings are possible. tables 2 and 3 demonstrate this strategy, where a company can input their confidential cost ratio (lcnf:pmdi) and then see if the change in cost increases or decreases in the form of a percentage. the company can then translate the percentage into a real cost value for their financial situation. the following examples summarize how to read tables 2 and 3. if our specifications or end customer table 1. full multiple linear regression model for dry moe and mor properties (n = 69 samples per model). variable df parameter estimate standard error t value pr > |t| variance inflation factor property dry moe intercept 1 -27.615 531.51 -0.05 0.9587 0 adhesive % 1 -22.211 37.14 -0.60 0.5519 1.06 lcnf % 1 48.75 21.91 2.22 0.0296 1.06 density 1 5826.0 1030.28 5.65 <0.0001 1.11 property dry mor intercept 1 -10.14 4.62 -2.20 0.0317 0 adhesive % 1 0.010 0.32 0.03 0.9762 1.06 lcnf % 1 0.307 0.19 1.70 0.0499 1.06 density 1 52.61 8.95 5.88 <0.0001 1.12 66 bioproducts business 5(6) 2020 table 2. moe model predictions optimized such that each combination of independent variables will yield the same moe. combination of lcnf, adhesive %, and density needed to reach same moe (3410 mpa) density reduction (g/cm3) 0.0 0.01 0.02 0.03 0.04 0.05 adhesive % 2.6 2.6 2.6 2.6 2.6 2.6 lcnf % 0 1.2 2.4 3.6 4.8 6.0 ∆ cost (%)10:1 0 -0.3 -0.5 -0.7 -1.0 -1.2 ∆ cost (%)5:1 0 -1.1 -2.1 -3.2 -4.3 -5.3 ∆ cost (%)1:1 0 -1.7 -3.5 -5.2 -6.9 -8.7 adhesive % 4.4 4.4 4.4 4.4 4.4 — lcnf % 0.8 2 3.2 4.4 5.6 — ∆ cost (%)10:1 0 -0.2 -0.4 -0.6 -0.9 — ∆ cost (%)5:1 0 -0.9 -1.9 -2.8 -3.8 — ∆ cost (%)1:1 0 -1.5 -3.1 -4.6 -6.2 — adhesive % 6.1 6.1 6.1 6.1 — — lcnf % 1.6 2.8 4 5.2 — — ∆ cost (%)10:1 0 -0.2 -0.4 -0.6 — — ∆ cost (%)5:1 0 -0.9 -1.7 -2.5 — — ∆ cost (%)1:1 0 -1.4 -2.8 -4.2 — — note: a “—“ means that an lcnf > 6% was needed to reach the same moe and is not considered possible due to a viscosity limitation (difficulty spraying). the analysis also assumes water in lcnf is negligible in cost (de assis et al. 2017). bolded sections in the table represent model output of the change in costs (%). table 3. mor model predictions optimized such that each combination of independent variables will yield the same mor. combination of lcnf, adhesive %, and density needed to reach same mor (21.5 mpa) density reduction (g/cm3) 0.0 0.01 0.02 0.03 0.04 0.05 adhesive % 2.6 2.6 2.6 2.6 2.6 2.6 lcnf % 0 1.9 3.6 5.3 — — ∆ cost (%)10:1 0 0.8 1.2 1.7 — — ∆ cost (%)5:1 0 -0.6 -1.3 -2.0 — — ∆ cost (%)1:1 0 -1.6 -3.3 -5.0 — — adhesive % 4.4 4.4 4.4 4.4 4.4 4.4 lcnf % 0.1 1.8 3.5 5.2 — — ∆ cost (%)10:1 0 0.4 0.8 1.3 — — ∆ cost (%)5:1 0 -0.6 -1.3 -1.9 — — ∆ cost (%)1:1 0 -1.5 -3.0 -4.4 — — adhesive % 6.1 6.1 6.1 6.1 6.1 6.1 lcnf % 0.1 1.7 3.4 5.1 — — ∆ cost (%)10:1 0 0.3 0.6 1.0 — — ∆ cost (%)5:1 0 -0.6 -1.2 -1.7 — — ∆ cost (%)1:1 0 -1.4 -2.7 -4.0 — — note: a “—“ means that an lcnf > 6% was needed to reach the same mor and is not considered possible due to a viscosity limitation (difficulty spraying). analysis also assumes water in lcnf is negligible in cost (de assis et al. 2017). bolded sections in the table represent model output of the change in costs (%). via and peresin — cost analysis of lightweight wood panels strengthened with lignin-cellulose nanofibrils 67 for dry moe, we showed the potential to simultaneously reduce the density and cost by 0.05 g/cm3 and 8.7%, respectively (table 2). this means that we can make a lighter weight panel that can meet the needs of construction, while being easier to handle. likewise, we can create a lighter panel that reduces gasoline costs during transportation. it also allows us to use less wood to make the same square footage of panels. 4. conclusions and recommendations oriented strand board (osb) manufacturers would like to reduce panel weight to save on costs and provide a lighter panel for handling during construction. in summary, it was concluded that a lighter osb could be achieved with the addition of lcnf. we were able to maintain mechanical properties (strength and stiffness) while lowering panel density. a break-even cost ratio analysis found that the lcnf% could be up to 7 times more expensive than pmdi, while still yielding a cheaper osb panel. while not discussed extensively in this paper, for future work, it is recommended that manufacturers and researchers continue to work on how to improve dispersion methods, as this will likely increase density reductions and further reduce costs with lcnf additions. figure 1. a combination of the multivariate model (from table 1) and the cost model from equations [1]–[8], in which the bottom solid line represents the predicted strength of a control at 4% pmdi loading, and the dashed top line represents the same conditions but with the substitution of 6% lcnf into the pmdi. places a priority around strength (mor), then we would focus on table 3. if we assume a 6% adhesive loading, a 1.7% addition of lcnf, a density reduction of 0.01 g/cm3, and a cost ratio of 5:1 (lcnf:pmdi), then the model says that the percent costs will decrease by 0.6%. conversely, if our specifications or end customer dictates that material stiffness (moe) is important, then we would focus on table 2. under this scenario, if we assume a 2.6% adhesive loading, a 6% addition of lcnf, a density reduction of 0.01 g/cm3, and a cost ratio of 5:1 (lcnf:pmdi), then the model says that the percent costs will decrease by 1.2%. using interpolation of tables 2 and 3, or using the models described in table 1 and equations 1-8, we determined the breakeven point to be at or close to 7:1 for most scenarios. in other words, if we want to reduce costs while making lightweight panels with lcnf, then the cost of lcnf needs to be no more than 7 times that of pmdi. according to table 2, the addition of lcnf appeared to show more promise for cost reduction for dry moe than dry mor. in other words, the addition of lcnf to maintain moe was cheaper for all adhesive, loading, and density combinations. this would suggest that mor is the limiting factor for this study, if the company has to maintain their product above a specific strength specification. 68 bioproducts business 5(6) 2020 5. literature cited asafu-adjaye, o, via, b, & banerjee, s. 2020. increasing cold tack of polymeric methylene diphenyl diisocyanate resin with partial soy flour substitution. forest products journal 70(1), 143–144. chen, h, nair, ss, chauhan, p, & yan, n. 2019. lignin containing cellulose nanofibril application in pmdi wood adhesives for drastically improved gap-filling properties with robust bondline interfaces. chemical engineering journal 360, 393–401. de assis, ca, houtman, c, phillips, r, bilek, em, rojas, oj, pal, l, peresin, ms, jameel, h, & gonzalez, r. 2017. conversion economics of forest biomaterials: risk and financial analysis of cnc manufacturing. biofuels, bioproducts and biorefining 11(4), 682–700. delgado-aguilar, m, gonzález, i, tarrés, q, pèlach, mà, alcalà, m, & mutjé, p. 2016. the key role of lignin in the production of low-cost lignocellulosic nanofibres for papermaking applications. industrial crops and products, 86, 295–300. hansen, e, hoen, hf, & nybakk, e. 2018. competitive advantage for the forest-based sector in the future bioeconomy–research question priority. bioproducts business 3(2), 15–28. hornus, m. 2019. hemicelluloses extraction and nanocellulose addition as a partial replacement for non-renewable adhesives in oriented strand board. thesis. school of forestry and wildlife sciences, auburn university, auburn, al, usa. iglesias, mc, gomez-maldonado, d, via, bk, jiang, z, & peresin, ms. 2020. pulping processes and their effects on cellulose fibers and nanofibrillated cellulose properties: a review. forest products journal 70(1), 10–21. schwarzkopf, m. 2020. combining thermo-hydro-mechanical and phenol-resin impregnation treatments: potential for highdensity poplar flooring. forest products journal 70(2), 147–150. stürzenbecher, r, hofstetter, k, bogensperger, t, schickhofer, g, & eberhardsteiner, j. 2010. development of high-performance strand boards: engineering design and experimental investigations. wood science and technology 44(1), 13–29. veigel, s, rathke, j, weigl, m, & gindl-altmutter, w. 2012. particle board and oriented strand board prepared with nanocellulosereinforced adhesive. journal of nanomaterials 2012, 158503. xu, w, & suchsland, o. 2007. modulus of elasticity of wood composite panels with a uniform vertical density profile: a model. wood and fiber science 30(3), 293–300. abstract small and medium-sized enterprises (smes) in the value-added forest products sector play an important social and economic role in canadian forest-dependent communities. in british columbia (bc), the sector is not reaching its full potential. many factors limit or enable growth of the value-added forest products sector in bc. this study seeks to assess what factors are most integral to success through an in-depth examination of four value-added forest product sector smes in rural bc representing four different types of firms with varying levels of performance. the results of the study indicate that, though factors typically considered vital, such as access to skilled labor, fiber supply, location, and financial capital, are integral to business success, business management skill and firm size are integral and often-overlooked factors. the results of this study point to a need for a better provincewide understanding of the barriers to success commonly faced by forest products smes, particularly barriers to management skill development. keywords: value-added, small business, forest products, small and medium sized enterprises understanding sme success in the value-added forest products sector: insights from british columbia 1 department of forest resources management, faculty of forestry, university of british columbia, forest sciences centre 2777 – 2424 main mall, vancouver, bc v6t 1z4. 2 department of forest resources management, faculty of forestry, university of british columbia, forest sciences centre 4609 – 2424 main mall, vancouver, bc v6t 1z4. 3 department of wood science, faculty of forestry, university of british columbia, cawp 2926 – 2424 main mall, vancouver, bc v6t 1z4. * corresponding author: email: harry.nelson@ubc.ca; tel.: 604-827-3478. acknowledgements: the authors would like to thank ken day for his assistance in conducting the research for this paper. the authors would also like to thank all the case study participants and other interviewees for investing time and providing insight to the research, and tim hawkins for his assistance in preparing the manuscript. finally, we would like to thank the two anonymous reviewers of this article for their helpful and insightful comments. philip grace1, harry nelson2*, and robert kozak3 bioproducts business 3(9), 2018, pp. 107-117. issn 2378-1394. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-009 1. introduction small and medium-sized enterprises (smes) in the valueadded forest products sector are important contributors to their local, regional, and provincial economies, yet their contributions are often overlooked. lack of data, small firm size, diversity in firms’ activities, and uncertainty regarding factors of sme success all contribute to an environment in which small business is poorly understood (nelson, hotte, and kozak 2017). consequently, sme’s receive less attention in public policy than their economic contributions warrant. despite this, a growing recognition of the benefits that smes provide, especially their ability to generate employment and income in rural communities, has led to renewed emphasis on smes in the international forest policy discourse (nelson, hotte, and kozak 2017; agrawal et al. 2013). long touted as the new direction of british columbia (bc)’s forest products sector, due to the ability of valueadded smes to generate more income and employment per cubic metre of wood, the bc government has held the strengthening and supporting of value-added forest products firms as a provincial forest policy goal for many years. recently, supporting value-added smes has all but disappeared from official ministry of forests, lands, and natural resource operations goals (british columbia ministry of forests, lands and natural resource operations 2016), although an action plan was released in september 2016 (government of bc 2016). the plan was short on specifics, however, with the main outcome the establishment of the wood secretariat to serve as a point of access for smes to government, rather than assessing the adequacy of existing policies and programs. this is surprising, given the reduction in timber supply 108 bioproducts business 3(9) 2018 in the bc interior and the value-added sector’s ability to mitigate the effects of timber supply reductions on forest-dependent local and regional economies. if the value-added sme sector is to reach its full potential and increase economic activity despite timber supply reductions, a strong understanding of the business and policy needs of the sector in bc is needed. the forest policy environment is important for valueadded firms as it influences the availability of timber, and various government policies and related discussions have historically been focused on ensuring a steady supply of timber, which underpins the main objective for forest policy in the province. in this context, value-added is most often discussed as an alternative to primary commodity lumber production, that is, creating solid wood products with higher value. this framing tends to overlook smaller firms that may not necessarily be using logs as their main input or even local resources, while also ignoring the importance of other factors that contribute to firms’ competitive positions, such as human capital and management skill development. when these other factors are taken into account, the setting within which these firms operate – which includes not only the physical resources but also the communities in which they operate – has an important influence on factors such as labor supply or the availability of financial institutions. regional and community-level strategies have tremendous impacts on smes, especially in resource-dependent communities where smes often rely on community networks in day-to-day operations (i.e. relationships with primary manufacturers for fiber supply). therefore, it is essential for all levels of government to coordinate efforts when addressing needs of value-added smes. while the value-added forest products sme sector has been discussed through descriptions of potential firm activities and possible socioeconomic contributions of the sector (parfitt 2011; woodbridge 2009; schultz et al. 2013), careful and in-depth analyses of the factors that influence or limit success in this important sector is nascent and generally scant (for exceptions, see delong, kozak, and cohen 2007; spetic, kozak, and vidal 2016). we address this knowledge gap and add to this emergent area of inquiry through an exploratory study by examining four different value-added smes operating in the rural bc interior to identify the factors most important to these firms’ success. 2. background 2.1 competitiveness theory we start with a general review of the literature examining competitiveness as it relates to smes and the viability of smes in the value-added forest products sector. various approaches offer insight in areas of firm behavior. some of these approaches include looking at firm decisionmaking, price-setting, human resource management, and marketing. an approach that systematically looks at outcomes and the determinants of success among firms is competitiveness theory. michael porter’s (1980) work on the competitive forces affecting businesses has come to be, for many, the de facto model by which industry competitiveness is assessed. porter’s analysis is built on five forces that affect a firm’s competitive position. moving away from the model of perfect competition, which is fraught with unrealistic assumptions, porter looks at (1) the threat of new entrants, as well as (2) the jostling for position within an industry as two key forces that shape a business’ competitive strategy. recognizing that competitiveness is also heavily affected by (3) buyers and (4) suppliers, he incorporates bargaining theory into his examination. he completes his five-pronged analysis by looking at (5) the role that substitute products (or services) can play in competitive dynamics. competitiveness ultimately boils down to advantage. if a firm can leverage a competitive advantage over its rivals, it is in a position to successfully compete in its industry. day and wensley (1988) further extend competitiveness theory by developing the spp framework (sources, positions, and performance outcomes) for measuring competitive advantage by asking the following questions: what are the sources of competitive advantage (e.g. skills, resources)? what are the firm’s positional advantages (e.g. value, costs)? are performance outcomes favourable (e.g. customer satisfaction, loyalty)? they argue that the spp framework represents the components that make up competitive advantage, and that those components are sequential. this means that sources of advantage will only truly result in an advantage if a firm is positioned in such a way as to exploit those sources. along the same lines, performance outcomes are a result of the carefully aligned source and positional advantages. they posit that, although superior skills and resources may be necessary for sustained competitive advantage, grace et al. — understanding sme success in the value-added forest products sector: insights from british columbia 109 they are not enough on their own to guarantee competitive advantage. an advantage can only be profitably exploited if the firm’s advantage is positioned in such a way as to be valued by customers. these two aspects of competitiveness theory (porter 1980; day and wensley 1988) identify the factors relevant for explaining the overall competitive environment within which a regional sector is situated (as is the case in bc), and within that sector, whether or not or a firm will be competitive. this synthesized framework highlights the importance of strategy in how it aligns with those factors at both the sector and firm levels, and how competitiveness (performance outcomes) can be assessed at those levels. this framework, however, glosses over one critical issue – firm size. a review of the existing value-added sector in canada shows that the valueadded forest products sector is overwhelmingly made up of smes. there are few large companies in canada that operate in this sector (stennes and wilson 2008). while there are aspects of competitiveness theory that discuss size (i.e. in relationships between buyers and suppliers), this factor is generally overlooked. firm size has important implications, not only in how a firm influences industry dynamics, but also in how a firm’s success is heavily influenced by the role small business owners play in firm establishment and operation. many of the characteristics of competitiveness mentioned in competitiveness theory can be applied regardless of firm size; however, smes are often faced with further challenges to competitiveness because of their smaller size (man, lau, and chan 2002). therefore, competitiveness frameworks must be adapted to take into account how the size of a firm influences its competitive position (bierly and daly 2007). two ways that size can influence competitive position is through the lack of economies of scale (having to do with production technology) and limited bargaining power (having to do with industry structure and firm relationships). while porter (1980) argues that the achievement of economies of scale will deter potential new entrants to the industry or industry subsector as well as position a firm to have a cost advantage, other researchers have argued that a reduction in economies of scale in favor of a diversified product line may help a firm more. dixit and stiglitz (1977) posit that, while economies of scale may enable a firm to compete in its pricing, product diversification, often achieved at the expense of economies of scale, will be preferred by consumers and will lead to increased customer loyalty. this, they argue, reduces the threat of new entrants and, ultimately, improves a firm’s competitive position in relation to its existing industry rivals. in the value-added sector, which includes a wide-range of product categories – some suited for commoditization and economies of scale, and others being more in line with strategies incorporating economies of scope – both porter’s and dixit and stiglitz’s theories may be applicable. the bargaining exercise can also play a significant role in the competitiveness of a firm or industry. moving away from nash’s (1950) assumptions of equal discount rates, equal bargaining skills, and equal ability to consider and compare different alternatives, porter (1980) notes that bargaining power at different stages of the supply chain can be a major determinant of the degree of competition in an industry. when an sme is negotiating with a much larger supplier, for example, the two parties likely have different discount rates. where the larger firm can afford to be “less impatient” and hold out for as long as is required to meet certain negotiation goals, holding out beyond a certain amount of time could prove to be fatal for the smaller business (wagner 1988). while there is a plethora of tools available for assessing competitiveness, not all can be directly applied to smes. evaluating competitiveness at the sme level is different from evaluating the competitiveness of larger firms because they are inherently different with respect to factors of competitiveness (burns 2001). perhaps the most important difference lies in the firms’ relationship with its external environment. understanding the environment, or the context, in which a company operates will help us better understand the competitive strategy adopted by a firm as well as offer insight into the competitive nature of an industry. a core concept that porter stresses (1979; 1980; 1991) is that certain strategies will be more effective in certain environments. that is, the business environment will invariably shape what successful competitive strategy looks like. complementing this approach is the resource-based view (rbv) of firms, which looks at the internal capabilities and resources that firms utilize to gain competitive advantage (barney 1991; grant 1991; peteraf 1993). these include human (e.g. skills and training), technological, financial, and physical resources, as applicable to the industry setting. the analysis then involves identifying 110 bioproducts business 3(9) 2018 those factors which lead to sustained competitive advantage for the firm, and where those factors must be valuable, rare, and difficult to imitate or copy in order to generate that advantage relative to their competitors (husso and nybakk 2010). detailed studies looking at the competitiveness of smes in the value-added sector in the developing world have found several reoccurring barriers to success. these include the smaller scale of operations, scarce access to raw materials, and a lack of business capacity and capital (nelson, hotte, and kozak 2017). these can reinforce one another to increase impediments to success; for example, a small scale of operations means that business owners often ignore basic managerial tasks, such as bookkeeping, have limited working capital, and have difficulty securing raw material. forest policy and governance in many developing countries, by favouring larger corporations, only increases these barriers to success (fisseha 1987; arnold et al. 1994). husso and nybakk (2010) used both the porter and rbv framework to analyze the performance of eight scandinavian sawmilling smes and found that, while firm location did confer a competitive advantage (in their cases in terms of access to fiber and labor), most external factors, such as market demand, the impact of globalization and consolidation, had generally similar effects across all firms, and it was how firms organized themselves internally to offset these disadvantages in the external environment that was key to their success. learning from these various perspectives, aspects to be analyzed when looking at competitiveness are: size, location, the influence of policy and the institutional setting, access to markets, and internal strategies and capabilities. in the next section, we describe the value-added sector in bc and take a look at its specific factors of and barriers to success. 2.2 the value-added sector in bc in bc, the value-added forest products sector is broadly defined as the manufacturing of products beyond boards, dimension lumber, and panels; the sector spans from sorting for grade to making high-end goods like furniture or cabinetry (schultz and gorley 2006). stennes and wilson (2008), in a survey, found that approximately 20% of firms in the sector were primarily remanufacturers, 18% were log home and timber frame builders, 14% did millwork, about 12% manufactured engineered wood products, and the rest produced cabinets, furniture, pallets, containers, and shakes and shingles. many of the firms in this sector are located in or near the metropolitan areas of vancouver and lower vancouver island, and in the okanagan region (mcilhenney and hayter 2013). a more recent study (bogdanski and mcbeath 2015) undertaken in 2012 found that the industry had contracted since the last survey, due in large part to the collapse in us demand, with a shift from panelboards and remanufactured lumber products towards sectors tied more closely to housing, such as cabinetry, millwork and furniture. according to schultz and gorley (2006), the large number of small value-added manufacturers in the province could create more competition for raw materials, which in turn could lead to the implementation of a more market-based mechanism for pricing timber – as opposed to the current regulated system. another perceived benefit of the sector is its ability to do more with less. that is, as economic timber supply decreases (especially in the interior of the province), the sector has the potential to offset some of the expected setbacks in the primary processing sector (schultz and gorley 2006). the latter benefit is also cited by stennes and wilson (2008), who state that the level of economic activity associated with timber processed by value-added firms is higher than that associated with commodity product manufacturing. some of the other benefits associated with a strong value-added sector are increased customer brand loyalty with non-commodity products, resilience to commodity market cycles, and possible increases in “green” investments due not only to higher profit margins, but to the perception that value-added production is more environmentally friendly than commodity production (schultz and gorley 2006; spetic, kozak, and vidal 2016). despite the value-added sector contributing nearly $4 billion to the bc economy (bogdanski and mcbeath, 2015), some industry players are skeptical of the view that the value-added sector is the way forward. on the other hand, it has also been argued that the commodity focus in the bc forest industry will likely remain due to the fact that bc’s forests are almost entirely comprised of softwoods (nielsen 2011), and the sector is entrenched in manufacturing traditional commodity products that have historically been derived from these species (kozak 2005). however, many in the industry have called for a larger, more active value-added forest products sector in bc, given the argument that it generates more economic grace et al. — understanding sme success in the value-added forest products sector: insights from british columbia 111 activity per unit volume than a purely commodity sector (kozak, maness, and caldecott 2003; parfitt 2011; parfitt 2005; schultz and gorley 2006). many bc value-added firms struggle to meet their growth objectives (cohen, delong, and kozak 2005). an inability to find skilled workers is often cited as the biggest impediment to growth, along with unfavorable taxation policies and other government polices, difficulties accessing capital, and increasing competition (price waterhouse 1992; delong, kozak, and cohen 2007; stennes and wilson 2008; spetic, kozak, and vidal 2016). a general lack of management and entrepreneurial skills has also been cited as an impediment to success in the sector (spetic, kozak, and vidal 2016). kozak, maness and caldecott (2003) point out that the value-added sector is very heterogeneous with regard to firms’ characteristics, yet all sub-sectors have fiber procurement problems of one form or another. stennes and wilson (2008) also note that, although there have been improvements in the adoption of web-based tools for doing business since kozak (2002) reported that wide-scale adoption of e-business was lagging, only 24% of surveyed firms used their websites for sales, which could also be limiting growth, particularly in foreign markets. this relates to a broader finding that, while access to international markets is not out of reach for value-added producers in bc, success is largely dependent on managerial skills and business savvy (spetic, kozak and vidal 2016). in particular, the benefits that can be accrued from adopting and promoting sustainable business practices were seen as a potentially important means of gaining competitive advantage in international markets (spetic, kozak and vidal 2016). a recent study by mcilhenny and hayter (2013) of 41 firms operating in the value-added sector in the greater vancouver area investigated whether or not a new type of business model in the forest industry was emerging marked by entrepreneurial green leadership. their focus was on whether or not there were cluster economies, where firms take advantage of networking and other opportunities associated with clustering. in their findings they state that, although a self-sustaining critical mass of firms has emerged, firms are adopters, not leaders, and networking is weak or absent. although their focus was not on firm performance, they did ask about factors affecting firms’ success. they were surprised to find that the lack of skilled workers was an issue, that improved access to supplier networks and local markets was desired, and that resource availability was not a major hurdle (fiber was not mentioned other than with difficulties in sourcing specialized types of wood not necessarily available in bc). furthermore, they question whether value-added activities can prosper outside of large urban centres. they suggest that the concentration of value-added manufacturers in greater vancouver is the result of a greater availability of labor, access to coastal fiber, and a higher relative proximity to local and united states markets than more distant forest-dependent communities, implying that these are important determinants of success. 3. methodology this exploratory qualitative study focused on examining what sets successful small and medium-sized firms apart from their struggling counterparts. a multiple case study method was used as we investigated a “contemporary phenomenon in-depth and within its real-life context” (yin 2009, p. 18) and drew data from multiple sources in order to develop comprehensive descriptions and analyses of the cases (creswell 2007). the purpose of the study was not to make generalizations about all smes operating in the value-added wood products manufacturing sector, but rather to gain a strong understanding of the complexities of each case and describe common or recurring themes. these themes can then be used to guide further research and inform policy. in order to best achieve the study’s goals, firms operating in the rural interior region of british columbia, in or near a highly forest-dependent community1, were selected. the bc interior was chosen due to (1) its dependence on forest values for economic stability, (2) previous research experience in the area, and (3) over two-thirds of timber harvested is done so in the interior; the region is also facing the most pressing supply constraints. firms were selected as cases based on their competitive position at the start of the data-gathering phase of the research. a list of eight potential cases, including four successful firms and four struggling firms, was drafted with the help of local forest sector experts and after a careful review of each potential case’s website (if available), relevant newspaper articles, and other 1 to preserve the confidentiality of the firms involved, the names of the communities are withheld from this paper. 112 bioproducts business 3(9) 2018 grey literature. with careful consideration of the forest sector experts’ input, the list was narrowed to the ultimate selection of four individual firms: two successful firms and two struggling firms. for the purpose of the selection process, ‘successful’ firms were characterized by the achievement or active pursuit of management’s goals (beaver 2003), and ‘struggling’ firms were defined as those firms that were either operating intermittently or had shut down. the firms selected for the study were given generic names to protect their identities: firm a (struggling), firm b (successful), firm c (struggling), and firm d (successful). firms were initially contacted by telephone to gauge interest and were then provided with a formal invitation to take part in the research. although each firm was operating under the umbrella term of “valueadded”, considerable product diversity exists between the 4 cases. table 1 below presents an overview of the firms’ characteristics. data was collected in a number of iterations wherein various types of data, including academic literature, grey literature, focused interviews, and in-depth interviews, were collected. after a thorough review of relevant literature, interviews were conducted with the owner/ operators of the firms (the same people in each round). when interview sessions were completed, a second review of relevant academic literature was conducted in order to gain a better understanding of the data collected in the interviews, and to prepare for the following round of interviews. the data collection process is summarized in figure 1 below. the interview data was analyzed using a four-step process adapted from rubin and rubin (1995): (1) the interviews were transcribed to a word processor, carefully reviewed to identify themes and recurring topics, and coded according to these themes and topics; and (2) using the qualitative data analysis software nvivo 8, transcripts were re-read and coded further based on previously categorized themes. at this stage, if themes were deemed irrelevant, they were dropped from the analysis. in step (3), a complete recoding of the original transcripts using the themes identified in the previous two steps was performed to ensure complete coverage and a thorough analysis of the interview material. after this second round of coding, a new set of text summaries was drafted. once the findings were written up, each case study participant was provided with a copy of the section relevant to their firm in order to solicit feedback and validate the findings – this constituted the fourth and final step (4) of the data analysis process. table 1 – characteristics of firms under study. product number of employees years active current status firm a custom remanufacturing 10 to 15 more than 20 intermittent operations firm b timber frame houses, cabinetry, millwork 10 to 15 15 20 operating full-time firm c engineered wood products, remanufacturing more than 20 more than 20 shut down firm d millwork, custom remanufacturing, engineered wood products less than 10 less than 10 operating full-time figure 1 – data collection process. grace et al. — understanding sme success in the value-added forest products sector: insights from british columbia 113 4. results and discussion firm owners identified three main keys to success: fiber supply, financial capital, and human capital. other themes also emerged from the interviews, such as strategic planning and the impact of the external environment, but the three main keys to success mentioned earlier dominated discussion due to their impact on the production function. upon analysis of the case results, it appears as though human capital – management skills, in particular – plays the most pivotal role in the ultimate success of each case; through in-depth interviews, participants addressed the issues of fiber supply, financing, and skilled laborers before turning the focus on themselves and their management. previous studies of the value-added sector in bc, which have predominantly been surveys (bogdanski and mcbeath 2015; stennes and wilson 2008; delong et al. 2007) have always highlighted the importance of fiber supply, financing, and laborers, as these have been the focus of the provincial discourse. this study, through in-depth interviews, was able to find that the issues surrounding management skills are integral to firm success, though they are not often discussed. the fact that fiber supply was the first issue raised in all cases is not surprising. concerns regarding fiber supply have been at the forefront of british columbian forest policy discussion since the first sloan commission on community forests in 1945 (sloan 1945). as fiber is the primary input in value-added wood products, fiber supply generally preoccupies firm owners. the government, the owner of the raw material, is also keenly interested in fiber supply. the results of this research, however, demonstrate that some firms, notably firm b, firm d, and for a time, firm c, have been able to work well within the imperfect fiber supply system. in fact, firm b has been in a position where they’ve had to decline wood that was perfectly suited to their needs because they had too much inventory. through relationships along the supply chain, as well as an organized and experienced approach to obtaining timber, these firms were able to meet their timber needs with relative ease. as the owner of firm c stated, “i had a great personal relationship with the managers and owners at the primary manufacturer i used to work for, so that turned into a very good business relationship. we had some small tenures and we made a deal with the major: we sell you our logs and buy your lumber. that relationship was huge for us.” similarly, firm b takes an open approach to sourcing raw materials: “we don’t buy the whole, ‘we can’t get wood’ argument. it doesn’t come easy, but there are ways to get wood if you’re willing to pay for it; and being able to pay for it should be part of your business strategy… if our regular supplier can’t produce for one reason or another, we can go to the log sorts. it’s more hit or miss with the log sorts, but you do what you can to make sure you keep your fiber supply steady.” that said, all owners did make suggestions on how to improve wood supply channels or restore aspects of the tenure system that worked in their favor in the past. participants in this study said the dissolution of the small business forest enterprise program (sbfep), which was specifically geared toward firms in the valueadded sector2, as part of the forestry revitalization plan (frp)3, has significantly handicapped small players in the value-added sector who used timber harvesting rights acquired through the program for leverage along the supply chain or to improve their financial positions. policy-makers should take note of the issues raised and suggestions tabled by the owners in their review of current and future policies. given the high fixed costs required to participate in the forest products sector, the fact that financing is an issue of importance for all firms is to be expected. while firms sought financing through different channels and for different purposes, the issue was clearly important in all cases. for example, when firm c experienced lower than usual cash flows, they would seek significant cash advances from one of their primary suppliers: “this was an unusual relationship, but they knew we had a good business plan and we would be able to cover the advance, no problem.” while it would seem fairly obvious that financial matters would be at the forefront of a struggling firm’s owner-operator’s mind, this study demonstrates that even for successfully established, thriving companies, such as firm b, financial trouble is always a worry. that said, even firm b has had to rely on loans, but when it has done so, it ensures that they “get all our ducks in 2 the sbfep awarded short-term timber sales licenses to value-added firms through competitive sealed bid auctions. while many firms in the value-added sector saw the sbfep as vital to their success and survival, the program as a whole did not result in significant growth for the sector; in fact, in the final years of the program’s existence, value-added production in the province stagnated (parfitt 2005). 3 the bc government introduced the frp in 2003 to create a market-based competitive market for fiber that would also contribute to a competitive pricing system for timber (british columbia ministry of forests 2003). the frp also set aside 10% of the provincial allowable annual cut for small tenure holdings. 114 bioproducts business 3(9) 2018 row” with respect to bookkeeping, updated quotes and invoices, and year-end accounting. likely the best buffer against financial troubles for the firms involved in this study is a strong business plan and strategy. as firm b put it, “[strategy is] simply a necessary part of staying in business. that’s why so many start-ups fail: it’s easy to start a business; the hard part is keeping it going. you need a good bookkeeper, a good accountant, good employees, good marketing, good wood supply, good relationships along the supply chain.” on the other hand, the owner of the less successful firm a stated that, “in [forestry], you cannot make a plan for the future,” opting instead to merely “ride the wave” while markets were heated and cash flow could be accumulated. similarly, firm d takes a decidedly pragmatic approach to doing business, only taking on orders that exceed the firm’s minimum profit margin: “if an order is below that certain threshold, we don’t do it. it’s just not worth the effort and the possible opportunity missed if we commit to this low paying job and have to pass up a higher paying job tomorrow or next week.” as firm b identified, strategy is inextricably linked to the third component of the production function, human capital, stating that retaining good employees, providing high quality jobs, and offering training are “the core of our strategy. we are always reflecting on and updating our strategy to make sure that we’re in a position to not only be a successful company, but also an attractive one to work for." the issue of skilled labor and skilled managers is one that touches both business owners and policy-makers. the owners highlighted a common difficulty in finding skilled workers and all believe that some of the responsibility for addressing the lack of workers lies with the provincial and regional authorities. this sentiment is echoed in a number of reports, including a recent report by the research universities council of british columbia (research universities’ council of british columbia 2012), which calls on the province to increase its support of post-secondary education to meet a projected skills shortage. the findings of addis (2003) are echoed in our study: despite the potential risk of having under-skilled workers, employers are still reluctant to embrace skills training as a means of improving their competitive position, though investment in skills development would help managers fill their labor needs. one major finding of this study is that investment in management skills training could significantly help sme owners and managers in the quest for business success. though size is not viewed as one of the central elements to competitiveness theory (porter, 1980), the results here suggest that size may play a role in relation to the issue of skilled management. when a firm is very small, management shortcomings can be both more frequent and more severe due to the large influence of the owner or manager over the business operations, in contrast to a larger firm wherein a group of managing leaders make decisions. despite not saying so explicitly, the two struggling firms in this study have management shortcomings. both firm a and firm c demonstrated that significant strategic miscalculations have been made due to a lack of understanding of the operating environment or mismanagement of commercial and economic risk. for firm c, “management was not an issue for us. it was probably our strongest asset. if it hadn’t been for the market we would still be there… ultimately, the market collapsed in 2008 and took us down with it. i guess had we been better financed we would have been in a better position.” improved management skills training could lead to better performance in core areas of business such as financing and strategy development. management skill development, an area often seen as being of secondary importance for smes (fitzsimmons and fitzsimmons 2013; coetzer et al. 2011), is an essential component of a successful sme’s overall business strategy (libutti 2000). as the owner of firm c was quick to point out, “i’m not the best at selling and dealing with money, you know, but i do my best. i’m a guy who makes things, not sells things.” with two of the four firms studied lacking such fundamentals as a detailed business plan, the fact that owners from firm a and firm d report that they were refused loans from lending institutions is not surprising. with better business management foundations, these owners may have taken different approaches to running their firms and seen better results in obtaining loans. it is interesting to note that many studies continue to report that access to markets, labor and fiber supply are the most significant barriers to success and expansion for value-added manufacturers. bogdanski and mcbeath (2015) conducted a survey with secondary manufacturers which, among other things, asked respondents to rank a predefined list of constraints to capacity expansion. markets, labor, and wood supply were ranked most grace et al. — understanding sme success in the value-added forest products sector: insights from british columbia 115 constraining by respondents with management capacity being ranked least constraining. this finding was borne out in this study, for example, with marketing being top-of-mind with all of the participants, who pointed to the importance of international markets, the need for market research through communications with supply chain actors and clients, and the strategic advantages of diversifying target segments. while the inclusion of management capacity as a constraint in the survey was an important step, the results do not account for social desirability bias, which may threaten the validity of the results (greenlaw and brown-welty, 2009). in-depth interviews, focused interviews, or surveys administered by field enumerators would likely reduce social desirability bias (jo 2000; randall and fernandes 1991; roxas and lindsay 2011) and could increase the reporting of management capacity limitations as constraining factors to success. an interesting finding of this study is that industry associations were mainly talked about in a positive light. this may serve as an opportunity to achieve economies of scale while remaining a small business, or, as noted by firm b, local government officials can play an active role in helping smes address some of their firm’s needs. formal industry associations can serve to provide access to otherwise unattainable markets, provide opportunities for cost-sharing, and provide an environment that helps build supply chain relationships; all lowering the risks experienced by firms (biggs and shaw 2006; macqueen 2004, macqueen et al. 2006). the results of this exploratory study confirm the value of the approach utilized by husso and nybakk (2010) in integrating porter’s framework, with its focus on external factors with the rbv focus looking at the internal resources and capabilities that firms have and could develop. while we were limited in the number of case studies, we did control for location (all firms were in the same region), one of the three important external factors that husso and nybakk (2010) identified as underpinning their competitiveness. we also addressed one of the limitations in their study in which they acknowledged that they only interviewed successful firms and that adding firms that were struggling or failing could provide additional insight; we agree and point to how these results underscore the importance of management and ways in which firms can overcome the disadvantages of size. finally, the results of this exploratory study are optimistic about the potential for value-added activities to take place outside the metropolitan areas of vancouver, vancouver island and the okanagan. contrary to mcilhenney and hayter’s (2013) assertions, the size of community, location, and type of fiber do not seem to be limiting factors to success. 5. conclusions the findings of this study bring a fresh perspective to widely held perceptions about the causes of lackluster performance in the bc value-added sector and reveal a need for more information regarding the policy and business needs sector-wide. for example, though the interviewees discussed fiber supply, three of the four case study firms were skeptical that an inability to access timber is the main reason that firms struggle. the provision of timber through different forest tenure types and supply chain agreements play a large role in addressing the raw material needs of smes in the sector, but fiber supply is merely one of several factors in the production function of value-added smes. interviews with case study participants revealed that human capital – both skilled labor as well as skilled management – plays an equal or greater role in determining the competitive position of firms. this study also suggests that firm size is an important factor of success, but more in how it may be related to management skills and resources, rather than in the more tradional sense of how it may influence bargaining power or access to capital. these results call for a new, more coherent policy approach to addressing the multifaceted needs of this diverse sector. for years, the focus has been on increasing fiber supply to the sector, reflecting the belief that fiber access is the key to success as well as reflecting the institutional mandate of the provincial ministry of forest lands and natural resource operations, which is tasked with making timber available. given that the ministry is not set up to provide technical and skills training assistance, that responsibility would lie with a different government agency. in addition, the study shows that while location is an important influence on the competitive positions of firms, it does not predetermine success in the sector. proximity to metropolitan areas is not essential. this does not mean that all locations are equal; interviews with experts and firm owners revealed that there are 116 bioproducts business 3(9) 2018 attributes of a community that make it easier to attract skilled labor. the nature of a forest-dependent community is such that other local businesses, particularly lending institutions, are familiar with forest products firms and their day-to-day realities. understanding the interplay of these factors: fiber access, human capital, financial capital, and location, especially from a community development perspective where there is strong interest in promoting local economic activity, can aid policy that facilitates the growth of small business. this study also suggests areas of exploration in future research. case 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global. new countries and regions increasingly realize its potential. as an example of a new market, this study analyses the current characteristics of the north american market, as well as its resident companies. additionally, the historic development of the product is studied. there is the unique opportunity to learn from the existing original market in europe and the companies that have been successful there for many years. the german-speaking alpine region of europe is the cradle of clt innovation. using qualitative methods, specific lessons learned are identified. the combined findings give an enhanced understanding of what can be done to effectively foster and fast-track implementation of clt in north america. this study also aims to provide interested parties, such as architects, engineers, owners, developers and academics with insights regarding the development of clt in north america, while also providing a foundation for future academic research. keywords: digitalization; digital transformation; wood products industry; customer value; service logic cross-laminated timber in north america: what can we learn? 1 department of wood science and engineering, oregon state university, 119 richardson hall, corvallis, or 97331. 2 salzburg university of applied sciences, campus kuchl, austria. * corresponding author: email: eric.hansen@oregonstate.edu; tel.: 541-737-4240. acknowledgements: this project was conducted with support from the tallwood design institute and funding from u.s. department of agriculture’s agricultural research service (usda ars agreement nos. 58-0202-5 and 58-0204-6). gabriel schwarzmann1, eric hansen1*, and gunter berger2 bioproducts business 3(7), 2018, pp. 81-91. issn 2378-1394. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-007 1. introduction in recent years, cross-laminated timber (clt) has experienced huge growth in international awareness and interest. north america, for example, is veritably booming, where clt is a trendy topic in the construction industry and even, at times, in public discourse. but what role does clt really play in north america? architects and engineers, as well as interested parties like developers and owners often encounter uncertainties and false expectations concerning the use of clt. there is much more to a market than excitement and publicity; there is a highly complex process of producing clt, realizing projects, and establishing the product as a competitive building solution. gathering information about the situation can be a long and wearying process for new market players. our results provide lessons learned from alpine europe relevant to advancing the north american clt market. in doing so, we provide information and insights for professionals with an interest in becoming involved with clt in the us or canada. this information can facilitate implementation and growth of the market compared with historical development in europe. considerable work exists documenting the views of us architects and engineers regarding clt, including opportunities and barriers in the market (mallo and espinosa, 2014, 2015) and the characterization of global manufacturer characteristics and capabilities (muszyński et al., 2017). thus far in the development of clt, no work has considered the development of the marketplace from the perspectives of both experts in the marketplace and manufacturers in both europe and north america. considering this, our study provides lessons learned from more experienced markets, especially in the german speaking alpine region of europe. market 82 bioproducts business 3(7) 2018 characteristics and lessons learned are placed into the context of the north american industry. specifically, we focus this study on the following two objectives: 1. identify how threats and weaknesses can be dealt with, and opportunities and strengths can be used to foster the implementation of clt in the north american market. 2. identify lessons, especially from the development of clt in the original market of the german-speaking alpine region in europe, that north america can benefit from. 2. theoretical background in order to develop a comprehensive overview of the two clt markets, data collection in this research relies on a framework of categories, based on theoretical models from the literature. one of the most common is the pest model (i.e., political, economic, social and technological factors). together, these categories describe important external influences affecting a company (yüksel, 2012). hansen and juslin (2011) adapt this concept specifically to forest products marketing and create a structure to guide information gathering, using the information environment model. the authors divide all aspects that influence a company into two main areas, the macro environment and the micro environment. the macro environment includes demand, supply and “other”, primarily describing impacts on the firm from the context of the economy or marketplace. the micro environment, on the other hand, contains aspects that describe the behaviors or context of customers, competitors, and systems of distribution (hansen and juslin, 2011). in this research, we make use of the categorizations of pest analysis, with the addition of the information environment model to guide the process of gathering information for drawing a comprehensive understanding of the context surrounding the clt marketplace. an additional category is introduced, existing clt structures, which captures projects that have already utilized clt within a certain market. a second framework of categories was used to collect comprehensive information about the business models of individual companies, relying on the nine building blocks by osterwalder and pigneur (2010), including the additional category strategies. osterwalder and pigneur developed the business model canvas with its nine categories as a “shared language”, which can be used to describe virtually any company and its business model. because of its universal and complete nature, this system can be used effectively to collect information as a basis to describe and analyze companies within the clt industry. the last framework we utilized is concerned with the results, dividing them into two stages, each following one of the research objectives. the first is concerned with the current status of the north american clt market, compared to the original market, and is structured around the four pillars of a swot analysis. this widely used theoretical model describes external opportunities and threats, giving information about what is happening within a market, as well as internal strengths and weaknesses of each company, in this case, clt manufacturers. the second stage contains all results concerning lessons that can be learned from the development of clt especially, but not exclusively, in the original market. 3. data and analysis the data collection process is focused first on clt markets themselves (including everything but clt manufacturers), and second on companies that manufacture clt. figure 1 shows the conceptual framework with a market side (green) and a business side (blue) that was used to guide data collection and presentation of results. muszyński et al. (2017) refer to the alpine cluster in europe as the original market. we divided our study area into the “original market”, the geographic region where clt was initially developed and implemented, and north america. within this research, however, the term “german-speaking alpine region” was used to define this area. figure 2 shows the approximate area of the original market. within these two regions, personal interviews were conducted as a primary source of information. following the overarching research structure, informants were divided into two groups. experts were defined as individuals with a high level of knowledge about a certain clt market (external), and manufacturers as companies that produce clt (internal). when selecting experts we attempted to engage a large variety of participants. the first few interviewees were chosen through convenience sampling. subsequently, snowball sampling was used, where every interviewed person was asked for references of other potential informants (patton, 2002). following schwarzmann et al. — cross-laminated timber in north america: what can we learn? 83 figure 2: the german-speaking alpine region of europe figure 1: conceptual framework ity of analysis of written transcripts suffers since the researcher’s memory of the interview will fade over time. another significant threat of having a large number of pages of transcriptions is that the researcher might fail to see the forest through the trees and consequently miss or overlook important findings. addressing these issues, clausen (2012) developed the individually focused interview (tifi). the tifi methodology omits the need for the widely-used audio transcription process by relying on verified field notes, allowing a larger number of interviews to be conducted. after the interview, the field notes are shared with the respective interviewee to ask for comments or changes. all verified field notes are then combined to a data set, which is used for data these methods, a large variety of clt experts, such as university professors, trade journal editors, architects, engineers, etc., were identified and interviewed. secondary research showed that north america has only seven operating clt manufacturers. therefore, we invited all of them to participate. the original market has more manufacturers and was approached with criterion sampling, where manufacturers had to be in operation for at least 5 years to be considered. following that, convenience and snowball sampling were also used. our sample size was not defined in advance. instead, we stopped interviewing when data saturation was reached, which means that new interviews no longer provided significantly new information. in total, we conducted 19 interviews, including six experts in north america, five experts in the original market, three manufacturers in north america, and five manufacturers in the original market. personal interviews were conducted using a semi-structured approach. we used four open-ended questions, closely arranged around the two study objectives (see appendix). two interviews were conducted by telephone, while all others were conducted in person. the length varied between 45 and 210 minutes. to make sure interviews covered the most important topics, the research framework categories were utilized as a guide for additional probing questions. every time quotation marks and italics are used in the results, the quote comes directly from an interviewee. according to gillham (2007), transcribing and analyzing recorded interviews are the most time-consuming steps of qualitative research. clausen (2012) sees a significant disadvantage in the time-consuming nature of traditional techniques, as they limit the researcher to a smaller number of interviews. also, if a long time passes between data collection and analysis, the qual84 bioproducts business 3(7) 2018 analysis. considering its advantages, we chose the tifi methodology for this study and adapted the process to ensure data reliability. instead of only relying on verified field notes, every interview, with the permission of the informant, was audio recorded. afterwards, we listened to the recordings and created an additional set of audio notes, which we then compared and merged with the field notes to create a set of final notes. for data analysis, we took a simple structured approach. at first, all information gained through data collection was combined to a complete database by distilling all final notes down to individual information blocks, where each block contained a specific theme. in the subsequent data analysis, the market characteristics stage and the lessons learned stage make use of slightly different approaches. the first divides the respective information blocks into the categories of the swot analysis. within them, the original market and the north american market are compared to each other to create awareness about the differences between them. this builds the basis for the lessons learned stage. to help assure reliability only those information blocks that are mentioned by more than one independent source (number of occurrences >1) are included in the results. 4. results 4.1 the north american market in context the culture around construction and building differs from north america to europe. clt as a product, system, and global industry is more developed now than it was in its early days in europe. because of this, the development of clt in north america will likely differ from the example in europe. the following four points illustrate the differences between the two markets, to put the lessons learned into context. 4.1.1 strengths we discovered that many companies consider similar virtues to be their strengths. for example, most companies in north america as well as in the original market say that providing additional services is very important to their success. this is because nearly all manufactured clt is part of a custom order (muszyński et al., 2017). therefore, companies must support customers with design capabilities and custom fabrication of raw clt panels. muszyński et al. (2017) also found that manufacturers see their additional services as the second most important competitive advantage, after high quality. very few companies produce commodity-type panels that are subsequently customized by carpenters or specialty firms. almost all large manufacturers in the original market, and about half of north america’s producers, are vertically integrated in production. interviewed companies consider this to be one of their biggest strengths and state: “you can only provide price stability, in combination with your own saw mill. then you can set average prices for the next year or so.” this is a great advantage for both the manufacturer and the customer, because the cost of a project can be held stable in the time between the offer and production. in the original market it is common to provide annual cost sheets for clt, whereas in north america, prices are as volatile as the lumber market. 4.1.2 weaknesses since the north american market is comparably young and still in its development stage, the local industry tends to be less efficient. in particular, the standards of production facilities could be greatly improved, compared to the original market. most manufacturers: “add on there, and add on here, and it’s just never gonna be efficient.” therefore, workflows are less lean or quick and more human input is required. this increases the costs of the final product significantly. also, the degree of accuracy and precision, and therefore the quality of clt is lower in north america. the load carrying capacity is not compromised, but for special applications, like visual surfaces, special surface finishes, or art projects, this is an issue. currently, clt producers from the original market can offer cost-competitive and superior quality clt in the us and canada, even with shipping costs included. post production and cnc machining of clt is particularly affected by this prevalent lack of efficiency. the less work input that must be done to a panel in production, the cheaper it can be sold. consequently, clt in north america is currently used primarily for ceilings and not so much as wall elements, because cutting out doors and windows requires more effort and cost. 4.1.3 opportunities globally, population and resource depletion are increasing (wwf 2016). this creates an opportunity for clt construction, as its high degree of prefabrication can provide fast and efficient housing, its good strength-to-weight ratio makes it possible to densify urban landscapes even schwarzmann et al. — cross-laminated timber in north america: what can we learn? 85 more, and being made from wood, clt is renewable and even sequesters co2. despite recent political events, there is an increasing awareness of climate change, also in north america. from a practical point of view, clt is very versatile. experts know that it can be used for public buildings, schools, gyms, hospitals, hotels, apartment buildings, office space, industrial buildings, high-rises, multi-family housing, single-family homes, boutique projects (beautiful buildings), tornado shelters, wind turbines, bridges, as t-beams or plate-beams or free-forms (e.g. artwork), etc. one often-overlooked application involves utilizing clt as access mats, which are used to build temporary roads on otherwise inaccessible terrain, without overly impacting the landscape. clt maintains its structural integrity considerably longer than, e.g., conventional nonlaminated hardwood mats. therefore, clt mats can be used much longer. the oil, utility, and forestry industries in north america use huge volumes of access mats, which provides an opportunity for large production volumes of clt. forest economic advisors (schmon et al., 2017) found in their study that the north american clt access mat market is growing more rapidly than architectural clt. according to their study, north america consumes 45,000 m³ of clt for buildings, and 118,000 m³ for access mats, which is only about 3% of their potential market. speaking of market potential, in north america “the chances for clt are huge”. an especially promising area is repetitive projects. if, for example, mcdonalds decided to make even a canopy for their restaurants out of clt, or if an insurance company would promote discounts for customers who have a clt garage in tornado-prone areas, very large demand volume could result. even modular single-family housing could find large scale application for clt, due to the high degree of prefabrication. it is understood that the north american market is growing faster than the original market did in its beginning. there is considerable excitement around the product. in 2011, a standard for clt (prg320 apa/ansi) was created, and the international building code (ibc) of 2015 in the us (must be adopted by every state individually) prescriptively allows mass timber and clt. in quebec, canada, the office of the local building code, the rbq (régie du bâtiment du québec), even made an official design guide for mass timber projects up to 13 stories, making the code approval process much easier and faster. a “clt handbook” was created by fpinnovations in canada, which is a comprehensive guide on how to build with clt. before 2015, mallo and espinosa (2014) found that the fact that clt was missing in the ibc was the main barrier to the adoption of clt in the us. 4.1.4 threats in north america, wood as a building material has an equivocal image. in the us, more than 90% of singlefamily houses are made with timber-framing (u.s. census bureau, 2016). however, experts also explain that there is a preconception that the use of wood harms forests. apart from the public, even many architects and engineers have the perception that only certified wood is sustainable, thinking that is influenced by leadership in energy and environmental design (leed) building certification. according to our respondents, leed tends to discriminate against uncertified wood, whereas environmental product declarations (edps) can provide a more comprehensive examination and show different results. the current design processes in north america are inflexible and old-fashioned. very popular is the designbid-build process, because it is seen as a tool to control the price of a project. however, it is a threat for clt, because manufacturers must bid on a pre-made design, which often forces a non-efficient use of clt and mass timber. this process also favors decisions mostly based on cost-per-square-foot calculations, which do not consider the savings that clt provides through its speed of installation. architects say that within the current stiff planning processes in north america, “collaborating with manufacturers isn’t very easy”. further, the ibc of 2015 is using safety mechanisms around clt that are very conservative, which limits mass timber design and makes clt less efficient and cost-effective. the mass timber industry in north america is not yet using its full potential of efficiency and know-how. there is existing knowledge and skill in more experienced clt markets that can be learned from, but the north american industry tends to ignore these existing sources of knowledge. many mistakes and experiences would not need to be repeated in north america if more cooperation was pursued. most publications around clt and mass timber in the old market are also available in english, and many european manufacturers are willing to start collaborations internationally, some are even actively looking for partners. 86 bioproducts business 3(7) 2018 4.2 lessons learned 4.2.1 wood education experts mutually agree that it is highly important for clt, and mass timber construction as a whole, to foster education since it is a great point for new professionals to enter the industry. aside from that, the related research increases knowledge and fosters new developments. most needed is education for professionals that work with clt, something well-documented in previous work (oregon best, 2017; mallo and espinoza, 2015; hemström, et al., 2011; kozak and cohen, 2007). firstly, architects must be instructed on how to safely, efficiently and sustainably design clt buildings. they have the power to choose one material over another, so the more they are comfortable with clt, the more demand can be created. in the original market, architects created the largest demand for clt in the beginning. manufacturers know: “if you can’t convince architects, you don’t have projects!”. also, engineers must fully understand the properties and characteristics of clt so that they can plan efficiently and safely. the more engineers that know about mass timber, the more they can increase the efficiency, flexibility and longevity of a building. the importance of educating architects about clt is consistent with mallo and espinoza (2014). they identify a lack of education about clt as a barrier to the adoption of clt in the us. in the original market, education about wood construction is provided on many levels, including high schools, apprenticeships, trainings, and universities. there even are universities that teach in english language and have comparably low costs of tuition, however, very few north americans take advantage of these study opportunities. after the planning stage, a clt structure must be installed, which also requires trained labor. in the original market, carpenters find it very easy to adapt to clt, but in north america this expertise is still scarce. even though assembling a clt building is very straightforward, if someone has not done it before, there is a sizeable learning curve. 4.2.2 water-related building services experts in the original market say, “the only big weakness” that is left in the development of clt and mass timber construction, are water-related building services. accordingly, new optimized solutions for building services in clt and mass timber buildings are needed. experts agree that design of mass timber buildings must carefully consider the potential for moisture intrusion (wang et al., 2018). currently, it is common practice to use standard details and designs from other building technologies like concrete, brick or steel in mass timber projects. it is, for example, typical to route water-carrying pipes within or underneath the screed of a floor construction. by doing so, the biggest vulnerability of wood is ignored; wood will decay when exposed to moisture over time. if these pipes start leaking, water invades the structure and it may be some time before the issue becomes visible on the surface. if it goes unnoticed for an extended period of time, there is potential for significant damage, especially compared to a concrete or steel structure. this is why it is very important to develop and use building services that are designed for wood construction so that any kind of abnormal moisture concentration can be detected right away, and damage prevented. for that reason, experts in the original market ultimately demand: “no single water-carrying pipe should be routed inside of the floor construction. no fresh water, no warm water, no coils for floor heating. all water-carrying pipes have to be accessible!” one alternative solution could be the proactive use of moisture detectors. these could function like smoke detectors, announcing when an abnormally high concentration of moisture is detected in a mass timber building. 4.2.3 tall wood illusion there is an unofficial ongoing race within the global mass timber scene to build the tallest buildings in wood. even public media sometimes reports on the latest achievements in wood construction and big plans for the future. however, experts have mixed feelings about this tall wood hype. the enormous publicity that tall buildings in wood are generating is a benefit for the industry. many people get excited about these projects and even the general public occasionally shows interest. it creates excitement to watch taller and taller wood buildings go up. however, the real drivers that are needed to advance the industry at this point are: a reliable and increasing demand, higher efficiency, and diverse market penetration with large volumes of clt. tall wood projects do not provide these hard benefits, simply because the demand for high-rises, in general, is comparatively low. in north america, the term ‘mid-rise gap’ refers to the situation in canada and the us where wood frame schwarzmann et al. — cross-laminated timber in north america: what can we learn? 87 construction is only allowed up to 5-6 stories, depending on the regional code. everything taller must be built in concrete or steel. however, experts say that concrete is not very efficient below about 10 stories. this opens up an area between 6 and 10 stories, where an efficient building material is needed. this offers a great opportunity for clt and mass timber construction, because in that height range, they can be very efficient. as a conclusion, the “sweet spot” for clt and mass timber construction in north america, lies in the midrise gap, between 6 and 10, or optimistically 4 and 12 stories. north america’s commercial building sector carries a lot of potential for clt and mass timber. potential projects incluede warehouses, retail stores, large schools, hotels, etc. 4.2.4 holistic design clt is not just another building material; it is a concept which requires adapting conventional planning processes accordingly. due to the nature of clt and its high degree of prefabrication, the design process must start very early to be cost-efficient. since clt is a panel, forces are conducted differently, and the structure must be designed differently. in addition, different manufacturers produce different products with different properties and dimensions. therefore, “with clt, working with the manufacturer from the beginning, is really important!”. if this is not the case, plans and 3d models, and structural calculations must be changed to incorporate differing new panel dimensions and performance characteristics. a good design team, where architects, engineers, builders and manufacturers work together early on in the design phase, is key. with clt, “you have to go slow to go fast!”, meaning more time must be spent on the planning phase, so that the construction phase can be expedited. the more planning effort that is invested beforehand, the higher the degree of prefabrication, and the faster the installation will be, which increases time and cost efficiency. in the existing planning traditions in the original market, this approach can be pursued more easily than in north america. processes beyond “design-bid-build” are needed, and owners must be made aware that with prefabrication a design must be final when entering the production and installation stage. architects in north america see clt and mass timber as a potential catalyst for modernizing their existing old-fashioned planning processes. more collaboration and more comprehensive planning are needed. 4.2.5 automation clt is a panel that can easily be machined and transported, which makes it possible to produce housing quickly and efficiently with much less skilled labor in the factory as well as on the building site. our informants say this provides potential opportunity to modernize the entire construction industry. this is precisely the business model currently pursued by katerra in the us (katerra, 2018). common practice in the original market and in north america involves using a cnc to fabricate all clt panels individually off-site, turning a construction site into an assembly or installation site. however, state-of-the-art in prefabrication is already much further along. instead of transporting individual panels, entire cubicles and modules can be preassembled in the factory. modularization even makes it possible to preinstall interior construction and facades so that an installation site can consequently become a mere delivery site. the more that is done in advance, the more efficient and therefore cost-competitive a clt project can be. comparing the construction industry with, e.g., the automotive sector shows that modern production standards could take efficiency to an even higher level. in a car factory, the human component is eliminated as much as possible. clt provides an opportunity to bring this technology to the construction industry, taking it beyond prefabrication, towards automation. currently, almost every clt panel is custom-made. by increasing the level of standardization, this could be changed. a company could offer a few box types and a range of interior features to choose from, similar to car models and their optional features. business models like this can allow mass production of clt. at present, at least two companies are establishing large-scale production facilities, planning to mass-produce modularized clt housing. if they succeed, this concept is very likely to spread globally (schmon et al., 2017). the study from fea (schmon, et al., 2017) predicts that decreasing skill levels and increasing productivity are keys for the future of the construction industry because affordable housing is in high demand worldwide and skilled labor is hard to find. 4.2.6 establishing new production facilities contemplating market entry as a clt manufacturer requires careful decision-making. two things are essential: having good production know-how about clt 88 bioproducts business 3(7) 2018 and knowing the construction industry within a market. wood products companies have an edge in terms of technical understanding, however, glulam manufacturers that have expanded to clt production say it was still challenging. one challenge documented in the literature is the cultural gap that exists between wood products manufacturers and specifiers (fernando et al., 2018). in addition, glulam is often produced as a commodity type product, or with low amounts of customization. with clt, nearly every panel is 100% custom-made and a cnc panel machine is needed to be competitive. glulam-based cnc machines are unlikely suitable for panels. additionally, clt manufacturers must do a lot of planning work up front. they typically provide pre-static calculations, technical detailing, 3d modeling, design assist and optimization. for a current glulam producer interested in entering the market, the options are to extend current production or invest in a new clt production line. experts are fairly clear that a green-field investment is the better choice. a clean start allows use of state-of-the-art technology, which is much more competitive than a patchwork of old and new. a large manufacturer said: “if the decision is made to invest, why not invest into a proper production right away?” machine producers offer pre-planned clt production lines, however, launching and running a production line successfully also requires skill. there is a lot of fine tuning to be done and additional planning services must be established. a potential slow progression for a glulam producer that mostly does commodity production could be starting to provide additional services, like planning and engineering, first. this intermediary step can help to get to know the regional construction industry in detail. once this is second nature, the stretch to manufacturing clt is no longer overwhelming. despite the challenges, there have been numerous announcements of new facilities and high interest within the general wood products industry (oregon best, 2017). 5. summary and conclusions the north american clt industry has already made considerable progress, but the market is in its early development. manufacturers have room for improvement in their operations. for example, planning and customization services must be improved, as well as the overall levels of production efficiency. the newly created product standard in north america, something that does not exist in europe, is likely beneficial for development of the market. also, the international building code prescriptively allows clt; however, the current codes are quite conservative, making it hard for clt to be used efficiently and cost-competitively. the competitiveness of clt against other building materials in general is of significant interest (macdonald, 2017) in the marketplace and deserves the focus of future research. how much does it cost, in comparison to light-frame, concrete and steel construction? current planning processes are old-fashioned and mostly based on cost-per-square-foot values. more interactive processes are needed. another barrier, especially on the west coast, is the belief that using wood harms the forest and is only sustainable when certified. even within the construction industry, this prejudice is an issue. in terms of how wood construction professionals are trained and educated, a lot can be learned from the original market. however, reproducing the extensive coverage that exists there is likely not feasible in north america. perhaps the best place to invest in the north american education system is at the university level, with a special focus on architects and engineers, via close industry cooperation. this is an area that the american wood council and the woodworks™ program are currently active. global research must further focus on two other aspects. production, design, and use of clt must be more efficient, using less material for the same functionality and performance. also, its highly important to develop new solutions for all water-carrying building systems in wood buildings, so that “the only big weakness” of mass timber construction can be eliminated. related to that is the controversial nature of the ongoing tall wood hype. high-rises in wood fascinate people, but they do not keep production lines running across a market. they are still too inefficient, and demand is too little. the ‘mid-rise gap’ carries much more potential for clt in canada and the us. to increase the competitiveness of clt, construction planning processes must be adapted and made much more interactive, incorporating all parties that are involved in a project early in the design phase. in the original market, the level of cooperation is traditionally much higher, and projects are more individual. automation may play an important role in the development of the north american clt market. standardizing and modularizing clt construction can translate to schwarzmann et al. — cross-laminated timber in north america: what can we learn? 89 very efficient production and facilitate direct interaction between manufacturers and customers/owners/ developers. this approach can allow mass production of clt and take the product to the next level of costcompetitiveness. when establishing new clt production this must be taken in to account and a decision must be made to either produce regionally and small, or large and with a high degree of automation. opposed to europe, the north american construction industry is traditionally focused on standardization, repetitiveness, and large scale, which suggests that clt production and planning are more likely to follow that path in north america as the market develops. a solid foundation for clt is being established in north america. within the next few years, strong growth is expected in the industry, especially once larger manufacturers begin producing. in europe, there is a strong regional concentration with austria alone manufacturing about 500,000 m³ annually, or around 65% of global clt production (schickhofer et al., 2017). a similar trend is described for north america by schmon et al., (2017). they claim the demand and supply of clt will initially grow in the “greenest” us states. lastly, new business models are likely to emerge and clt might help to modernize the processes of how architecture is designed and built in north america. 6. limitations our results and conclusions are derived from personal interviews and are based on verified knowledge from the clt industry in north america and the original market. we chose a qualitative approach for this research, so that a great variety of topics could be covered, which is needed to provide a broad overview. while we are confident that our results provide a good snapshot of the industry, the reader should keep in mind the fast-paced change happening in this market and that we were only able to interview a relatively small number of experts and manufacturers in the overall industry. 7. literature cited clausen, a. s. (2012). the individually focused interview: methodological quality without transcription of audio recordings. the qualitative report, 17(19), 1-17. retrieved from nsuworks. nova.edu. fernando, s., hansen, e., kozak, r., & sinha, a. (2018). organizational cultural compatibility of engineered wood products manufacturers and building specifiers in the pacific northwest. architectural engineering and design management, 1-13. gillham, b. (2007). research interviewing: the range of techniques. berkshire, gb: open university press. retrieved from ebrary. com hansen, e., and juslin, h. (2011). strategic marketing in the global forest industries (2nd ed.). corvallis, or. 327 pp. hemström, k., mahapatra, k., and gustavsson, l. (2011). perceptions, attitudes and interest of swedish architects towards the use of wood frames in multi-storey buildings. resources, conservation and recycling, 55(11), 1013-1021. katerra. (2018). general company web site. https://katerra.com/. last accessed on april 30, 2018. kozak, r. a., and cohen, d. h. (2007). how specifiers learn about structural materials. wood and fiber science, 29(4), 381-396. macdonald, i. (2017). personal communication. december 5, 2017, corvallis, oregon. associate director, tallwood design institute, oregon state university. mallo, m. f. l., and espinoza, o. a. (2014). outlook for cross-laminated timber in the united states. bioresources, 9(4), 7427-7443. retrieved from ebscohost.com mallo, m. f. l., and espinoza, o. (2015). awareness, perceptions and willingness to adopt cross-laminated timber by the architecture community in the united states. journal of cleaner production, 94, 198-210. muszyński, l., hansen, e., fernando, s., schwarzmann, g., & rainer, j. (2017). insights into the global cross-laminated timber industry. bioproducts business, 77-92. oregon best. (2017). advanced wood product manufacturing study for cross-laminated timber acceleration in oregon and sw washington, 2017. retrieved from http://oregonbest. org/fileadmin/media/mass_timber/accelerating_clt_manufacturing_in_oregon___sw_washington__2017__oregon_ best_.pdf. last accessed on april 30, 2018. osterwalder, a., and pigneur, y. (2010). business model generation: a handbook for visionaries, game changers, and challengers. hoboken, new jersey: john wiley & sons inc. patton, m. (2002). qualitative research and evaluation methods (3rd ed.). thousand oaks, california: sage publications. 127 pp. schickhofer, g. flatscher g., ganster, k., sieder, r., and zimmer, s. (2017). a status report from the clt hot spot in europe | austria. (presentation at clt seminar, tokyo, sola city conference center) schmon, a., lowney, b., and jannke, p. (2017). global outlook for engineered lumber products, 2010 – 2021. littleton, ma: forest economic advisors u.s. census bureau. (2016). type of framing in new single-family houses completed. retrieved from census.gov/construction/ chars/pdf/framing.pdf. wang, j. y., p.i. morris, a. taylor, j. lloyd, g. kirker, s. lebow, m. mankowski, h.m. barnes, j. j. morrell. (in press). durability of mass timber structures: a review of the biological risks. wood & fiber science. wwf. (2016). living planet report 2016, risk and resilience in a new era. wwf international, gland, switzerland. 144 pp. yüksel, i̇. (2012). developing a multi-criteria decision making model for pestel analysis. kırıkkale, turkey: international journal of business and management. retrieved from ccsenet.org. last accessed on december 31, 2017. 90 bioproducts business 3(7) 2018 interview guide 1. giving informant an overview about research 2. informing informant that interview is confidential and depersonalized 3. asking informant for permission to audio record 4. interview questions 4.1 questions for experts in original market/north america icebreaker: how did your organization become an expert in clt? q1: in your organization’s opinion, what are the main drivers and opportunities for clt manufacturers in the greater german-speaking alpine region/north america? q2: in your organization’s opinion, what are the main challenges and threats for clt manufacturers in the greater german-speaking alpine region/north america? q3: in your organization’s opinion, what developments and dynamics are to be expected within the north american clt market in the next years? q4: in your organization’s opinion, what lessons can be learned from the original european market to help the north american clt market to develop fast and efficient? snowball sampling: what other clt experts could be helpful to this research? what important clt companies could be helpful to this research? 4.2 probing categories for expert interviews political/legal: building codes, environmental, regulations, standards, governmental subsidies economic: gdp, raw material costs, housing starts, square meter prices social: awareness/perception, environmental awareness, relationship to house, clt education technological: it adaption, construction methods, inventions, r&d, health, sustainability demand: advertising, growth, population, annual newbuilds, user trends supply: products types, additional services, raw material, value chain competition: big players, importers/exporters, channel power distribution: sales, communication, marketing & advertising, transportation, value chain customers: industrial customers, end-users, general contractors, value chain existing clt structures: residential, public, multi-family, multi-story appendix schwarzmann et al. — cross-laminated timber in north america: what can we learn? 91 4.3 questions for manufacturers in original market/north america icebreaker: how did your company get into producing clt? q1: what are the strengths and the usp (unique selling proposition) of your company and how did these aspects develop over time? q2: what are the most significant weaknesses and challenges your company had to overcome? q3: in your company’s opinion, what developments and dynamics are to be expected within the north american clt market in the next years? q4: in your company’s opinion, what lessons can be learned from the original european market to help the north american clt market to develop fast and efficient? snowball sampling: what clt experts could be helpful to this research? what other important clt companies could be helpful to this research? 4.4 probing categories for manufacturer interviews customer segments: mass-customized, private-industrial customers, import-export value proposition: customer needs, planning, design, prefabrication, r&d, brands channels: marketing, sale platforms, awareness, communication, transport customer relationships: personal assistance, co-creation, customer/end-user revenue streams: incoming-outgoing, clt, additional services, licensing, advertising key resources: physical (raw material, production line, assembly equipment, trucks) intellectual/human (formulas, parameters, assembly team), financial key activities: purchasing, production, customization, prefabrication, transport, quality control, r&d, site assembly, planning, static calculation key partnerships: suppliers, third party certification, private customers, general contractors, architects, carpenters, structural engineers cost structure: cost-driven, value-driven, fixed costs, variable costs strategies: additional services, vertical/horizontal abstract a well-known furniture making region in jepara, indonesia, has a story to tell. since the 19th century, the region has developed as an industrial district, creating many opportunities for subsidiary activities and other kinds of industries while supporting the livelihood of 4-5 million indonesians. jepara, with a total area of 167.8 km2 (64.7 sq. mi.), has nearly 12,000 wood-based furniture workshops, showrooms and warehouses, all of which employ approximately 120,000 workers, process 0.9 million cubic meters of wood per year, and account for 26% of the district’s economy. however, research shows that although jepara’s furniture export is increasing, continued growth is not sustainable. this situation could jeopardize an industry that supports millions of people. this paper looks at the wooden furniture industry as a low-technology, resourceand labor-intensive sector in facing globalization. therefore, it is important to understand how small-scale furniture producers are being affected by globalization. are they change makers or, the opposite, change takers? can they benefit from globalization? the question is asked in response to value chain inequality. although the value added in jepara’s furniture production is relatively high, profit distribution is inefficient and inequitable. as an integral part of jepara’s furniture value chain (fvc) project, this study was designed to gather information on how furniture production value chain actors might react to potential scenarios regarding the ways in which small-scale furniture producers could best thrive in an era of globalization. four potential scenarios were considered through a literature analysis: (1) fair trade, (2) green furniture, (3) vertical integration, and (4) capacity building of small-scale producers. the purpose of this research involves determining which of these four scenarios would be the most relevant to improve the performance of small-scale furniture enterprises in jepara. recommended strategies include green furniture labels (e.g., eco-labels) and capacity building of small-scale producers. keywords: furniture industry, small-scale furniture producers, globalization, green/certified furniture, capacity building indonesian furniture producers: change makers or change takers? pipiet larasatie1* 1 phd student, wood science and engineering department, oregon state university, 119 richardson hall, corvallis, or 97331. * corresponding author: email: pipiet.larasatie@oregonstate.edu. acknowledgements: the author acknowledges writing support from dr. eric hansen and forest business solutions group (oregon state university) also financial support from lpdp, new zealand aid scholarship, center for international forestry research, and university of canterbury’s school of forestry. bioproducts business 3(4), 2018, pp. 39-50. http://biobus.swst.org. https://doi.org/10.22382/bpb-2018-004 1.0 introduction through globalization, global product markets are increasingly integrated. although borderless markets can be beneficial for economic development, some developing countries find it difficult to compete effectively. this paper looks at the wooden furniture industry as a low-technology, resourceand labor-intensive sector facing globalization. indonesia’s furniture industry plays an important role in the national economy (berry et al. 2001, kaplinsky et al. 2002) by utilizing vast pools of cheap labor (xu et al. 2003). together with china, malaysia, mexico and poland, indonesia contributes to a large proportion of global wood furniture production (purnomo et al. 2011, purnomo et al. 2008, xu et al. 2003). one of the most well-known furniture regions in indonesia, jepara, is a city on the north coast of central java province. wood carving has been culturally and economically important to jepara for centuries. this city has developed as an industrial district, in which growth in one sector (i.e., furniture manufacturing) has attracted thousands of small to medium-sized companies to the administrative district, creating many opportunities for subsidiary activities and other industries. with a total area of nearly country spotlight 40 bioproducts business 3(4) 2018 167.8 km2 (64.7 sq. mi.), jepara has approximately 12,000 wood-based furniture workshops, showrooms and warehouses (purnomo 2013). the furniture industry employs approximately 120,000 workers, processes 0.9 million cubic meters of wood per year, and accounts for 26% of the district’s economy. jepara’s furniture industry is considered relatively small-scale and un-mechanized with few workers per firm; nevertheless, the industry can produce highly specialized products for sophisticated export furniture markets (alexander and alexander 2000). value chain inequality presents an obstacle: although the value added in jepara’s furniture production is relatively high, distribution of profit is inefficient and inequitable (purnomo et al. 2009, purnomo et al. 2011). while furniture exporters and overseas importers enjoy most of the added value, small-scale tree growers and furniture producers receive only 14% of the total profit (purnomo 2006), which is used to support the livelihood of approximately 4-5 million indonesians (ewasechko 2005). from the perspective of distributors overseas, the inability of local producers to consistently maintain the quality of furniture products is a significant issue. this problem may be caused by the ineffectiveness and inefficiencies of production processes, quality control, and distribution (anantadjaya and yudha 2010). most of jepara’s entrepreneurs do not have sufficient business management and production skills to produce furniture efficiently (nansereko 2010). there are contrasting opinions regarding the effect of globalization; some see it as beneficial, while others see it as detrimental. scholte (2005) states that globalization is an emancipating force that increases efficiency, sustainability, welfare, democracy, community, justice, and peace. supporters of globalization suggest global trade can provide more jobs in developing countries through investment from developed nations. more jobs contribute to economic growth as well as increased standards of living by providing health and education facilities. however, the same author also emphasizes negative aspects of globalization, such as the undermining of security, equality, and democracy (scholte 2005). globalization can destroy the state’s ability to regulate national economies, raise taxes, and spend money on public goods and social welfare (wolf 2004). globalization can weaken democracy, by imposing the rule of bureaucrats, corporations and markets, leading to increased inequality within and between nations. it can lower real wages and labor standards as well as increase economic insecurity. further, it can destroy the natural environment by eliminating native species and harming animal welfare. globalization can allow financial markets to generate crises with enormous costs while diminishing human cultures (wolf 2004). some authors believe that developing countries suffer more than developed countries (essmann and adrian 2003, kaplinsky et al. 2002). in their view, globalization only makes the rich richer. increased job opportunities in developing countries happens in labor-intensive or unskilled assembly activities for middle-low salary. firms in developing countries depend on the strategic decisions of lead firms from developed countries and only acquire capabilities in a limited range of operations (humphrey 2004). loebis and schmitz (2005) state that globalization impacts the furniture industry in jepara both positively and negatively. the industry took advantage of 1997’s financial crisis by increasing exports. however, this growth was not sustainable. jepara’s local furniture producers face globalization in one of two ways: taking the low or high road (loebis and schmitz 2005). low road competition includes paying the lowest possible wages, avoiding taxes, and disregarding environmental standards by, for example, using illegal wood. taking the high road means competing by upgrading processes and products. it is generally believed that producers in jepara choose the low road (loebis and schmitz 2005). one of the biggest competitors of jepara’s furniture exporters is china. as a leading furniture exporter for the past two decades, the chinese wooden furniture industry has experienced high growth (han et al. 2009) with a focus on low cost commodities (cao et al. 2004). however, this does not mean growth was without problems. chinese furniture producers face circumstances such as rising costs, shrinking international demand, technology gaps, trade barriers, and, most importantly, a growing challenge from lower-income countries, such as poland and vietnam. this research was an integral part of the jepara fvc project, conducted from 2008 to 2013 by the center for international forestry research (cifor), in collaboration with the forestry research and development agency of the indonesian ministry of forestry and the faculty of forestry of bogor agricultural university. this article investigates strategies to improve the performance of small-scale furniture enterprises in jepara currently faclarasatie — indonesian furniture producers: change makers or change takers? 41 ing globalization. four scenarios, developed through literature analysis, were evaluated by respondents in the study with respect to their potential in improving furniture firms’ competitiveness. the scenarios included: (1) fair trade, (2) green furniture, (3) vertical integration, and (4) capacity building of small-scale producers. the purpose of this research is to determine which of those four scenarios would be the most relevant to help smallscale furniture producers in jepara. this paper is organized as follows. first, i provide a theoretical background discussing small-scale firms in developing countries, value chain analysis, and potential strategies for improving the performance of small-scale furniture enterprises facing globalization. this is followed by a description of the study methods used, including respondent and key informant interviews. results are then discussed from both academic and practical perspectives. finally, conclusions and key limitations are offered. 2.0 theoretical background 2.1 small-scale firms in developing countries the furniture industry in jepara primarily consists of small enterprises (alexander and alexander 2000). micro and small enterprises are defined as firms with less than 50 employees (nichter and goldmark 2009). most firms in the world are small enterprises, both in developing and developed countries. for instance, more than 95% of firms in mexico, thailand, and the united states are considered to be small-scale enterprises (nichter and goldmark 2009). these types of enterprises employ more than half of the working population in many latin american countries, such as paraguay, mexico, and bolivia. in kenya, micro and small enterprises employ one-third of all working age citizens and contribute 13% of national income (daniels 1999). in developing countries, small-scale enterprises usually comprise these characteristics: • relatively low levels of education among owners and workers, compared to larger firms • owners often learn on the job • often not formally registered, usually to avoid taxes • lack of collateral • face significant financial constraints 2.2 value chain analysis one problem faced by jepara’s furniture industry is involved in its value chain (purnomo et al. 2009, purnomo et al. 2011). the value chain concept consists of a systemic view of the production and full range activities required to bring a product or service from conception or design to market. the phases of production include a combination of physical transformation and the input of various producer services, involving delivery to end consumers and disposal, as well as after use and recycling (kaplinsky and morris 2001, schmitz 2005). value chain analysis is one of the best ways for answering issues of globalization and inequality because it focuses on how firms and countries are globally integrated and the dynamics of inter-linkages within the productive sector (kaplinsky and morris 2001). through value chain analysis, the ability of local enterprises can be improved to compete in the global economy and generate sustainable jobs and income for local people (schmitz 2005). value chain governance can be distinguished from forms of co-ordination of economic activities such as market, network, and hierarchy (mccormick and schmitz 2001, humphrey and schmitz 2000, jessop 1998, williamson 1979). several types of value chain governance are shown in table 1. based on the types identified by mccormick and schmitz (2001), purnomo (2009) divided value chain governance into four types: “(1) market-based, indicating many customers and many suppliers; repeat transactions possible, with limited information flows; (2) balanced network, indicating that a supplier has various customers; and both sides have the capability and commitment to solve problems through negotiation; (3) directed network, indicating the main customer purchases at least 50% of outputs, and customers define the product and provide technical assistance; and (4) hierarchy, indicating that firms are vertically integrated and have very limited autonomy to take decisions at a local level.” there is a hierarchy of governance types in export channels between (1) small-scale producers and finishing companies1 /exporters, (2) small-scale producers and 1 finishing companies are the actors in jepara’s furniture value chain that apply finishes to furniture. these companies are commonly large-scale firms that also act as exporters. 42 bioproducts business 3(4) 2018 domestic retailers, (3) finishing companies/exporters and global brokers, and (4) between finishing companies/ exporters and importers. small-scale producers do not have the power to make decisions in their relationship type with finishing companies/exporters and domestic retailers. the finishing companies/exporters collect instructions about furniture design and specification from global buyers who are often a subsidiary of overseas retailers, and later convey information to the small-scale producers. in domestic channels, small-scale producers have a direct network relationship with domestic brokers. the brokers typically buy more than 50% of small-scale producers’ products. however, the brokers can easily shift from one producer to another. relations between small-scale producers and sawmill owners as well as between small-scale producers and wood retailers are market-based. small-scale producers can buy wood from any retailer. if they do not have sufficient funds, they will take loans from wood retailers. small-scale producers are also free to choose the sawmill where their logs are sawn. 2.3 potential strategies for improving the performance of small-scale furniture enterprises in jepara facing globalization this research was an integral part of jepara’s fvc project, conducted from 2008 to 2013 by the center for international forestry research (cifor). the overall aim of the project was to improve the performance of smallscale furniture enterprises in jepara. to achieve this goal, several possible scenarios (strategies) were developed. the project officers formulated the scenarios based on some of the problems that small-scale furniture producers face, such as value chain inequality (purnomo 2013). however, there was no information on how the furniture production value chain actors might react to those scenarios. the analysis from available literature, including publications that were produced from the project, is shown in table 2. the text below explains each of the four scenarios. 2.3.1 fair trade the concept of fair trade for jepara’s furniture companies is inspired by fair trade coffee, a worldwide initiative developed in response to expanding world affluence with distribution inequities. fair trade strives to create balance between economic demand on one side and environmental degradation and social issues on the other. “fair trade coffee” is a type of certification solution that can help balance globalization, which prioritizes market interests and localization commitments, with a focus on people, community, and development (taylor 2005). fair trade, together with vertical integration, can be valuable in providing a price premium to small and medium enterprises (muradian and pelupessy 2005). it may be possible for tree growers to obtain a “fair trade” price premium benefit, even after deducting margins for brokers, cost of certification, etc. (purnomo et al. 2009). this price premium could serve as an incentive to motivate tree growers to produce legal wood. ideally, the price premium is allocated in equal proportions to tree growers and small-scale furniture producers (purnomo et al. 2009). in the future, a fair trade scenario may increase the wood raw material standing stock. raw material availability helps ensure the continuity of furniture manufacturing. 2.3.2 green furniture some studies show that it is important to incorporate environmental sustainability into business strategies (spetic et al. 2016, panwar et al. 2016, panwar et al. 2015). the green furniture scenario encourages production of eco-labelled furniture from certified timber. this can be facilitated by government policy support, such as control on certification, incentives to increase competition, regulation on exports, standardization of minimum prices, and product design protection (purnomo et al. 2009), including patents and copyrights. certification can enhance value added to furniture products (muradian and pelupessy 2005, veisten 2007). table 1. types of value chain governance. williamson jessop humphrey and schmitz mccormick and schmitz 1. market 1. anarchy of exchange 1. arm’s length market relations 1. market 2. network 2. self-organizing hierarchy 2. network 2. balanced network 3. vertical integration 3. organizational hierarchy 3. quasi-hierarchy 3. directed network 4. hierarchy 4. hierarchy larasatie — indonesian furniture producers: change makers or change takers? 43 table 2. literature analysis of proposed scenarios for improving jepara’s furniture industry. scenarios and keywords in the literature no. publications fair trade green furniture vertical integration capacity building of smallscale producers 1 purnomo. (2006). teak furniture and business responsibility: a global value chain dynamics approach. premium price through fair trade 2 purnomo, h., guizol, p., & muhtaman, d. r. (2009). governing the teak furniture business: a global value chain system dynamic modelling approach. fair trade vertical integration 3 purnomo, h., achdiawan, r., parlinah, n., & irawati, r. (2009). value chain analysis of furniture: action research to improve power balance and enhance livelihoods of small-scale producers. green product collaborating down; moving up small-scale association 4 yovi, e. y., & nurrochmat, d. r. (2009). sources of timber and constraints to the timber acquisition of jepara‘s small-scale furniture industries. timber certification timber acquisition 5 irawati, r., & purnomo, h. (2010). analysis of value chain governance: scenarios to develop small–scale furniture producers. moving up; network companies small-scale association 6 irawati, r. h., & purnomo, h. (2010). upgrading wood-based industries: harnessing the social network of small-scale furniture producers and their institutions. upgrading small-scale furniture producers association 7 parlinah, n., nugroho, b., & purnomo, h. (2011). analisis finansial dan kelembagaan rantai nilai mebel mahoni jepara. incentive policies on community forest improving the capacity of small and medium enterprises in the marketing system 8 purnomo, h., irawati, r. h., & wulandari, r. (2011). kesiapan produsen mebel di jepara dalam menghadapi sertifikasi ekolabel (readiness in jepara furniture manufacturers in confront of ecolabel certification). ecolabel certification market-based certification and labelling assume that with improved market access and environmental awareness, customers are willing to reward producers with a price premium (hock 2001) that is possible through market orientation (anderson and hansen 2004). one example of a certification and labelling instrument is that of the forest stewardship council (fsc) (panwar et al. 2016, panwar et al. 2015), an independent, thirdparty, non-governmental, not-for-profit organization which was established in 1993 to promote responsible management of the world’s forests. fsc is one of the major wood certification schemes in the world. there is an increasing trend, especially in developed countries, for furniture made from eco-labelled wood (purnomo et al. 2009, veisten 2007). based on findings from norwegian and british ikea customers (veisten 2007), a 5% price premium, above additional costs, may be feasible in international furniture markets for producers in jepara (purnomo et al. 2009). 2.3.3 vertical integration harrigan (1985) defines vertical integration as a firm’s way to increase value-added margins for the processing chain from raw materials to end consumers. when developing strategies to meet resource needs through vertical integration, firms must consider demand, competitive volatility, and behavior of outsiders. purnomo (2009) modifies the vertical integration concept by proposing that small-scale furniture enterprises can be upgraded through strong coordination with leading firms. this scenario assumes that supply capacity is low and the complexity of transactions is high. in addition, leading enterprises may enforce their standards on small tree growers and small-scale enterprises. this situation is similar to that of starbucks enforcing its standards on coffee farmers, popularly known as ‘first party starbucks code’ (muradian and pelupessy 2005). however, leading firms will likely seek enterprises that already have good standards and can assist with upgrading small tree growers and small-scale enterprises. 44 bioproducts business 3(4) 2018 the expected price premium in vertical integration is lower than in fair trade (purnomo et al. 2009). under fair trade, the market determines the price, while in vertical integration, leading firms control the price. it is estimated that the price premium obtained from vertical integration is 60% of the fair trade price premium, as a consequence, small tree growers and small-scale enterprises could receive a 3% price premium. this is a significant increase for the typical furniture product. in some publications resulting from the fvc project, this scenario was divided into two: moving up and collaborating down. the moving up scenario encourages small-scale producers to move up in the furniture value chain, for example, being furniture brokers or finishing companies or exporters. this scenario requires training on design development and protection, it based marketing, brokering, financing, and overseas trading. by moving up, small-scale producers can have more power and find it easier to manage or develop a network with other small-scale producers. in the collaborating down scenario, small-scale producers are encouraged to collaborate with wood traders and tree growers. frequently, the inconsistency of delivery time is caused by unavailability of wood sources and wood stock. by collaborating with wood suppliers, producers can address wood delivery time and product quality inconsistency issues, and as a result, increase the buyers’ trust. through this scenario, the power balance between small-scale business (small-scale producers, small-scale wood traders and tree growers) and big players can be improved. the small-scale actors can have a better bargaining position to negotiate with brokers and exporters due to better product quality and consistency. 2.3.4 capacity building of small-scale producers to face tight competition with intense price pressure, there are three ways that firms in developing countries can compete: upgrading products, upgrading processes, and functional upgrading (humphrey and schmitz 2002, kaplinsky et al. 2002). functional upgrading means the capacity to change the mix of performed activities. in the case of furniture producers, this includes observing a growing confluence between value added and the degree of intangibles that become the producer’s responsibility, such as design, branding and marketing. these strategies are formulated to be a “capacity building of small-scale producers” scenario that may be done through furniture producers’ associations. there are two major furniture-making organizations in jepara: indonesian furniture industry and handicraft association / asosiasi industri permebelan dan kerajinan indonesia (asmindo) and jepara small-scale furniture producers association / asosiasi pengusaha kecil jepara (apkj). asmindo comprises large and medium-scale enterprises, while apkj represents small-scale players who are mostly types of jepara’s wooden furniture producers. apkj, established in 2008, has collaborated with some of jepara’s furniture stakeholders, such as the government, various trading offices, and furniture and design schools. the aim of apkj is to improve the livelihoods of small-scale furniture producers. through apkj, there is a good opportunity to unite most of the small-scale enterprises. apkj members can be encouraged to enhance business management practices and production techniques, and improve their market access. 3.0 methods this research utilized a single case study focused on the central java area (jepara district) in indonesia and utilized both interviews and field observations. as an integral part of the fvc project, this study was designed to gather information on how furniture production value chain actors might react to potential scenarios on improving the performance of small-scale furniture enterprises in jepara. 3.1 interviews with furniture producers face-to-face interviews were conducted with 80 furniture producers in jepara during april and may 2012. interviews were used to seek information from furniture producers about their reaction to the four previously described scenarios regarding improving the performance of small-scale furniture enterprises across jepara. an interview protocol includes two types of questions: “yes-no” questions following up with “open-ended” questions, as shown in appendix 1. the furniture producers were asked about each strategy: had they heard of the strategy, had they been involved with something similar, and what was the potential advantage for their business and the furniture industry. the interview protocol was pretested twice. the first test was conducted in march 2012 by interviewing a key person from jepara small-scale furniture producers association via email and skype. the results were discussed for preparing another test. the second test was done prior to field work (april 2012) through asking larasatie — indonesian furniture producers: change makers or change takers? 45 three furniture producers considered as having the most extensive furniture industry experience. these results were combined to create an improved final interview protocol, which was used for the interviews with furniture producers. several strategies were employed in data collection for increasing reliability and validity of the study. first, given the locations of many small furniture producers, transportation to interviews was coordinated by motorcycle. using this kind of transportation, which is also a common vehicle in jepara, increased the sense of belonging. second, the local language (javanese) was used for all interviews. typically, jepara furniture producers are reluctant to share information with outsiders. in this case, the researcher was local to the area, which helped alleviate concerns about business ideas being stolen. half of the total respondents were chosen randomly from a cifor database. however, since there was insufficient geographical data for the target population, 32 respondents were also chosen by non-random, convenience sampling based on accessible locations and willingness to participate. in addition, snowball sampling was used relying on networks of previous respondents. the number of snowball sampling respondents was limited to only 8 respondents (10% of total). the researcher carefully documented observations in field notes from each furniture respondent’s workshop and showroom to document the furniture production, sales, and marketing processes. 3.2 interviews with key informants the interview and observation results from furniture producers were cross-checked through in-depth interviews with six key informants from each stakeholder group in the furniture industry. stakeholders were determined through literature analysis, observation, and interviews with furniture producers. interviews were conducted with key personnel from each group or organization in jepara’s furniture value chain including: (i) jepara district government, (ii) teak wood businessmen association / himpunan pengusaha kayu jati (hpkj), (iii) jepara small-scale furniture producers association / asosiasi pengusaha kecil jepara (apkj), (iv) indonesian furniture industry and handicraft association / asosiasi industri permebelan dan kerajinan indonesia (asmindo), (v) domestic customers such as showroom and shop owners, and (vi) exporters. interviews were conducted face to face. the goal with this stage of the research was to gain first-hand information and relevant interpretations of the current industry situation and to get feedback regarding respondent interview results. 4.0 results and discussion the scenarios were evaluated through the views of furniture producers and key informants to determine which were the most relevant. 4.1 respondent interviews the furniture producers’ views of four potential scenarios to improve the performance of small-scale furniture enterprises in jepara are shown in table 3. regarding the fair trade scenario, some respondents said that this could improve product sales, value chain sharing, and the stabilization of product prices. on the other hand, one respondent worried about a decreasing profit margin because of an increasing price, although he believed that the business would likely be more sustainable and could attain greater efficiency, which were more important aspects. in the green furniture scenario, the certification and labelling schemes that have been used by respondents were fsc, verified legal origin (vlo), and tropical forest trust (tft). most small-scale enterprises said that they were assisted by their sub-contract parent company that already had certification. others were assisted by associations, such as the small-scale furniture association, ngos, and multistakeholder forestry programme (mfp). respondents, who were aware of the green furniture concepts but had not adopted it, stated that certification and labelling were complicated and would require significant investment. some respondents are still seeking information about certification and its potential. one respondent relied on the government to help explain the issue. table 3. respondent views of various scenarios to improve the performance of small-scale furniture enterprises in jepara informed no. scenarios possible acceptance (%) uninterested (%) not informed (%) 1 fair trade 2 19 79 2 green furniture 7 39 54 3 vertical integration 1 4 95 4 capacity building of small-scale producers 45 55 46 bioproducts business 3(4) 2018 from the supply side, large producers are far better prepared than small producers. in fact, small-scale furniture producers do not want to buy certified timber because it is more expensive and it is not clear why certification may be important to their business. from the demand side, respondents said that domestic consumers usually do not want to pay more for certified furniture. in general, adoption depends on furniture customers. if customers still accept uncertified products, respondents feel they do not need to obtain certification and labelling for their products. regarding the vertical integration scenario, some respondents believed that if this scenario were applied, it would need a strong leader. they hoped with this scenario, sales and marketing would be well-managed, which could increase product prices and improve the furniture industry. a large-scale enterprise respondent said that they had already adopted the practices in this scenario by offering cheaper products from their sub-contract enterprises to their buyers with a quality guarantee. this enterprise has its own division to manage all its sub-contract enterprises. in the capacity building of small-scale producers scenario, most respondents said that the principal benefits of this scenario comprised interactions with the associations. they expected that they could broaden their knowledge surrounding global markets, expand their business, access training and mentoring, and gain innovative ideas, such as making garden tile and making handicrafts from wood waste. in contrast, other respondents thought those associations did not affect their business since they only care for their members. this is an argument for expanding their association membership. 4.2 key informant interviews based on in-depth interviews with key personnel from each group or organization in jepara’s furniture value chain, the best scenarios were green furniture labelling and capacity building of small-scale producers. the text below provides the key informants’ views and their recommendations for implementing both scenarios. 4.2.1 green furniture although almost half of the furniture makers in jepara have realized that green furniture or eco-label certified furniture is required in international markets, they still have not obtained wood certification for their raw material, particularly because of the lack of information and high cost. in addition, there are difficulties for smallscale producers to obtain certification because most of them do not record their wood purchasing and wood consumption by source. for increasing awareness and readiness of producers to obtain product labelling and certification, the informants suggested producers join training programs related to wood legality and certification. they also must be informed if they want to spread their sales network. they must diversify their markets by getting certified wood as their raw material, as this certification will add value to their products. regarding the high cost of certification, timber legality verification system (slvk) has a solution in which small-scale producers can group together (3 to 5 producers) and apply for a single permit. this scenario requires coordination and integration from stakeholders in jepara’s furniture industry. for example, it could include the coordination and integration of certified wood from perhutani, a state-owned forest enterprise, and community forests, certified processing from furniture producers, access to environmentally oriented customers, and both domestic and international markets. the scenario also needs government policy support, especially in certification control and monitoring, price standardization, export regulation, incentives to increase competition, and product design protection, such as patents and copyrights. 4.2.2 capacity building of small-scale producers as a relatively young organization, apkj still faces many challenges, such as inconsistencies between structural relationships and social personal networks, which cause a lack of balance in relationships and information distribution. apkj members also suffer from limited bargaining power, inadequate access to credit, restricted market access, and insufficient knowledge infusion. 4.2.2.1 organization management informants suggested building trust among members to improve the organization. this can be accomplished through team building workshops focused on the benefits of good relationships, communication, and teamwork. in addition, leaders should attend leadership and organizational management training workshops. 4.2.2.2 trade exhibition management small-scale producers dominate the furniture industry in jepara, especially in rural areas. typically, these produclarasatie — indonesian furniture producers: change makers or change takers? 47 ers lack capital, capacity and extensive market relations. these factors make marketing challenging. for improving market access and sales networking to a wider domestic market as well as international markets, informants suggest that small-scale producers embrace innovative marketing strategies, such as cooperative marketing and participating in trade exhibitions. some producers have realized that exhibitions are very important for access to wider markets and disintermediating the marketing chain. exhibitions are also an opportunity for them to learn about product quality standards in foreign markets. however, because of their background, producers said they needed help doing those things. small-scale furniture producers feel they do not have the capability to manage preparation, dealing with customers, and setting sales goals for trade exhibitions. for this purpose, they hope to acquire training to improve their capability in trade exhibition management. producers hope to learn about: • preparation and planning steps • to-do lists for trade exhibitions • following up with customers after exhibitions • negotiation techniques and dealing with buyers, especially international buyers • quality of design and products for exhibition • network development • character and personal performance 4.2.2.3 information technology (it) skill the informants considered that in the future, small-scale furniture producers need to master design and use of information technology (it), since it is a powerful tool to gather information, which will become more crucial for automating processes, improving efficiency and productivity, supporting decision-making (sowlati 2013), and advancing marketing systems. 4.2.2.4 furniture manufacturing and design skill small-scale furniture producers hope to join a training program for furniture manufacturing. training in product finishing would be more critically important since few small-scale producers complete this process. finishing is usually done by intermediaries (e.g., furniture companies who commonly act as exporters) in the marketing channel. producers also hope to learn furniture design for better inspiration in design development (see figure 1). 4.3 scenario’s application based on the outcome of the research, fvc project personnel recommended scenarios, or adaptations thereof (purnomo 2013), as shown in table 4. figure 1. example of jepara's teak furniture products: gebyok, a room partition made from high quality teak and requiring highly skilled design work and carving. 48 bioproducts business 3(4) 2018 since fair trade and green furniture were quite similar in terms of achieving a price premium, they are merged into a scenario of certified production: ecolabelled or “green furniture”, which requires vertical and horizontal coordination between companies in the value chain. green furniture was implemented by improving efficiency in the use of wood and encouraging the industry to enter certified-product markets (purnomo 2013). trainings were done to help the small-scale furniture producers understand certification schemes and chain of custody so they could comply with certification requirements. the vertical integration scenario, which suggests small-scale furniture enterprises develop strong coordination with leading firms, was divided into two: “moving up” and “collaborating down”. the moving up scenario encourages small-scale furniture producers to move up in the value chain while the collaborating down scenario urges small-scale furniture producers to collaborate with wood traders and tree growers to secure sustainably grown wood supplies. one way the moving up scenario was implemented was through trade exhibitions (purnomo 2013). with support of the project, small-scale furniture producers participated in several exhibitions in jepara, bogor (west java), jakarta, and overseas. furniture producers practiced their exhibition and marketing skills, and the project team members disseminated research findings and outreach materials. during exhibitions, the furniture producers promoted products and activities to access new markets. activities for the collaborating down scenario were designed to increase small-scale furniture producers’ understandings of the patterns of raw material supply and procurement (purnomo 2013). furniture producers were also motivated to plant trees surrounding their houses and in the community. the capacity building of small-scale producers scenario becomes the “association” scenario that suggests forming local organizations to assist members in accessing credit through financial institutions and in improving access to established and/or new markets. the fvc project built institutional capacity in the jepara small-scale furniture producers association / asosiasi pengusaha kecil jepara (apkj). in conjunction with apkj, the project set up and maintained a collective marketing portal: www.javamebel.com. 5.0 conclusions currently, furniture producers in jepara are generally change takers, rather than change makers. this situation is due to two reasons. first, the profit distribution is inefficient and inequitable where small-scale tree growers and furniture producers receive only 14% of profit. second, most of jepara’s small-scale entrepreneurs do not have sufficient business management and production skills to produce furniture efficiently. to improve this condition, this study suggests that the best scenarios are green furniture labelling and capacity building of small-scale producers. the green furniture scenario encourages production of eco-labelled furniture from certified timber to add value to furniture products. this scenario requires coordination and integration from stakeholders in jepara’s furniture industry, especially government policy support. capacity building of small-scale furniture producers is also important. jepara’s small-scale furniture producers association / asosiasi pengusaha kecil jepara (apkj) as the only association for small-scale furniture producers is a good opportunity to unite most of the small-scale enterprises. trust among members can be improved by team building workshops that are focused on the benefit of good relationships, communication, and teamwork. leaders should attend leadership and organizational management training workshops. in addition, additional trainings can be done for apkj members, such as trade exhibition management, information table 4. comparison of scenarios in the study with results of final project (purnomo 2013). no. scenarios in final project name in this study adopted/not name in the final project 1 fair trade not adopted — 2 green furniture adopted green furniture 3 vertical integration adopted 1. moving up 2. collaborating down 4 capacity building of small-scale producers adopted association larasatie — indonesian furniture producers: change makers or change takers? 49 technology (it) skills, and furniture manufacturing and design skills. the findings from this study were utilized and applied in the fvc project where some scenarios were adapted and the others renamed. in the final report of the fvc project, the authors recommend four scenarios: (1) “moving up” that encourages small-scale furniture producers to move up in the value chain; (2) “collaborating-down” that urges small-scale furniture producers to collaborate with wood traders and tree growers to secure sustainably grown wood supplies; (3) “association” that suggests assisting members in local organizations to access credit through financial institutions and in improving access to established and/or new markets; and (4) “green furniture” that motivates the production of certified or eco-labelled furniture (purnomo 2013). 6.0 limitations this study gathered information on how furniture producers reacted to potential scenarios for improving the performance of small-scale furniture enterprises in jepara. with interviews that include yes/no and openended questions and study phenomenon which is quite abstract, there were some challenges to articulate clear answers. 7.0 references alexander, j., & alexander, p. 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(2005). value chain analysis for policy-makers and practitioners. geneva: international labour office. scholte, j. (2005). globalization : a critical introduction (2nd ed.). new york: palgrave macmillan. appendix 1. respondent interview questions sowlati, t. (2013). current and future role of information technology in the global forest sector. in hansen, e., panwar, r., & vlosky, r., the global forest sector: changes, practices, and prospects. boca raton: crc press. spetic, w., kozak, r. a., & vidal, n. g. (2016). critical factors of competitiveness for the british columbia secondary wood products industry. bioproducts business, 1(2), 13-31. taylor, p. l. (2005). in the market but not of it: fair trade coffee and forest stewardship council certification as market-based social change. world development, 33(1), 129-147. veisten, k. 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(2004). why globalization works. new haven: yale university press. total 80 furniture producers were interviewed and asked these questions: 1. have you heard about fair trade? yes / no if yes, have you involved in it? yes, i have / no, i have not what is its advantage for your business and furniture industry? 2. have you heard about green furniture? yes / no if yes, have you used it in your production? yes, i have / no, i have not how you develop certification and labelling system? does any association help you? yes / no if yes, who is it? what is its advantage for your business and furniture industry? 3. have you heard about vertical integration? yes, i have / no, i have not if yes, have you involved in it? yes, i have / no, i have not if you have involved, what link that you have? if you are not involved, is there any opportunity to do that? yes / no does it work? yes / no what are its benefits for your business and furniture industry? 4. have you heard about the possibility to unite the enterprises and or merge smaller companies? yes / no is it possible and feasible to unite the enterprises and or merge smaller companies? yes / no if yes, can you explain it? 5. have you heard about jepara small scale furniture producers association (apkj)? yes / no do you think apkj contributes to your business and furniture industry? in your opinion, how to make apkj better? abstract a considerable portion of the developing world is living in substandard houses. developed countries like the united states have substantially improved the residential construction sector by engineering new materials and developing efficient systems. composite materials, factory-built prefabricated houses, advanced production methods, better designs, and access to abundant resources make the u.s. a world leader in the wood construction industry. this research is focused on characterizing the housing market for bottom-of-the pyramid buyers in developing parts of latin america to give them an affordable yet sustainable alternative to traditional systems. this study attempts to link the capacity of the system-built wood construction sector in the u.s. to urban lowincome housing markets in peru, ecuador, and colombia. case studies and surveys were used to assess key aspects of housing deficits. our findings indicate that developing products for social housing programs can provide access to potential untapped markets. there is an opportunity to develop economic, sustainable, hybrid housing solutions for low-income households. existing policies and trade relations would support this development. current awareness of and perceptions about wood construction are very limited in the region, however. the lack of existing wood construction in these markets indicates a possibility of resistance to acceptance, but also assures no local competition. this research contributes to the opening of new markets for exports of prefabricated wooden buildings in other housing sectors. the same approach can be extended to improve u.s. exports of value-added wood products to latin america. keywords: exports, system-built wood construction, panelized housing, social housing, internationalization assessment of u.s. manufactured system-built wooden homes as an affordable housing alternative for low-income households in developing countries 1 ms student, department of sustainable biomaterials, virginia tech, blacksburg, va 24061, email: kakkarg@vt.edu. 2 associate professor, department of sustainable biomaterials, virginia tech, brooks forest products building, 1650 research center drive, blacksburg, va 24061. 3 professor and department head, department of sustainable biomaterials, virginia tech, blacksburg, va 24061, email: rsmith4@vt.edu. * corresponding author. email: quesada@vt.edu. tel: 540-231-0978. gaurav kakkar1, henry quesada2*, and robert smith3 bioproducts business 4(4), 2019, pp. 41–50. issn 2378-1394. https://doi.org/10.22382/bpb-2019-004 1 introduction latin america (including the caribbean) includes some highly urbanized regions of the world. it is estimated that this urban population will grow from 75.5% in2010 to 84.6% in 2030, mirroring the developed regions of western europe and north america (mcbride & french 2011). this fast-growing urban population has increased the need for housing, but the majority of the countries in the region have not been able to withstand the immense pressure on the supply and cost of urban land and housing (un-habitat 2016). this is indicated by the appalling differences in the living conditions between the rich and poor (bouillon 2012). as a result, housing affordability has become a critical issue (brednoord, lindert, & smets 2014). three major but interrelated factors commonly cited for a region’s poor performance in the housing sector are high housing prices relative to family income, lack of access to mortgage credit, and high prices for land and construction (bouillon 2012, ferguson & navarrete 2003). latin america’s residential construction sector is largely dependent on manpower-intensive, on-site construction. the auto-construction or progressive housing approach, where households carry out construction in phases, is commonly practiced among low-income households of the region (mctarnaghan et al. 2016). this practice, over time, leads to an inadequate supply acknowledgements: this project was funded through a grant from the federal state marketing improvement program (fsmip) at the us department of agriculture. 42 bioproducts business 4(4) 2019 of housing, producing quantitative and qualitative housing deficits (bouillon 2012). by contrast, european and north american countries are accustomed to using prefabrication in construction. an example of this is system-built wood construction for residential and commercial buildings (mcgraw-hill construction 2011). in 2015, a total of 717 system-built wood construction businesses were active in the united states, generating a revenue of $7.4 billion (carter 2015). three companies, berkshire hathaway inc. (28.0%), champion enterprises inc. (10%), and cavco industries inc. (7.8%), together controlled more than 45% of the market share (carter 2015). these system-built wood housing alternatives, built in the united states, have the potential to fill the housing deficit gap in developing countries by producing and exporting an affordable substitute to current practices in those target markets. in the united states, system-built housing has matched and even surpassed existing economic, social, and technical specifications of residential construction (mcgraw-hill construction 2011). the geographical proximity, trade relations, and existing business corridors would further support the development and exportation of system-built housing from the united states to central and south american countries (zhang, toppinen, & uusivuori 2014). despite these favorable business conditions, there is a considerable knowledge gap in the understanding of local regulatory policies, construction codes, potential housing demand and segmentation, and cultural aspects impacting the design and architecture to be used by u.s. businesses to develop these custom products. this study identified key stakeholders and assessed the urban low-income housing markets of three countries in south america: peru, colombia, and ecuador, where wood housing systems manufactured in the united states could be introduced. the analysis investigated the housing deficit and the affordability of low-income household solutions, with the goal of gathering key information characterizing the urban social housing market. the information collected will be helpful for system-built wood construction companies in the united states aiming to expand to urban social housing markets in these countries. 2 literature review with the advent of globalization and industrialization, urban migration and the expansion of cities has become a global trend. central and south american countries are among the most rapidly urbanized in the world. as more people migrate to urban areas in search of a better life, the cities of the region are growing in size and number (ferguson & navarrete 2003). this problem is a major concern for most of the developing world. the united nations (un) estimates that by 2050, 40% of the world’s population will be living in substandard housing (united nations 2016), as a result of urban expansions and population growth. this is due to the impact of rapid urbanization and the excessive strain on housing and serviced land. the un estimates the slum population of sub-saharan africa at 199.5 million; south asia, 190.7 million; east asia, 189.6 million; latin america and the caribbean, 110.7 million; southeast asia, 88.9 million; west asia, 35 million; and north africa, 11.8 million (united nations 2016). the construction sector in these countries, along with other factors, has failed to match the housing demand using conventional systems, forcing people to resort to informal slum settlements. the current housing need in latin america is approximately 42 million units (united nations 2016). to bring this into perspective, one out of every three families in this region lives in substandard housing. both nicaragua and peru, with 78% of the population living in substandard housing, have the highest shortage of housing. bolivia (75%), guatemala (67%), el salvador (58%), and honduras (57%) are the other countries with high housing deficits in the region. 2.1 residential construction industry in the united states of america the construction industry is one of the major industries in the united states. in 2014, the sector accounted for 3.8% of the annual gross domestic product (bureau of economic analysis 2016). wood is the primary structural component and is used in over 90% of houses (piepkorn 2014). the wood sector was badly hit during the december 2007-june 2009 recession, with a net employment decline of 19.8% (hadi 2011). while the domestic market is gradually improving, and there is the possibility of a rebound, the peak sales level (more than 1.5 million residential units) is not expected to occur within next 10 years (u.s. census bureau 2016).the development of a robust business model with diverse market penetration could be one of the options for growth, as well as to prepare for a similar catastrophe in the future (baack, harris, & baack 2013). exports of forest products from the united states have grown over 80% from 2009 to 2014, with the makakkar et al. — assessment of u.s. manufactured system-built wooden homes as an affordable housing alternative 43 jor increment due to volume, as prices stayed uniform (inouye 2015). however, compared to other goods, forest products are more sensitive to economic changes (carter 2015) and thus need a more robust strategy. figure 1 shows the division of different forest product groups and their share in total exports (inouye 2015). assembled products, including factory-built wood buildings, fabricated structural membranes, assembled casks, doorframes, and joinery accounted for $1.3 billion. in 2015, the factory-built home industry (part of the assembled products category) recorded total exports of $226.8 million. seventy-four percent of these exports were to canada, mainly due to geographical proximity. japan, australia, and mexico together accounted for another 15.7%. the remaining 10.3% was dispersed throughout the global market (carter 2015). this demonstrates that the domestic market is the major focus of factory-built homes industry. figure 2 shows the distribution of exports and the share for each of the countries. additionally, finished, value-added products create more jobs and value for the u.s. economy, compared to unprocessed or low value-added products. the systembuilt wood construction industry should look for a niche and new markets in order to rejuvenate and survive, rather than continue to decline (carter 2015). thus, there is a need to further promote and increase the global operations of this sector. 2.2 low income housing as a business opportunity while it is often perceived to be the public sector’s responsibility to develop affordable housing, the government alone is not capable of meeting the housing demand. public policy can act as an impetus to promoting private investment in low-cost housing. as demonstrated in western europe and america, support for public housing programs can significantly promote the private housing industry in reducing the overall deficit of low-cost housing (chen, stephens, & man 2013). the inter-american development bank’s initiative, “opportunities for majority” (omj), also demonstrated that the private sector can stimulate profitable business opportunities by delivering valuable goods and services to the lower economic strata of the market. this population segment has significant buying power and could spend up to $56.7 billion annually in latin america and the caribbean region (stickney 2014a). rojas and medellin (2010) suggested that since each country in the latin america region has varied socioeco logs, $2.4 lumber, $3.4assembled products, $1.3 fuel, $0.8 other products, $1.7 canada 74% japan 2% australia 6% mexico 8% other 10% canada japan australia mexico other figure 1. export value of different forest products categories from the united states (in billions usd, 2014) (inouye 2015). figure 2. exports of factory-built construction industry (carter 2015). nomic and geopolitical structures, the shortage must be tackled differently in each. the improvement of current construction practices, use of better materials, use of new techniques, and government policies to support these changes are good starting points (idb 2012). stickney (2014a,b) demonstrated the need for private financing institutes for the housing portfolio in latin america and the caribbean region and an opportunity for low-cost housing developers, suppliers of construction materials, and ngos in developing a complete solution. a clear understanding of the various export parameters is necessary to assure the success of export-oriented businesses in the forest products industry (parhizkar, miller, & smith 2010). companies interested in developing and exporting prefabricated wood housing to developing countries would also need to have a clear understanding of local markets and the factors responsible for acceptance. thus, it was important to study both the current government policies regulating social housing projects in the region and the existing use of wood in construction, and to identify the different stakeholders involved in the social housing value chain. 44 bioproducts business 4(4) 2019 3 methodology 3.1 research approach a qualitative research design, specifically a case study method, was used to conduct this study. a qualitative design aims to explore and understand stakeholders’ opinions regarding an issue and is useful when the goal is to understand the problem based on the information given by the participants (creswell 2009). this also provides an opportunity to study the subject in its natural setting. case studies are empirical forms of inquiry with a systematic approach for information gathering. this approach goes beyond pure data gathering by including different approaches to information collection. it involves recording life experiences and histories, related documents, and participant perceptions. this gives an opportunity to bring out the potential discrepancies or “fallout” related to the research topics, which might be missed by other approaches. therefore, case studies are considered an efficient method of detailed and in-depth data collection (berg 2004), and are part ofthis study. 3.2 research process the initial research question was defined at the beginning of the research process as to “assess the opportunity of exporting prefabricated wood construction manufactured in the united states for residential applications.” the next step was to define the target population and delineate potential subjects for the study. as mentioned earlier, this study targets urban social housing markets in developing countries of south and central america that have high qualitative (housing conditions) and quantitative housing deficits. peru, ecuador, and colombia were selected as case countries. this selection was based on the level of existing housing deficits in the region (bouillon 2012), which can provide a scalable market share to potential manufacturers in the united states. 3.3 research methods and instruments as a first step, secondary information about the policies regulating social housing in each country was documented. this included details of existing projects. companies’ information was obtained through newsletters, company websites, books, and peer-reviewed journals. this information was used to prepare semi-structured interviews. this also helped validate the data collected through the later interviews by triangulation. the united states commercial service offers the “gold key matching service” to help u.s. companies find potential links to gain knowledge of and access to overseas markets. this is conducted by arranging interviews with preselected stakeholders (international trade adminstration 2016). stakeholders interviewed for this study included local and federal government agencies, builders, project development and management companies (both public and private), financial institutes, and nonprofit organizations. semi-structured interviews served as a main tool for data collection, where the investigations were based on, but not limited to, predefined questions. the questionnaires were divided into sections targeted at specific stakeholders. factors characterizing the social housing market highlighted by mcbride & french (2011) and bouillon (2012) were used as a basis to develop questions for each participant category. the interviews started with the demographics of the organization. for government agencies, the interview included questions about the policies concerning the regulation and management of social housing projects. for builders and project development and management companies, details about allotment and approval along with construction practices were collected. there was also a section on awareness and perception of the use of wood as a structural component in residential construction. since the interviews had overlapping questions, the information was cross-validated based on the responses from participants within various categories. 4 results this section summarizes the findings of the study from the market analysis conducted in peru, colombia, and ecuador. because it was the first of its kind in the region specifically for analyzing market opportunities for u.s.built prefabricated, panelized wood-housing systems, the focus was to gather macro information from the major capital cities of the target countries. table 1 summarizes details of the interviews conducted, categorized by stakeholder groups. each interview had two to three participants (in other words, these were not individual interviews). the key highlights of policies and schemes associated with social residential housing are discussed first, followed by current solutions in the market by major construction companies. the findings also include highlights of major financial and supervising institutions supporting/monitoring such projects. kakkar et al. — assessment of u.s. manufactured system-built wooden homes as an affordable housing alternative 45 4.1 lima, peru within the construction industry, one of the engines of economic growth—the current housing deficiency—was a major concern of the peruvian government. there was additional pressure on the government as cities expanded and households migrated to urban areas in search of better jobs. this also led to an increase in land prices, indirectly affecting construction costs. most of these migrating households were lowto medium income families that moved to illegally constructed structures on the periphery of major cities. 4.1.1 policy techo propio/ adquisición de vivienda nueva (avn) [own roof/new housing acquisition] is an umbrella policy supporting social housing projects. this program was implemented in 2002, with the goal of creating a subsidized housing market for low-income households. the policy attempts to resolve the problem of the high and increasing costs of land and construction, informality, and social inclusion. 4.1.2 current status of residential construction brick and concrete were the most commonly used construction materials. prefabrication, both in wood and concrete, was not commonly used in residential construction. despite different support programs, there were only a few builders in lima working exclusively in social housing projects, due to the lack of profitability using current construction methods. progressive housing was common in lowand middle-income households in the country, where a family would begin with a very basic structure and an empty lot. over time, the family would build floors and expand the house. despite this, there were no specific cultural/regional design/architectural requirements reported. the durability and maintenance of wooden buildings, as compared to concrete buildings, in the humid climate of lima can be a deciding factor. according to chamber of construction, metropolitan lima alone had an expected demand of 443,544 units in 2014. however, there were only 27,952 (6.3% of the demand) homes built. fifty percent of the unmet demand was for units below $40,000 usd (ownership cost, including land and construction) (capeco 2011). 4.1.3 application of wood the reported use of wood was limited to non-structural applications only. there were a few high-cost projects that used wood for structural applications, but the market share was very limited. policy has a major role in regulating the use of wood. according to existing guidelines, only indigenous species can be used as a structural component in government projects. there is a provision that allows foreign wood species to be included, however, after it has gone through testing procedures. grades of materials and guidelines approved by u.s. agencies could be easily accepted by the peruvian regulatory agencies and could help speed up the process. the interviewed stakeholders widely acknowledged the benefits of wooden construction, including better seismic resistance, shorter construction times, lower cost, and being more environmentally friendly, compared to concrete construction. wood construction can also be used as emergency shelters in more remote regions of the country. the ease and speed of building a prefabricated house can give this type of construction an extra edge over concrete construction. 4.2 bogota, colombia the colombian housing market varies from luxurious homes to temporary shacks with a bare minimum of infrastructure. while there was a well-developed morttable 1. interview details. number of interviews stakeholder groups lima, peru bogota, colombia quito, ecuador total construction companies 3 2 3 8 governmental organizations 2 4 2 8 financing institutes 1 1 1 3 educational institutes 0 1 2 3 non-profits 0 1 1 2 trade firms/ certification agencies 1 4 2 7 wood users / suppliers 2 10 2 14 housing projects residents 1 1 1 3 total 10 24 14 48 46 bioproducts business 4(4) 2019 gage system to finance housing in the country, the lowincome households still failed to get houses through formal markets. as a result, this section of the market resorts to informal construction. in bogota alone, 54% of the homes built between 1993 and 2005 were built informally (florian 2011) and varied in quality and concentration across the city. 4.2.1 policy the state does not build homes under any schemes, but encourages and supports the private sector. proposals for projects are invited once a need is determined by the government. the proposals are examined and projects are regulated by findeter, a third-party mediator and developmental bank. findeter is a financial management institution for social housing and is also involved in budget planning each year. a foreign company can participate in the bidding process by demonstrating five years of construction experience or by partnering with local companies. proposals do not specify any material or design usage; however, project designs have to be approved by the government entity, “curaduria urbana,” before the project is implemented. the proposed homes should be durable and secure from break-ins. despite high government interest, only a few construction companies participate in social housing projects. returns from the projects were reported to be highly dependent on project scale. current housing projects for low-income households range from 100 to 2,000 dwelling units per project. with current practices, at least 400 units are necessary to make a project profitable for the builder. if feasible, large companies already tend to subcontract construction processes. builders prefer vertical construction to reduce costs but the people prefer horizontal construction. as of march 2016, the housing policy in colombia had four different schemes to support the housing needs of low-income households. • mi casa ya (my house now): this is a short-term policy to support eligible households with incomes between two to four times the current legal minimum wage (689,455 colombian peso or $230 usd/month, 2016) to buy houses costing from 70 to 135 times the legal minimum monthly wage. the scheme was designed to benefit 130,000 households from 2015-2018. these houses can range from $16,100 to $31,050 usd. • vis (affordable social housing): the goal of this program is to build houses under the value of 135 legal minimum monthly salaries. currently, there is an estimated demand of 77,000 houses in this program. this policy covers houses under $31,050 usd without any restrictions on the selection of beneficiary households. • vipa (priority interest housing): the maximum value of houses built in this program cannot exceed 70 legal minimum monthly salaries, i.e., a total cost under $16,100 usd. this type of housing targets populations in extreme poverty, the network “red unidos,” rural populations displaced by guerrillas, and citizens displaced by natural disasters. the average size of these homes is 48 m2. the program strives to cover more than 100,000 households in different zones (4, 5 or 6) of urban areas. • fondo de estabilizacion de la cartera hipotecaria (frech): frech is a public hedge facility that supports social housing. the benefit provides reduced interest rates to eligible households and acts as a stabilization buffer to counter inflation. the limiting cost for all four low-cost housing schemes also includes the lot cost (< 53 m2), which can be 10% of the total cost of a singlefamily unit. the allotted project may include the availability of a fully developed site with installed utility lines, or the site development may be the builder’s responsibility. 4.2.2 current status of residential construction the building code is designed specifically to withstand high seismic activity. the projects also need to demonstrate energy and water consumption efficiency, a focus area of the current national sustainable energy law. a total of 19,758,964 m2 in area licenses were issued in 2015 for residential house construction, out of which 25% (4,971,147) of the land was dedicated to vis projects (gilbert a. 2014). the majority of the households fail to get support from any of these schemes, preferring progressive housing. this incremental self-construction is a major feature of the low-income housing market in bogota as well. concrete in combination with steel is the most prevalent construction material in the nation. shares of other materials, including brick, make up approximately 11%. every new material used in construction requires approval from the colombian society of engineers. 4.2.3 application of wood the majority of the interviews reported lack of experience building with wood. the current reported use of kakkar et al. — assessment of u.s. manufactured system-built wooden homes as an affordable housing alternative 47 wood in construction was predominantly limited to non-structural applications. this was also due to the unavailability of graded, rated lumber and the negative impression of wood construction. wood is considered for use in either expensive construction projects or for very low cost, temporary housing. two types of projects involving wooden construction in colombia were recorded. techo, a nonprofit international firm, has built 1500 units (of 6 x 3 m each) in the valle aurra region of the country. these units were reported to be imported from chile. programa “aldeas” (program “village”) is one of the flagship initiatives for social housing by epm, a group of companies located in central america, chile, mexico, united states, spain, and colombia with headquarters in medellin, colombia. wood from a private epm plantation was used to develop the project. the project aims to deliver 1,400 homes in three phases. the homes will go to poor families, as well as to households relocated due to hydroelectric projects in six districts of the region. 4.3 quito, ecuador the deficiency in housing in ecuador is spread across both rural and urban parts of the nation. housing conditions vary considerably from city to city, but unfortunately, there was very little data to compare cities in ecuador, either among themselves or with cities outside ecuador. 4.3.1 policy the constitution of ecuador guarantees the right to housing, which implies that the state is responsible for ensuring that all its citizens are properly housed. however, it is not the state’s main function to produce the necessary assets and services, although the state guarantees that society will have the required mechanisms for accessing these assets and services. its basic role is to motivate, channel, facilitate, regulate, set norms, and coordinate the agents engaged in urban development. the government has taken an enabling role where, instead of being directly responsible for producing the houses, it oversees and corrects the housing sector as a whole. in other words, the government enacts and enforces laws and regulations, corrects market failures, and provides institutional, technical, and financial support to the stakeholders, while relinquishing control over the building, lending, buying or selling, owning or renting, management or maintenance of houses and apartments. this enables the key stakeholders in the housing sector, inhabitants, communities, builders, lenders, and local governments to work efficiently and equitably towards meeting housing needs. 4.3.2 current status of residential construction in evaluating the housing markets, we found that despite the slow economic growth, it was reportedly easy for buyers to secure credit and get a home. progressive housing was again one of the major features defining residential construction in lowand medium-cost construction, as households expand their buildings both vertically and horizontally on the same lot over time. this cultural aspect of incremental construction was used by builders as well. selling a unit with only the basic minimum of required construction reduces the cost. it also gives the household an option to make a customdesigned unit that best suits their needs. one of the companies interviewed during the visit had efficiently incorporated modular design to allow future expansion and was delivering units with different levels of finish to keep the costs down. the social housing policy required the unit cost to be under $40,000 usd, 15% to 20% of which was usually the land cost, with the rest allocated to site development and construction. many companies developed projects with units of mixed cost ranging from medium to low in order to assure the overall viability of the project. these builders also preferred vertical construction to save on land costs. however, the consumer still preferred detached homes or horizontal homes. since the use of wood was limited by the lack of wood-working knowledge, there was a need to develop marketing and promotion plans to educate the stakeholders of the benefits of wood construction. 4.3.3 application of wood the use of wood was found to be primarily restricted to non-structural applications. limited knowledge about its application and the poor perception and availability of wood were found to be the major reasons for the low utilization of this resource in residential construction. despite low current use, the market size and the push to find alternative materials capable of better sustaining earthquakes provide an opportunity to promote the use of wood as a structural component in residential construction. this was evident from the increasing use of bamboo in residential construction in earthquake-prone coastal regions. the perception of using it as structural component among low-income consumers changed 48 bioproducts business 4(4) 2019 substantially after a devastating earthquake in april 2016 in the southeastern region of the country. nevertheless, lack of performance standards for building with bamboo or any other alternative material was a major concern among builders and designers. there were no reported restrictions on the use of wood in construction. there are agencies that can assist companies in planning projects and drafting proposals for social housing projects. there were no reported restrictions on the participation of foreign companies, provided the project was approved. perceptions about wood, awareness of the benefits of using wood, and education about its use are major hurdles in the ecuadorian market. however, the push to find renewable materials and determine their architectural uses, when supported with the correct programs, can help break this taboo. this would help open new markets for wood construction in general, and prefabricated wood-building manufacturers in the united states could take a lead in this market. 5 discussion pre-manufacturing houses in a closed environment and shipping them to the construction site is not a new idea. the united states, being one of the largest producers and consumers of wood fiber, is perfectly poised to lead the global market. however, this industrialized wood construction sector has been losing ground over the past decade, even in the domestic market, to onsite construction. considering this background, these companies could expand to niche international markets by developing specific products. the experience of manufacturing for domestic markets, efficient building guidelines, availability of efficient delivery networks, and favorable international trade treaties place u.s. manufacturers in a favorable position to export these housing solutions. table 2 summarizes findings across the three studied countries. prefabrication of buildings helps in optimizing construction by reducing time, environmental effects, health and safety risks, building defects and life cycle cost. the technique also increases net productivity, whole life performance and net profitability. the housing market deficit of the studied countries summarized in table 2 shows an opportunity for innovative techniques to fill the gap. wood prefabricated housing systems can be one of those alternatives. this generates an opportunity for system manufacturers in the united states. these manufacturers can take advantage of this need by developing custom products for each housing market segment. due to the urgent need and the large scale of projects, the social housing segment could prove to be favorable. existing trade channels and policies between the united states and these three countries would further support such expansion. the mode of entry depends upon the levels of corporate control, internationalization cost, and the associated risk the company is willing to maintain. u.s. prefabricated system manufacturers could go international by exporting straight to local builders with or without using intermediaries. direct exporting means of entry would mean less investment risk and cost, but also less control over the supply chain. u.s. manufacturers could also create long-term partnerships with local agencies to form joint ventures while maintaining a certain level of ownership. local partners could be responsible for providing access to the residential construction market, site selection, and development, while the manufacturers could be responsible for developing and manufacturing the wood housing systems. internationalization as an entry mode would involve higher costs compared to exports. the risk of failure would be shared between both of the partners. joint venture involves the formation of a separate legal entity. if any of the partners are not willing to do that, there is the option of formulating a strategic alliance, which is similar to a joint venture, but does not involve the formation of a new organization. another major entry mode that u.s. companies can take is to establish a wholly owned subsidiary. however, this would require the companies to comply with local rules, adjust to local culture and language, accommodate local economic conditions, and expect support from the local infrastructure. there are a few limitations to the approach of this study. the findings reported are country specific and cannot be used for other latin american markets. some of the information collected could also be limited to the selected stakeholder’s perspective. in addition, the details of project parameters (design, cost, timeline, scale, etc.) would vary from one city to the other, even within the same country. only the capital cities of each country were visited for this study, and these cities were used to represent the low-income urban housing market for each country. although the policies regulating and controlling the social housing sector would stay essentially the same throughout a country, the market dynamics may change from region to region. kakkar et al. — assessment of u.s. manufactured system-built wooden homes as an affordable housing alternative 49 6 conclusions by using an exploratory approach, the research sheds light on key factors characterizing the urban social housing markets in peru, colombia, and ecuador. current policies governing economics, scale, and the type of construction in the urban residential sectors in these countries were recorded. personal interviews with buildingand project-management companies, along with site visits, were helpful for insight on the current construction practices in the region. this helped identify vital cultural features defining residential construction. key findings from this study are as follows: • there exists a high, unmet demand for low-cost houses in the urban regions of peru, colombia, and ecuador. • there is little interest in developing low-income housing markets among the local builders due to low profitability, which further expands the deficit gap. • current trade policies, the rising cost of construction, and economic development of the region make it a favorable market for expansion. • the region lacks knowledge on the use of wood and its associated benefits as a construction material. wood is labeled as a cheap construction material with negative service and performance issues. the companies decide their optimal entry mode based on the trade between ownership and associated risk. there is a need to educate about the benefits of wood prior to entering the market to assure acceptance. this can be done by forming collaborations with the government, builders, ngos, and project developers in the foreign market. developing a hybrid design that incorporates both traditional construction and wood prefabricated systems may prove to be the most favorable. this would mean that manufacturers would need to work closely with local builders. this would largely depend upon the selection of entry mode by the company. other market segments such as disaster relief or emergency relocation shelters in the regions should also be examined by the manufacturers of system-built construction in the united states as possible market segments. the social housing market is further divided into a variety of market segments each requiring tailored products and approaches. based on this analysis and reported market potential, it appears that companies in the united states could develop products for social housing projects with promising market access. however, there is a lack of knowledge specifically related to policy, current construction practices, and social perceptions of wood construction in foreign markets. this work helped in identifying potential expansion opportunities for system-built wooden house manufacturing companies in latin american countries. the existing production chain was evaluated to identify factors supporting or hindering business expansion 7 future recommendations assessment of the market is important, but it is not the only process in developing a viable business plan. while this study looked at accessing only three potentable 2. summary of the findings. peru colombia ecuador identified housing deficit (fraction of total households) 72% 37% 50% traditional construction method block and concrete block and concrete block and concrete preferred building type detached apartment buildings (up to 5 floors) both detached and apartment homes average floor area of social housing 20-25 m2 20-30 m2 45-60 m2 selling price of single family homes (usd) $25,000-$45,000 $16,000-$32,000 < $40,000 (social housing) $40,000-$70,000 (public housing) profitability of social housing projects average below average average use of wood in construction non-structural non-structural non-structural building code for wood construction absent present present restriction on using imported wood species yes no no awareness of use of wood in construction limited limited limited social perception of wood construction poor poor poor other probable markets mining displacement camps and housing in hilly regions projects with less than 250 units coastal and high seismic prone regions 50 bioproducts business 4(4) 2019 tial markets in the central and south american region, future studies should look into other markets as well, in order to compare and find the appropriate country to target. this study explored the possibility of introducing system-built wood construction in the social housing market segment only. nevertheless, the same strategy can be used to assess the market potential for exporting to other segments of the residential and commercial construction market. this study can further be augmented by assessing the supply side of the value stream by evaluating existing manufacturing capabilities and the interest of u.s. manufacturers in export. by combining these 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(2010). business reseach methods (8th ed.). cengage learning, independence, ky. abstract several metrics have been formulated to evaluate the environmental impact of chemical manufacturing processes. however, there are no formulas for simplified, back-of-the envelope estimation of their efficiency of resource utilisation and profitability, which are hugely influential when it comes to determining investments and, for academic users, justifying research into new conversion technologies. herein, we posit a new metric called the valorization (v) -factor to estimate these parameters for manufacturing processes that utilize biomass. additionally, we also argue that co-assessment of the established environmental (e) -factor, related to waste production in a process, and v-factor will greatly facilitate the development of environmentally and economically sustainable processes for valorization of biomass. keywords: valorization, bioeconomy, manufacturing, technoeconomics, profitability, biomass the v-factor: towards a new metric for gauging the efficiency and profitability of manufacturing processes for the bioeconomy 1 department of wood science, university of british columbia, vancouver, bc canada v6t 1z4 2 department of chemical and biological engineering, university of british columbia, vancouver, bc canada v6t 1z3 3 school of biomedical engineering, university of british columbia, vancouver, bc canada v6t 1z3 * corresponding authors. email: vikramaditya.yadav@ubc.ca, scott.renneckar@ubc.ca acknowledgements: the authors would like to thank the natural sciences & engineering research council of canada (nserc) for funding. scott renneckar would like to acknowledge the support of the canada research chairs program. saurabh patankar would like to thank the queen elizabeth ii diamond jubilee scholarship program for financial support. saurabh c. patankar1, sonal r. ayakar2, scott renneckar1,*, and vikramaditya g. yadav2,3,* bioproducts business 4(6), 2019, pp. 63–76. issn 2378-1394. https://doi.org/10.22382/bpb-2019-006 1 introduction human history has a cycle of innovation and corrections where mass consumption and development has resulted in unforeseen (or limited appreciation for) severe consequences such as species extinction, elevated lead levels in blood, mass deforestation, ozone deterioration, release of carcinogenic compounds, and global warming. in an effort to minimize the environmental footprint of chemical and manufacturing industries, eliminate the generation of hazardous and toxic wastes, and reduce energy consumption, a set of sustainability principles were created to guide the development of greener chemistry practices (anastas & warner 1998). these twelve principles, with origins in pollution prevention and regulation, are quite straightforward and include guidelines such as “use renewable feedstocks” or “design benign chemicals”. furthermore, the twelve principles of green chemistry, have had a profound impact on the manner in which chemical processes are now designed graphical abstract mailto:vikramaditya.yadav@ubc.ca mailto:scott.renneckar@ubc.ca 64 bioproducts business 4(6) 2019 and operated (anastas & lankey 2002, anastas & warner 1998), and importantly a variety of metrics have been formulated to assess the compliance of manufacturing processes with these principles (table s1 in appendix). the embracement of these straightforward metrics by the chemical industry has greatly improved the atom and energy economies of manufacturing processes (sheldon 2014). chemical processes are now designed with an eye to avoid the use of toxic solvents, incorporate renewable feedstocks, and employ catalysts in lieu of stoichiometric quantities of chemical reagents; and products too are now conceived to be more biocompatible and designed for biodegradation. by close examination of by-products formed as possible new reagents, the extensive use of green chemistry metrics has also accelerated the transition of the chemical industry to a circular economy (sheldon 2016), which will reduce its environmental footprint even further. nevertheless, while the reconfiguration of a manufacturing process to minimize its environmental impact delivers two of the three bottom lines (elkington 1997), people and planet, its impact on the third factor, profits, is not as clearly articulated (sheldon 2014). instead, developing processes that utilize resources as productively and profitably as possible – a concept which has its roots in the german term verwertung (sheldon 2016) – could inherently deliver the coveted triple bottom line. to this end, formulas that provide quick, back-of-the-envelope estimates of how productively and profitably a process utilizes resources could be tremendously useful in the design cycle. while metrics such as the ecoscale (van aken et al. 2006) or the green aspiration level (roschangar et al. 2015) provide this information to varying degrees of detail, they are not easy to use; and, paradoxically, despite requiring extensive (and often difficult to procure) data to evaluate, both are semi-quantitative and sensitive to subjectivity in estimates for some of their parameters. significantly, there are no metrics to assess the efficiency of resource utilization and profitability of processes that valorize biomass, a hugely important domain of the emerging bioeconomy (bozell & petersen 2010). not only are biomass-based alternatives already replacing petroleum-based processes (karp et al. 2017), but they also open new opportunities to manufacture novel chemicals with superior or designer properties that are otherwise unattainable via petrochemical operations (carus & aeschelmann 2017, carus et al. 2017). in an era in which research on biobased chemical manufacturing is booming, the paucity of metrics to quantify the efficiency with which processes valorize biomass is especially glaring. our extensive search yielded only two metrics that partially meet this need. the biotechnological valorization potential indicator (bvpi) measures the degree of suitability of a lignocellulosic feedstock for biorefining (duarte et al. 2007); whereas the biomass utilization efficiency (bue) index is an estimate of the percentage of biomass on a molar mass basis that ends up in the desired products (iffland et al. 2015). both metrics are grounded in the assumption that treatment of biomass to generate a uniform stream of products typically enhances its value. in contrast, we sought to compare processes based on the degree to which they add value to biomass. to this end, we have conceived a set of simple formulae to quantify the value addition in biomass valorization processes. we label these metrics as v-factors or valorization factors. 2 concept the unabridged v-factor incorporates all variables that influence the profitability of a manufacturing process, namely the costs of its reactants and products ($/kg), its fractional yield, its capital and operating expenditures (capex and opex, respectively, $/kg for both), tonnage of the product (mt or metric tons), and the tonnage of its product sector (mt). approximate annual tonnages for some key product sectors are listed in table 1. the unabridged v-factor is postulated as: in this formula, the costs of the product and reactant are on a per-kilogram basis. the capex and opex are also scaled to a per-kilogram of product basis. capex includes costs associated with fixed assets such as land, buildings and manufacturing infrastructure, whereas opex includes manufacturing costs, separation costs, r&d investments, plant overheads, labour, insurance, administration costs and taxes. since capex is an asset, it is directly proportional to profitability. on the other hand, since opex is a liability, it varies inversely with profitability. unabridged v-factor = (cost of product cost of reactant) × (fractional yield ) × (capex opex ) × ( tonnage of product tonnage of product sector) (1) patankar et al. — the v-factor: towards a new metric for gauging efficiency and profitability of manufacturing processes for the bioeconomy 65 sector’s profit share of the global chemical market has remained constant over period of 20 years and is expected to remain same over next 25 years. the volume or tonnage at which a product must be manufactured in order to attain economies of scale, the capital and operating expenditures, and investments on r&d that are typically required for a sector greatly influence its profit share. for instance, the profit share is positively correlated with manufacturing volumes. sectors with higher manufacturing volumes such as petrochemicals typically achieve greater economies of scale compared with speciality chemical producers (jones 2013). however, higher manufacturing volumes usually incur substantially greater capital expenditures. as a consequence, the profit share for operating in a low-tonnage sector, despite having disadvantages such as higher product and process r&d expenditures, is not significantly lower in comparison. we used sector’s profit share data and coined the term fractional dollar output to simplify determination of v factor. the use of the fractional dollar output for estimating the profitability of processes is akin to performing a gate-to-gate life cycle analysis (lca) in lieu of the more accurate cradle-to-grave lca. 3 examples v-factors for some common manufacturing process are plotted in figure 1. the fractional yields used in these calculations are the highest reported values for that particular process and include examples that have low the unabridged v-factor is also directly proportional to the ratio of the dollar values of the products to reactants. this implies that as the cost of the product increases vis-à-vis to the cost of the reactant, the more profitable is the use of the reactant by the process. the fractional yield always ranges between 0 and 1. for processes not involving a chemical reaction, the fractional yield represents the fraction of the starting material that is converted to the desired product. predictably, the more efficiently the process converts the reactant to the product, the more profitable it will be. generally, the better the infrastructure used for manufacturing, which translates to higher capex, the higher is the fractional yield. moreover, higher fractional yields, which are indicative of technologically mature processes that do not necessitate large investments on r&d, also incur lower separation costs, and, as a consequence, lower opex. although the unabridged v-factor adequately describes how efficiently a process valorizes its inputs, it is not easy to calculate. this is especially true for academic users who may not have good estimates for capex, or upto-date information about pricing or product tonnages. it is also evident that the equation has redundancies that could be factored out in most cases. as a result, we have simplified the previous formula by incorporating the fractional dollar output for individual sectors. we term the simplified metric as the v-factor, and the fractional dollar output is an attribute of the industrial sector in which the product will be sold. table 1. approximate annual tonnages for various product sectors. sector tonnage (mt) (sheldon 1992, sheldon 2017, sheldon 1997) fuels & petrochemicals 107 commodity chemicals 105 speciality chemicals & polymers 103 pharmaceuticals 102 table 2. predicted global averages of fractional dollar outputs of selected sectors. sector fractional dollar output basic chemicals, fuels and petrochemicals 0.3 pharmaceuticals and agrochemicals 0.2 speciality chemicals 0.2 polymers and fibres 0.2 oleochemicals, surfactants & auxiliary chemicals 0.1 this simplification greatly improves the utility of the v-factor and provides academic users with a useful tool to quickly assess profitability during the formulation of green chemistry and engineering research strategies. the fractional dollar output also ranges between 0 and 1. in addition, the sum of the fractional dollar outputs for all sectors of the chemical industry is one. forecasted global averages of fractional dollar outputs for some common industrial sectors between now and 2050 are listed in table 2. the impacts of manufacturing volumes, capital and operating expenditures, and investments on r&d on the profits has been assessed previously (heaton 1991, valencia 2013), and it has been observed that a v-factor = (cost of product cost of reactant) × fractional yield × (fractional dollar output of sector ) (2) 66 bioproducts business 4(6) 2019 technology readiness levels (héder 2017). information about the conversion processes and the raw data employed to calculate the v-factors have been compiled in table s2 in the appendix. from a chemical engineering standpoint, analysis of the v-factors plotted in figure 1 also confirms the wisdom of selectively exchanging – or converting – less reactive c-c and c-h σ-bonds in the substrate for more reactive c-c π-bonds to generate a small set of products, but at higher yields, as opposed to arbitrarily exchanging of σ-bonds for π-bonds to generate a plethora of products (kolb et al. 2001). comparable insights are discernible for the other substrates listed in figure 1. figure 1. v-factors for the manufacture of selected products obtained at the highest reported fractional yields. detailed information about the conversion processes and the raw data employed to calculate the v-factors have been compiled in table s2 in the appendix. the product labels are listed in descending order of their v-factors and correspond to the order of the ordinate points plotted for each substrate. 4 variations to the formula although the v-factor is a useful comparative metric, it has some limitations, chief among which are that it relies on empirical data. additionally, it can only be used to compare either processes that manufacture different products from the same reactant or processes that make the same product from different starting materials. a comparison between processes that manufacture identical products from the same reactants necessitates inclusion of capex and opex. since capex is quite difficult to estimate for academic users, we empirically determined that eliminating capex from the equation still provides a reasonably accurate approximation for comparative patankar et al. — the v-factor: towards a new metric for gauging efficiency and profitability of manufacturing processes for the bioeconomy 67 valorization by the processes. this modification to the calculation yields a formula for a “process-function” v-factor, whose labeling is rationalized similarly to process or pathdependent thermodynamic functions (sychev 1991). in fact, one could simply replace the ratio of capex to opex with the reciprocal of manufacturing costs incurred on a per-kilogram of product basis, which can be estimated quite readily by academic users. if no information on product tonnages is available, which is quite common for new products, the fractional dollar output could be used instead. is produced from a variety of renewable feedstocks at relatively modest scales and has been suggested to be used in the replacement of plastic bottle containers for soda pop (xue et al 2016, yadav et al. 2004). limonene, on the other hand, is produced industrially via extraction from the peels of citrus fruits (pourbafrani et al. 2010). although the annual tonnages of hmf and limonene vary merely by about an order of magnitude, the former is a bulk chemical whereas the latter is a speciality chemical whose price and quality fluctuates seasonally. these fluctuations have forced manufacturers of limonene to pursue other alternatives, one of which is microbial fermentation. although the microbial synthesis of limonene is not cost-competitive at the moment, it is expected to rival and eventually supplant the current mode of manufacture by riding the wave of synthetic biology (jongedijk et al. 2016). it should be noted that the tonnage and cost for limonene reported in table 3 refer to its production using the current, extractionbased route, whereas the fractional yield is the highest reported value for microbial fermentation. accordingly, equation 2 is used to calculate the v-factors for the conversion of glucose to hmf (v1) and production of limonene from glucose (v2) as follows: (6) (5) either form of the process-function v-factor can be used to assess competing processes that have the same inputs and products but incur vastly different separation costs. more generally, the process-function v-factor can also be used as a first step to compare processes with similar products and processes with similar inputs. in order to illustrate the utility of the v-factors, let us compare the conversion of glucose to 5-hydroxymethylfurfural (hmf) using a heterogeneous catalyst and the production of limonene from glucose via fermentation (table 3). hmf is an important platform chemical that table 3: conversion of glucose to hmf and limonene. process product cost of reactant ($/kg) cost of product ($/kg) fractional yield product tonnage (mt) fractional dollar output sector tonnage (mt) manufacturing costs ($/kg) 1 hmf 0.5 3.5 0.7 (xue et al. 2016) 9 × 105 (factor & equilibrium research report 2017) 0.3 105 1.5 (van putten et al. 2013) 2 limonene 0.5 6.5 0.06 (alonsogutierrez et al. 2013) 5 ×104 (global market insights 2016) 0.2 103 2.15 (jongedijk et al. 2016) the corresponding process-function v-factors for the conversion of glucose to hmf and production of limonene from glucose are estimated using equation 3 to be: (7) process-function v-factor (with fractional dollar outputs) = (cost of product cost of reactant) × (fractional yield ) × ( 1 manufacturing costs ) × (fractional dollar output of sector ) v1 = 3.5 0.5 × 0.7 × 0.3 = 1.47 v2 = 6.5 0.5 × 0.06 × 0.2 = 0.16 process-function v1 = 3.5 0.5 × 0.7 × 1 1.5 × 9×105 105 = 29 process-function v2 = 6.5 0.5 × 0.06 × 1 2.15 × 5×104 103 = 18 (8) process-function v-factor = (cost of product cost of reactant) × (fractional yield ) × ( 1 manufacturing costs ) × (tonnage of product tonnage of product sector ) (3) (4) 68 bioproducts business 4(6) 2019 likewise, if we use fractional dollar outputs (equation 4) instead, the process-function v-factors for the two processes are estimated to be: dollar output for the petrochemical sector is 1.5 times higher than that of the pharmaceutical sector. like the crack spread, the v-factor also clearly identifies levers for maximizing profits. the impending implementation of a carbon pricing and taxation scheme across much of the industrialized world (world bank et al. 2017) has prompted aggressive investments in carbon capture, sequestration and conversion technologies, an example of which is industrialized photosynthesis using genetically engineered microorganisms (sarkar & shimizu 2015). several new ventures are commercializing the manufacture of alcohols in this manner. while the first generation of these companies targeted production of alcohols as biofuels, current operators are producing and marketing alcohols as high-grade, mid-commodity chemicals rather than biofuels. for instance, the wholesale price of pharmaceutical-grade ethanol is roughly three times that of fuel-grade ethanol (s&p global platt’s 2015a, 2015b); and the ratio of the v-factors for manufacturing pharmaceutical(v3) and fuel-grade ethanol (v4) from carbon dioxide is: all forms of the v-factor provide the same inference for the previous example, namely that it is more profitable to convert glucose to hmf rather than limonene using currently available technologies. the conversions of glucose to hmf and limonene could not be more dissimilar from a logistical perspective; yet, all forms of the v-factor correctly predict their comparative profitability. the predictive capability of the v-factors is even better for more realistic comparisons that process developers usually make. however, we would like to stress that since the v-factor is a comparative metric, it is imperative to make similar assumptions and use the same form of the v-factor for the processes being compared. 5 use of the v-factors in decisionmaking it is apparent that for the multiple products and/or substrates case, the v-factor mirrors the crack spread (canadian fuels association 2013, murat & tokat 2009) in oil refining, which is defined as the difference between the price of crude oil and the price of all products that are produced from it. the profitability of oil companies is intricately linked to their crack spread – the wider the spread, the more profitable they are, and, oil companies dynamically alter their product spectra in response to market conditions in order to widen their crack spreads. however, unlike the crack spread, which aids to focus operational strategy, the v-factor can also be utilized to focus research strategies, as is illustrated by the examples of hmf and limonene. if the selling prices for a particular product in two competing market domains were comparable, the domain with the higher fractional dollar output would be the logical choice. although it appears that the net difference between the fractional dollar outputs of individual sectors is small, their impact on the v-factors is sizable. for instance, the fractional since distillation and downstream processing account for a very small fraction of the costs pharmaceuticaland fuel-grade ethanol (mcaloon et al. 2000), manufacturers should choose to compete in the former domain. additionally, since product pricing is heavily influenced by regional factors that control demand and supply, as well as availability of resources, the v-factor for a process will change from region to region (figure 2). for each case that has been analyzed, the fractional yield is assumed to be constant. however, the v-factors vary since the values of the reactants and products vary from region to region owing to the unique market conditions that exist therein. for instance, it is more profitable to generate electricity via the combustion of wood pellets in europe than in india even though pellets cost more in europe. likewise, methanol production in the united states is amongst the most profitable in the world. methanol is efficiently produced from natural gas via steam reforming or by direct partial oxidation of methane. the united states boasts of some of the largest deposits of shale gas process-function v1, fdo = 3.5 0.5 × 0.7 × 1 1.5 × 0.3 = 0.98 (9) (10)process-function v2, fdo = 6.5 0.5 × 0.06 × 1 2.15 × 0.2 = 0.07 (11) v3 v4 = (wholesale price of pharmaceutical-grade ethanol wholesale price of fuel-grade ethanol ) × (0.2 0.3) = 2 patankar et al. — the v-factor: towards a new metric for gauging efficiency and profitability of manufacturing processes for the bioeconomy 69 figure 2. the v-factor for a manufacturing process varies with geography. for each process, the fractional yield is usually constant with respect to location. however, the values of the reactants and/or products vary from region to region since pricing is heavily influenced by regional factors that control demand and supply. the raw data employed for the calculation of the v-factors is presented in table s3 in the appendix. in the world, and the cost of natural gas is quite low on account of the country’s surplus production and supply of shale gas. similarly, the v-factor for urea production is the highest in south africa due to cheaper availability of carbon dioxide from coal; and converting stover to ethanol is more profitable in developing economies due to cheaper collection costs for biomass. since the v-factor depends on demand-supply dynamics, it is also a function of time. this means that, like money, the v-factor too can be extrapolated with respect to time, which allows the user to make temporal projections about the profitability of the process. this attribute of the v-factor aids the user to make informed decisions that are more robust to market trends. finally, the eand v-factors for the manufacture of a selective list of compounds, including those on the highly publicized department of energy’s list of top 12 chemicals (werpy & petersen 2004) that can be procured from biomass are plotted in figure 3. the high oxygen content of biomass and its distinct chemical bonding patterns make it recalcitrant to most of the thermochemical transformations that are commonly employed in biorefining. as a consequence, desirable biomass valorization necessitates use of specially tailored catalysts and novel chemistries (rinaldi 2014, rinaldi et al. 2016), neither of which have been developed to a satisfactory standard, as well as significant quantities of reagents, which greatly lowers the atom economy of biorefining. expectedly, processes for the production of the top 12 chemicals exhibit mid-level e-factors and have low v-factors. such a co-evaluation of eand v-factors provides a clearer understanding of the triple bottom line and prioritizes r&d to transition the process to exhibit low e-factors and high v-factors. 6 conclusions in conclusion, the v-factors enable users, especially academic users, to critically assess the productive use of resources and thereafter formulate informed and focussed research strategies. these metrics are particularly useful for evaluating manufacturing processes that valorize biomass, a hugely important domain of the emerging bioeconomy. estimating the profitability of 70 bioproducts business 4(6) 2019 figure 3. eand v-factors of selected products. processes for the production of the department of energy’s top 12 value-added chemicals from biomass exhibit moderate e-factors and low v-factors. this insight establishes a roadmap for technology development to improve fractional yields in order to further lower e-factors and increase v-factors. switchgrass is the starting material for all products with the exception of electricity, which is generated from wood pellets. the raw data employed for the calculation of the eand v-factors is presented in table s4 in the appendix. manufacturing processes using conventional methodologies requires elaborate market analyses, which may not be feasible for academic researchers to conduct. the v-factors fill a clear gap for such users and allows them to judiciously direct their research efforts. moreover, a co-assessment of the eand any one of the four v-factors presented herein provides a roadmap for technology development that could simultaneously reduce the environmental footprint and improve profitability of chemical manufacturing. nomenclature capex: capital expenditures ($/kg) opex: operating expenditures ($/kg) mt: metric ton hmf: hydroxymethylfurfural v1: v factor for conversion of glucose to hmf v2: v factor for conversion of glucose to limonene process-function v1: process-function v-factor for conversion 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(2004). selectivity engineering in conversion of sugars in to 5-hydroxymethylfurfuraldehyde. abstracts of papers of the american chemical society, 227, u287–u288. 72 bioproducts business 4(6) 2019 appendix table s1: green chemistry metrics. metric formula ref. atom economy (a + b → c) mw of c = × 100 mw of a + mw of b 1 e-factor kg waste = kg product 2, 3 effective mass yield (%) mass of product = × 100 mass of non-benign reagents 4 atom utilization (%) mass of desired product = total mass of all products 5 carbon efficiency (%) amount of carbon in product = × 100 total carbon present in reactions 6 mass intensity = total mass involved in a process or step (kg) mass of product (kg) 6 reaction mass efficiency (a + b → c) mass of product c = × 100 mass of a + mass of b 7 ecoscale = 100 − ∑ individual penalties (unifies several green chemistry metrics and works on a penalty system) 8 green aspiration level (gal) = tgal × complexity where, e-factor tgal = average complexity complexity = (% ideality) × (total # of reactions) % ideality = (# of construction reactions) + (# of redox reactions) total # of reactions 9 73 bioproducts business 4(6) 2019 table s2. v-factors for the manufacture of selected products using the conversion platform with highest reported fractional yield. process value of reactant (usd/kg) value of product (usd/kg) transformation efficiency fractional dollar output v-factor ref. switchgrass to 1,3-propanediol 0.035 22 0.3 0.3 56.57 10 switchgrass to 2-methyltetrahydrofuran 0.035 20 0.3 0.3 51.43 11 switchgrass to 3-hydroxybutyrolactone 0.035 6 0.7 0.3 36 12 switchgrass to 1,4-pentanediol 0.035 12 0.3 0.3 30.86 13 switchgrass to 2,5-furan dicarboxylic acid 0.035 3.8 0.7 0.3 22.8 14 switchgrass to hydroxymethylfurfural 0.035 3.5 0.7 0.3 21 15 switchgrass to glutamic acid 0.035 3.5 0.7 0.3 21 16 switchgrass to maleic acid 0.035 4 0.6 0.3 20.57 17 switchgrass to ethyl levulinate 0.035 3 0.75 0.3 19.29 18 switchgrass to succinic acid 0.035 3.5 0.6 0.3 18 19 switchgrass to γ-valerolactone 0.035 2.5 0.8 0.3 17.14 11 switchgrass to levulinic acid 0.035 2.5 0.8 0.3 12.86 20,21 switchgrass to lactic acid 0.035 3.2 0.7 0.2 12.8 17 switchgrass to aspartic acid 0.035 2 0.7 0.3 12 17 switchgrass to itaconic acid 0.035 1.7 0.7 0.3 10.2 22 switchgrass to glucaric acid 0.035 1.5 0.7 0.3 9 23 switchgrass to tetrahydrofuran 0.035 1.4 0.7 0.3 8.4 24 switch grass to fumaric acid 0.035 1.5 0.6 0.3 7.71 25 switchgrass to adipic acid 0.035 1.1 0.8 0.3 7.54 26 switchgrass to 3-hydroxypropionic acid 0.035 1.4 0.6 0.3 7.2 27 switchgrass to glycerol 0.035 1.2 0.7 0.3 7.2 17 switchgrass to sorbitol 0.035 0.65 0.7 0.3 3.9 28 switchgrass to furfural 0.035 0.4 0.7 0.3 2.4 24 lignin to carbon fibre 0.03 25 0.5 0.2 83.33 29 lignin to carbon aerogel 0.03 35 0.2 0.2 46.67 30 lignin to vanillin 0.03 15 0.1 0.2 10 31 lignin to cinnamaldehyde 0.03 8.5 0.15 0.2 8.5 32 lignin to xylene 0.03 0.8 0.6 0.3 4.8 33 lignin to benzene 0.03 0.75 0.6 0.3 4.5 33 lignin to toluene 0.03 0.7 0.6 0.3 4.2 33 lignin to styrene 0.03 0.2 0.8 0.1 0.53 34 cellulose to nanofibrillated cellulose 0.035 25 0.6 0.1 42.86 35 cellulose to microcrystalline cellulose 0.035 4 0.8 0.2 18.29 36 cellulose to glucose 0.035 0.5 0.8 0.3 3.43 37 cellulose to ethanol 0.035 1 0.3 0.3 2.57 38 cellulose to limonene 0.035 6.5 0.06 0.2 2.23 39 co2 to salicylic acid 0.02 4 0.4 0.3 24 40 co2 to acrylic acid 0.02 1.5 0.5 0.2 7.5 40 co2 to formic acid 0.02 0.5 0.6 0.3 4.5 40, 41 co2 to urea 0.02 0.2 0.8 0.3 2.4 40, 41 rock phosphate to nitrophosphate fertilizer 0.08 3.75 0.8 0.3 11.25 42 glucose to taxol 0.5 1000 0.02 0.2 8 43 starch to glucose 0.1 0.5 0.8 0.3 1.2 44 natural gas to methanol 0.15 0.5 0.9 0.3 0.9 45 veneer to plywood 60 400 1 0.1 0.67 46 wood to lumber* 100 300 1 0.1 0.3 46 wood pellets to electricity 0.12 0.0923 0.25 0.3 0.058 47 *value of reactants and products in usd/thousand board feet. 74 bioproducts business 4(6) 2019 table s3. variation of v-factor with geographical location (ref.: 47, 48-53). wood pellets to electricity region value of reactant (usd/kg) value of product (usd/kg equivalent) transformation efficiency fractional dollar output v-factor india 0.2 0.0615 0.25 0.3 0.023 us 0.12 0.0923 0.25 0.3 0.058 europe 0.22 0.185 0.25 0.3 0.063 south africa 0.15 0.0615 0.25 0.3 0.03 assumptions for estimation of the v-factor for conversion of wood pellets to electricity: electricity costs for india, us, europe & south africa are 0.08, 0.12, 0.24 and 0.08 usd/kwh, respectively 1.3 kg of biomass is required to generate 1 kwh electricity natural gas to methanol region value of reactant (usd/kg) value of product (usd/kg equivalent) transformation efficiency fractional dollar output v-factor india 0.2 0.5 0.9 0.3 0.675 us 0.15 0.5 0.9 0.3 0.9 europe 0.25 0.5 0.9 0.3 0.54 south africa 0.35 0.5 0.9 0.3 0.39 assumptions for estimation of the v-factor for conversion of natural gas to methanol: cost of natural gas in india, us, europe & south africa is 3.9, 2.9, 4.95 and 6.9 usd/mmbtu, respectively 1 mmbtu is equivalent to 28.33 m3 of natural gas density of natural gas at stp is 0.7 kg/m3 co2 to urea region value of reactant (usd/kg) value of product (usd/kg equivalent) transformation efficiency fractional dollar output v-factor india 0.025 0.2 0.8 0.3 1.92 us 0.02 0.2 0.8 0.3 2.4 europe 0.036 0.2 0.8 0.3 1.33 south africa 0.01 0.2 0.8 0.3 4.8 stover to ethanol region value of reactant (usd/kg) value of product (usd/kg equivalent) transformation efficiency fractional dollar output v-factor india 0.025 0.8 0.3 0.3 2.88 us 0.035 1 0.3 0.3 2.57 europe 0.045 0.8 0.3 0.3 1.6 south africa 0.02 0.9 0.3 0.3 4.05 assumptions for estimation of the v-factor for conversion of stover to ethanol: theoretical transformation efficiency is assumed 75 bioproducts business 4(6) 2019 appendix references 1. trost, b.m. 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(2019) market data. https://www.chemicalweekly.com/pricetrack. retrieved july 14, 2017, from http:// bit.ly/2uaamb6. abstract in the united states, trees felled in urban areas and wood generated through construction and demolition are primarily disposed of as low-value resources, largely sent to landfills, or utilized for energy, composting, and landscaping mulch. in recent years, the urban and reclaimed wood industries have emerged to provide a higher value-added outlet, foster local economies, and divert supplies from landfills. this paper presents the results of a nationwide survey carried out to understand marketing practices of the urban and reclaimed wood industries. the results indicate that a majority of respondents were small firms operating for less than 10 years, and that they appealed to consumers between 35 and 54 years of age, with upper middle income status. products and species were widely variable between firms, and sales were largely made-to-order and priced higher than similar products made from traditional sources. primary promotional messages included quality, aesthetics, and customization, largely advertised via the company’s webpage, word of mouth, and social media. the prevalent distribution channels included direct sales, online sales, and retail sales. partnerships appeared to be critical for effective raw material procurement, and, despite barriers associated with urban and reclaimed wood materials and production, growth expectations were almost unanimously optimistic, as reported by participating firms. keywords: urban wood, reclaimed wood, marketing, wood products marketing practices in the urban and reclaimed wood industries 1 department of bioproducts and biosystems engineering, university of minnesota, saint paul, mn. 2 college of natural resources and environment, virginia polytechnic institute and state university, blacksburg, va * corresponding author. email: espinoza@umn.edu. acknowledgements: the authors would like to thank all the companies that participated in the study. thanks also to alejandro sanchez chinchilla for his assistance during the development phase of this study. the work upon which this publication is based was funded in part through a grant awarded by the wood education and resource center, northeastern area state and private forestry, usda forest service. this institution is an equal opportunity provider. anna r. pitti1, omar espinoza1*, and robert smith2 bioproducts business 4(2), 2019, pp. 15-26. issn 2378-1394. https://doi.org/10.22382/bpb-2019-002 1 introduction traditionally, logs from trees originating in urban areas of the united states and wood elements generated through construction and demolition (c&d) projects have been disposed of as low-value resources, typically through chipping, burning, or landfilling. there are approximately 74 billion existing urban trees, and when trimming or removal is necessary, the resulting wood is considered wood waste. in 2010, roughly 34.2 million tons of wood waste entered the municipal solid waste (msw) stream, with 18.4 million tons consisting of woody yard trimmings such as urban trees and limbs (bratkovich, howe, bowyer, pepke, frank, & fernholz, 2014). a majority of reclaimed wood supplies originate from structures like old barns and buildings, and approximately 36.4 million tons of wood waste from c&d were generated in the u.s. in 2010 (bratkovich et al., 2014; howe, bratkovich, bowyer, frank, & fernholz, 2013). in recent years, new industries have emerged to capitalize on these undervalued resources by offering unique aesthetics, historical significance, environmental sustainability, and sentimentality derived from such inimitable wood supplies. these industries also provide economic opportunities in their communities and make use of an underutilized resource to produce high value-added products. this paper presents the results of a research project that used a nationwide survey to develop an industry profile of firms operating in the urban and reclaimed wood industries, with an emphasis on marketing practices. 1.1 urban trees for the purpose of this project, urban trees were defined as those located in urban areas, as outlined by the us 16 bioproducts business 4(2) 2019 office of management and budget (omb), for an estimated total of 74 billion urban trees (sherrill, 2017). urban trees bring forth a variety of environmental, economic, and societal benefits, such as lower air temperatures, pollutant filtration, carbon sequestration, benefits to mental health and community wellbeing, noise reduction, and reduced heating and cooling costs (city and county of san francisco, 2016; nowak et al., 2010). urban trees are removed for a variety of reasons, including landscaping, disease, or development, and the resulting materials have traditionally been regarded as urban wood waste. the epa defines urban wood waste as: yard trimmings, wood from project site removals, pallets, furniture, packaging, and other commercial or household wood waste disposed of in landfills (lyon & bond, 2014). using this definition, it was estimated that, of the 34.2 million tons of wood-based msw generated in 2010, 18.4 million tons of woody yard trimmings like urban trees and limbs were disposed of, with 4.0 million tons available for recovery (bratkovich et al., 2014). wood-based msw is typically disposed of via landfilling or low-value uses, such as landscaping mulch, compost, or firewood. landfilling not only negatively impacts the environment, but also many cities, businesses, and homeowners incur substantial costs to remove, transport, and landfill municipal trees (cesa, lempicki, & knotts, 2003). in recent years, entrepreneurs have noted the potential for further urban log utilization, offering environmental and economic benefits through higher value-added production. 1.2 reclaimed wood reclaimed wood is defined as all previously utilized wood products brought back into circulation, typically originating from old structures, like barns or buildings. salvaged elements include flooring, lumber, and timbers, resulting in a high-quality source of large-section pieces (howe et al., 2013). c&d waste are defined separately by the epa, with construction waste, including packaging, resulting from remodeling or renovation and demolition waste coming from selective or total demolition (united states environmental protection agency, 2007). it is estimated that 36.4 million tons of c&d debris were generated in 2010, with approximately 17.3 million tons of c&d wood waste available for recovery (bratkovich et al., 2014; howe et al., 2013). the forest stewardship council (fsc), an organization that maintains certification standards for sustainably managed forests and supply chains, has expanded the scope of their label to include post-consumer reclaimed wood, including material from residential, industrial, or municipal end-consumer waste streams (forest stewardship council, 2011). the leadership in energy and environmental design (leed) green building rating system provides credit to reclaimed wood projects for applicable life-cycle impact reductions as well as for fsc certification, material reuse, and regional sourcing, recognizing “leadership extraction practices” (u.s. green building council, 2019). both fsc and leed certifications recognize the environmental sustainability associated with reclaimed wood, namely landfill diversion and resource conservation, as well as decreased energy consumption and lower global warming potential when compared to alternatives (bergman, gu, falk, & napier, 2010). additionally, reclaimed wood possesses desirable characteristics for value-added production, including large sections (typically structural beams and timbers), unique aesthetics, and slow-growth wood attributes, as well as allows for strong, fully dried wood that is less prone to additional cracking, due to years of expanding and contracting (yr architecture + design, 2015). 1.3 marketing in the urban and reclaimed wood industries marketing can be defined as managing consumer needs through effective appeal and the promise of superior product value over industry competitors (armstrong & kotler, 2013; shupe & vlosky, 2010). due to the newly established nature of both the supply and demand of urban and reclaimed wood products, literature specific to marketing practices in these industries is almost non-existent. a variety of sources were used to gain a basic understanding of each industry and its marketing practices, including, for example, reports (bratkovich & fernholz, 2010; forest stewardship council, 2011; howe et al., 2013; lyon & bond, 2014; mnp llp, 2015; stai, wiesman, & fernholz, 2017), books (morrison, 2016; sherrill, 2017), online articles (leblanc, 2017; offner, 2014; wood-mizer llc, 2016), and company (specific firms will not be disclosed) and organization webpages (recycle ann arbor, 2017; urban salvaged + reclaimed woods, 2018; urban wood network, 2017; usda forest service, 2017; usda forest service, american forests & national association of regional councils, 2017). urban and reclaimed wood firms vary in terms of products, capacity, distribution, raw materials, and pitti et al. — marketing practices in the urban and reclaimed wood industries 17 markets, to name a few. firms range from small, ownerrun facilities to international export operations, and from newly established firms to companies operating for decades. customers are equally varied, ranging from high-volume corporate customers to architecture and design firms to individual buyers. ultimately, this paper will place emphasis on current markets and marketing practices in the urban and reclaimed wood industries, specifically on product, price, promotion, and distribution. a qualitative analysis of company webpages and other promotional materials revealed that urban and reclaimed wood firms generally offer differentiated products, including custom work, unique aesthetics and finishes (like live-edge tables, resin-filled slabs, and nail hole or painted boards), innovative designs, exclusivity, and sustainability associated with waste product raw materials. pricing within the urban and reclaimed wood industries is often variable due to the high percentage of custom work as well as the unpredictable nature of the raw material and labor required. regarding promotion, anecdotal evidence suggests that urban and reclaimed wood firms effectively leverage tools like social media, company webpages, printed or electronic publications, trade show participation, and educational training to emphasize messages surrounding quality, history, sustainability, uniqueness, and others. finally, in recent years, the internet has facilitated shorter distribution channels for smallto medium-sized firms by allowing them to advertise and sell directly to end users, which is particularly relevant for the urban and reclaimed wood industries. 1.4 objective the objective of this study was to identify current marketing practices in the urban and reclaimed wood industries. to accomplish this goal, the following specific objectives were proposed: (1) develop a profile of value-added urban and reclaimed wood products manufacturers, (2) identify current marketing practices, and (3) identify industry opportunities and barriers. 2 methods a survey was conducted to outline current marketing practices and major characteristics of firms in the target population, specifically us companies using timber from urban trees or reclaimed wood derived from old structures as a raw material for value-added production. because these industries are relatively new and lack a specific census classification designation (north american industry classification system, or naics), a list of companies was compiled through internet searches, social media, state and regional databases, personal contacts, and others. a considerable amount of time was dedicated to compiling this list and obtaining current email addresses. the final distribution list contained 386 companies, consisting of what the authors categorized as 151 “urban wood” firms and 238 “reclaimed wood” enterprises; however, survey results (see results and discussion section) later indicated that many firms identify themselves as utilizing both urban and reclaimed wood raw materials. to avoid confusion, such firms will be referred to as utilizing raw materials from “mixed sources.” using a literature review and the outlined research objectives as major inputs, a questionnaire was developed iteratively in qualtrics, an online survey software system (qualtrics, 2005). the draft was sent to industry experts to ensure question clarity and relevance, to add topics that may have been overlooked, and to delete or modify redundant questions. the resulting recommendations were incorporated into the questionnaire and sent to industry representatives for a second round of feedback. table 1 summarizes the final survey sections, questions, and scales distributed via email to companies in the industry list compiled for this study. table 1. survey structure breakdown. category variables question type company characteristics raw material source, years in operation, number of employees, geographic sales location, monthly raw material consumption, reason for entering the industry multiple-choice questions, open-ended question, likert-like importance scale customer characteristics major markets – age, gender, income category multiple-choice questions marketing practices product, pricing, promotion, partnerships, and distribution likert-like importance scale, multiple choice questions, open-ended questions opportunities expectations for growth open-ended question barriers barriers to growth, barriers to industry operation likert-like importance scale, open-ended question 18 bioproducts business 4(2) 2019 non-respondents received two email reminders prior to the survey’s closure and data analysis. 3 results and discussion after closing the survey, 132 usable responses were obtained from the sample of 386 firms. accounting for undeliverable email addresses (6), companies that declined participation (9), companies incorrectly identified as part of the population (8), and companies that submitted incomplete responses (8), an adjusted response rate of 37.2% was calculated, using an adjusted sample of 355 firms (dillman, smyth, & christian, 2009). this response rate is considerably above the median and average response rates of 26.0% and 31.6%, respectively, for surveys to north american forest products industries, according to a study of 195 surveys conducted between 2000 and 2015 (bumgardner, montague, & wiedenbeck, 2017). nonresponse bias was evaluated to estimate whether significant differences existed between firms responding to the survey and non-respondents. evaluating nonresponse bias is important because it limits generalizations that can be made about a population. for nonresponse bias assessment, late respondents were used as a proxy for non-respondents, and their responses were compared to those of early respondents. questions evaluated included number of employees (a measure of company size), raw material group (including urban wood, reclaimed wood, and mixed-source), and company sales region. from the pearson’s chi-squared test results, no significant associations were detected for region and number of employees when comparing early and late response tabulations, with p-values of 0.768 and 0.175 (p-value > 0.05), respectively. however, raw material group and response timing displayed significant association, yielding a p-value of 0.033, with mixed-source firms over-represented in the final sample (65.2% of late respondents compared to 35.0% of early respondents). 3.1 company characteristics table 2 contains a summary of the participating firms’ characteristics. respondents consisted of 36 (27.3%) urban wood firms, 41 (31.3%) reclaimed wood firms, and 55 (41.7%) mixed-source firms. overall, a majority of firms had been in operation for less than 10 years (43.2%) or more than 15 years (36.4%). more urban wood producers and mixed-source companies (50.0% and 43.6%, respectively) reported operating for less than 10 years when compared to reclaimed wood firms (36.6%). overall, as per the convention adopted for this study, the pearson chi-squared test revealed no significant association between raw material group and years of operation (p-value = 0.070); however, a p-value below 0.10 provides some support to the assertion that urban wood is a newer concept in large-scale application than reclaimed wood (table 2). companies were asked to report where their products were sold, selecting between us regions (midwest, northeast, southeast, southwest, and northwest) and export markets. multiple responses were possible. a majority of participating firms had sales in the midwest and/ or northeast (approximately 50.0% of respondents for each region), and 18.9% of participating firms reported having exporting operations (table 2). twice as many reclaimed wood firms (29.3%) reported international sales than did either mixed-source (14.5%) or urban wood firms (13.9%). in this and other questions, mixedsource responses resembled urban wood firm responses to a higher degree than those of reclaimed wood firms. however, no significant association was detected between region of sale and raw material group based on a pearson’s chi-squared test (p-value = 0.962) (table 2). number of employees was used as a proxy for firm size in the survey questionnaire. most firms were small, with 65.9% of respondents having fewer than 10 employees and only 12.9% employing 20 individuals or more. using a pearson’s chi-squared test, a significant association was found between firm size and raw material group (p-value = 0.003) (table 2). in general, urban wood and mixed-source firms were smaller than reclaimed wood operations, with 86.1%, 67.3%, and 46.3%, respectively, having fewer than 10 employees. conversely, 24.4% of reclaimed wood firms had 20 or more employees, while only 9.1% of mixed-source and 8.3% of urban wood companies met this criterion. in addition to number of employees, general firm size and production capacity were estimated by monthly raw material consumption in board feet. it was determined that, of the three raw material categories, reclaimed wood firms consumed the highest volume of raw material per month (average of 26.7 thousand board feet, or mbf), followed by mixed-source (16.4 mbf) and urban wood firms (6.1 mbf). the standard deviations associated with raw material consumption were high, ranging from 0.1 to 200 mbf per month and reflecting widely variable production capacities. pitti et al. — marketing practices in the urban and reclaimed wood industries 19 table 2. company characteristics of participating firms. years in operation overall (%) urban wood (%) reclaimed wood (%) mixed-source (%) < 1 year 2.3 5.6 2.4 0.0 1-4 years 10.6 13.9 2.4 14.5 5-9 years 30.3 30.6 31.7 29.1 10-15 years 20.5 16.7 12.2 29.1 > 15 years 35.6 30.6 51.2 27.3 no response 0.8 2.8 0.0 0.0 pearson’s chi-squared test: χ2 = 14.471; p-value = 0.070. sales region* overall (%) urban wood (%) reclaimed wood (%) mixed-source (%) midwest 50.0 47.2 51.2 50.9 northeast 50.0 44.4 61.0 45.5 southeast 43.9 30.6 63.4 38.2 southwest 37.1 25.0 46.3 38.2 northwest 30.3 22.2 43.9 25.5 international 18.9 13.9 29.3 14.5 * note: regions were selected from a simplistic map detailing (1) midwest – ia, il, ks, mi, mo, mn, ne, nd, sd, wi (2) northeast – ct, de, in, ky, oh, pa, ma, md, me, nh, nj, ny, ri, va, vt, wv (3) southeast – al, ar, fl, ga, la, ms, nc, ok, sc, tn, tx, vt, wv (4) southwest – az, ca, co, nm, nv, ut (5) northwest – id, mt, or, wa, wy. ak and hi were not specifically depicted but are assumed to be included in northwest and southwest, respectively. multiple responses possible, thus percentages do not add up to 100%. pearson’s chi-squared test: χ2 = 4.42; p-value = 0.962. number of employees overall (%) urban wood (%) reclaimed wood (%) mixed-source (%) 1 to 4 39.4 58.3 19.5 41.8 5 to 9 26.5 27.8 26.8 25.5 10 to 19 16.7 5.6 22.0 20.0 20 to 49 12.1 8.3 22.0 7.3 50 to 99 0.8 0.0 2.4 0.0 > 100 0.8 0.0 0.0 1.8 no response 3.8 0.0 7.3 3.6 pearson’s chi-squared test: χ2 = 19.625; p-value = 0.033. 3.2 reasons for entering the industry to contribute to the profile of urban and reclaimed wood firms, companies were asked to rank the importance of various reasons for entering the industry. the highest importance ratings were given to acquire raw materials with unique characteristics, capitalize on a supply of wood otherwise being underutilized or wasted, and appeal to consumer demand for more sustainable and local products, with 90.9%, 89.4%, and 77.3% of respondents, respectively, rating these reasons as “important” or “extremely important.” these responses reflect the emphasis on unique raw material characteristics as a source of differentiation. from a pearson’s chi-squared test, a significant association was detected between responses for capitalize on a low-cost raw material and raw material group (p-value = 0.038). differences were rather large, with 63.9% of urban wood firms, 43.6% of mixed-source firms, and 17.1% of reclaimed wood firms ranking capitalize on low-cost raw materials as “important” or “extremely important.” it should be noted that several firms communicated directly with the researcher (responding to the invitation email) stating that reclaimed wood does not provide a significantly lower-cost raw material, nor does it definitively translate to profits, due to the labor and resources required to refine it into a product. firms were given the opportunity to provide additional input on reasons for entering the industry via open-ended responses. input received included: “to divert supply from outlets like mulch, burn pile, or landfill;” “given the geographic location, using local materials is less shipping intensive and overall more sustainable;” “provide a product with consumer supplied wood;” and “appeal to the emotional aspect of production.” 20 bioproducts business 4(2) 2019 3.3 customer characteristics by understanding who their customers are, firms can tailor their marketing strategies, target specific customer segments, and develop more successful products. the survey asked firms to identify their typical consumer based on gender, age, and annual household income to help those firms better appeal to consumers with targeted marketing practices. respondents reported gender as a largely irrelevant factor to consumer purchasing, as attested to by 70.5% of firms. a majority of firms (50.8%) indicated that their typical consumer’s age fell in the 35 to 44 year range, followed by consumers in the 45 to 54 year range (37.1%). finally, annual consumer income was identified by participating firms as upper middle income (52.3%) and high income (33.3%). a pearson chi-squared test revealed no significant association between raw material group and customer demographic factors, with p-values of 0.22, 0.541, and 0.155 for gender, age range, and annual household income, respectively. 3.4 marketing mix this study sought to outline strategies implemented by the urban and reclaimed wood industries with regard to the marketing mix, namely product, price, promotion, and placement (the “4 ps” of marketing). product analysis consisted of wood species used and product type, pricing was studied in relation to the competition, promotional analysis included messaging and platform, and placement considered distribution channels for product delivery. each factor will be detailed further in the following sections. 3.4.1 product for marketing strategy, products include attributes beyond functionality and packaging, such as desirable features like quality and service (smith et al., 2010). products can be classified into commodity, specialty, and differentiated products. commodity products offer only pricing differentiation; specialty products have specific, niche features to appeal to narrow market segments; and differentiated products include custom work and variations that set firms apart and entice consumers with tailored offerings, like accessories, aesthetics, branding, and warranties (smith, cesa, & rappold, 2008; shupe & vlosky, 2010). responses for products manufactured and species used varied widely, particularly in relation to raw material group. products offered by urban wood firms most frequently included doors, millwork, flooring, slabs, and windows, while reclaimed wood firms identified millwork, windows, furniture, byproducts, and cabinets as their most common products. mixed-source responses were primarily aligned with urban wood production, with products including doors, millwork, flooring, windows, and byproducts. the top five species utilized most frequently by urban wood firms included walnut, white oak, cherry, ash, and hard maple (all hardwood species). for reclaimed wood firms, both hardwoods and softwoods were listed in the top five species, which were douglas-fir, pine, southern yellow pine, white oak, and red oak. the top five species for mixed-source firms were highly reflective of those reported by urban wood companies and consisted of walnut, white oak, red oak, ash, and hard maple. participating firms were also asked to report on the percent of sales, by volume, allocated to “madeto-stock” (mts) and “made-to-order” (mto) production. participating firms reported an average of 39.0% and 61.0% mts and mto sales, respectively. from a pearson’s chi-squared test, significant association was found between raw material group and responses to this question (p-value = 0.024). reclaimed wood firms allocated a higher percentage to mto production than did either urban wood or mixed-source companies (71.9% compared to 53.9% and 58.1%, respectively), where, as has been previously noted, mixed-source companies primarily resembled urban wood production. because a majority of firms, irrespective of raw material group, participated in mto production, the focus was placed on differentiated products over commodity products. 3.4.2 price for firms to adequately price products, they need to balance the value to consumers with cost and desired company profits, where pricing impacts overall operations, specifically sales, profit, inventory, and labor (smith et al., 2010). the survey asked participating firms to report their pricing as compared to “the competition.” no clarification was provided regarding whether competition should be understood as other urban and reclaimed wood firms or other value-added manufacturers of functionally similar products. approximately 36.3% of participating firms reported their prices as being “slightly higher” or “much higher” than the competition, while 29.5% indicated that their prices were “slightly lower” or “much lower” than the competition. a pearson’s chi-squared test resulted pitti et al. — marketing practices in the urban and reclaimed wood industries 21 in a p-value of 0.976, revealing no significant associations between raw material group and relative pricing. from an analysis of survey responses for the product and price questions, it can be stated that companies operating in the urban and reclaimed wood industries, in general, adopt a differentiation strategy, making highend products and producing largely against firm orders. 3.4.3 promotion promotion increases the likelihood of purchase by creating a positive company image and adequate product awareness, largely using promotional messaging to educate consumers and advertising, personal selling, sales promotion, and publicity to reach them directly (shupe & vlosky, 2010; smith et al., 2008). each aspect of promotion is equally important, where advertising is visible and thought-provoking (i.e., television or newspaper advertisements), personal selling involves face-toface communication (i.e., salespeople), sales promotion allows for non-personal product representation (i.e., trade shows), and publicity includes third-party limelight promotion (i.e., news articles or industry publications) (smith et al., 2010). in this research, promotional messaging was explored to gather an understanding of promotional strategies of participating firms. a number of promotional messages were identified based on themes in the literature and a systematic evaluation of company webpages, where firms were asked to rank the importance of these messages in their promotion. responses showed that quality, aesthetics, and customization were considered the most important promotional messages by respondents, with 93.2%, 92.4%, and 78.0% ranking these categories as “important” or “extremely important,” respectively (table 3). a pearson’s chi-squared test identified significant differences in responses between the three raw material groups for local and domestic sourcing (p-value = 0.026), with 91.7% of urban wood firms, 72.7% of mixed-source firms, and 53.7% of reclaimed wood firms ranking it as “important” or “extremely important.” participating firms were asked to rank the importance of various promotional platforms to their business. word of mouth, company webpage, and social media were considered the most important promotional channels, with 93.2%, 81.1%, and 65.9% of firms ranking these as “important” or “extremely important,” respectively (table 4). in contrast, public relations, events, and newspapers and magazines were ranked lower in importance as promotional platforms. a pearson’s chi-squared test table 3. importance of promotional messages utilized by participating firms. message not at all important (%) slightly important (%) moderately important (%) important (%) extremely important (%) quality 0.8 0.8 2.3 16.7 76.5 aesthetics 0 1.5 3.0 24.2 68.2 customization 3.0 1.5 13.6 25.0 53.0 sustainability 1.5 4.5 13.6 28.0 49.2 local and domestic sourcing 2.3 6.1 16.7 34.1 37.9 emotional value 2.3 5.3 26.5 31.1 31.8 historical significance 3.0 9.1 17.4 37.1 30.3 * rows do not add up to 100% because companies did not answer this question. pearson’s chi-squared test: “local/domestic sourcing” displayed significant association between promotional messaging and raw material group: χ2 = 17.39; p-value = 0.026. table 4. importance of promotional platforms utilized by participating firms. promotional platform not at all important (%) slightly important (%) moderately important (%) important (%) extremely important (%) word of mouth 0.0 0.8 3.8 20.5 72.7 company webpage 0.8 6.8 9.1 19.7 61.4 social media 2.3 8.3 19.7 29.5 36.4 public relations 6.8 18.2 25.0 16.7 27.3 events 22.7 28.8 16.7 17.4 9.8 newspapers or magazines 21.2 34.1 24.2 9.8 5.3 * rows do not add up to 100% because companies did not answer this question. pearson’s chi-squared test: “word of mouth” and “events” display significant association between promotional platform and raw material group: χ2 = 16.41; p-value = 0.012 and χ2 = 19.446; p-value = 0.013, respectively. 22 bioproducts business 4(2) 2019 revealed significant association between raw material group and the responses for word of mouth and events, (p-values of 0.012 and 0.013, respectively.) mixed-source and reclaimed wood firms ranked word of mouth higher in the importance scale than did urban wood companies, with 100.0%, 92.7%, and 83.3% ranking it as “important” or “extremely important,” respectively. events were valued as “important” or “extremely important” by primarily urban wood (36.1%) and mixed-source (29.1%) firms over reclaimed wood operations (17.1%) (table 4). the importance of word of mouth, company webpages, and social media highlight the customer-centric nature of urban and reclaimed wood company business models. word of mouth is heavily reliant on consumer satisfaction and is an effective way for smaller firms to attract consumers. company webpages are a simple, effective, and professional way to relay company information to consumers. firms often link their social media accounts on their webpages to provide frequently updated photos of current projects and contact information. ultimately, such practices speak to the fact that the urban and reclaimed wood industries seek to connect directly with their customers and do not typically use traditional advertising such as newspapers, public relations, or events. firms were given the opportunity to enter additional input on platforms not listed in the survey via openended responses. responses included “craft shows,” “paid advertising,” “radio,” “review websites” (yelp, google), “seeing products in the community,” “tours,” “tv commercial,” “youtube presence,” and others. 3.4.4 distribution channels distribution—or how products reach the consumer—is essential for product delivery, visibility, and price (shupe & vlosky, 2010). distribution channel length, or the number of intermediaries involved before end consumer delivery, directly affects pricing. longer channels allow for less producer control over price, which are often set so that each member is incentivized to participate and make a profit, and shorter channels allow for more control, due to direct involvement in sales (smith et al., 2010; smith et al., 2008). for example, a long channel might include a third-party wholesaler or broker who, in turn, sells to the consumer, while a short distribution channel might consist of a producer reaching consumers directly at a craft fair. the most common distribution channels utilized by participating firms were listed as follows: direct sales (88.6% of firms), online sales (53%), retail sales utilizing a company-owned store or showroom (47.4%), retail sales (43.2%), sale to a distributor (25.8%), and consignment sales (19.7%). more urban wood firms indicated using consignment sales (33.3%) than either mixed-source (21.8%) or reclaimed wood (4.9%) firms. export sales were reported most frequently by participating mixed-source firms (16.4%), followed by reclaimed wood and urban wood firms (12.2% and 11.1%, respectively). however, using a pearson’s chi-squared test, no significant association was found between distribution channel and raw material group (p-value = 0.773) (table 5). the prevalence of direct sales, online sales, and retail sales again speaks to the customer-centric nature of the urban and reclaimed wood industries and their desire to interact with customers throughout the production process and up to the final sale. firms were given the opportunity to provide additional, specific distribution channels not listed in the survey via open-ended responses. distribution channel length was quite variable between firm size, capacity, location, etc., in the urban and reclaimed wood industable 5. distribution channels utilized by participating firms. distribution channel overall (%) urban wood (%) reclaimed wood (%) mixed-source (%) direct sales 88.6 86.1 87.8 90.9 online sales 53.0 58.3 46.3 54.5 retail sales (company-owned or showroom) 47.7 50.0 41.5 50.9 retail sales 43.2 44.4 39.0 45.5 sale to a distributor 25.8 27.8 26.8 23.6 consignment sales 19.7 33.3 4.9 21.8 export sales 13.6 11.1 12.2 16.4 other 6.8 11.1 2.4 7.3 * multiple responses possible, thus percentages do not add up to 100%. pearson’s chi-squared test: χ2 = 8.149; p-value = 0.773. pitti et al. — marketing practices in the urban and reclaimed wood industries 23 tries, where input received from firms included both short channels (“community events,” “art shows,” “direct from job sites,” and “direct online sale using websites like wood planet or ebay”) and longer channels with sale to third parties (“architecture and design firms,” “furniture dealers and purchasers,” and “wholesalers”). 3.5 supply chain partnerships partnerships are essential to urban and reclaimed wood production due to their role in raw material procurement. the survey asked firms to identify sourcing collaborations by selecting from a list tailored to each raw material group, and respondents were also given the opportunity to list partnerships not provided in the survey via open-ended responses in the category of other. notably, 94.4% of urban wood, 95.1% of reclaimed wood, and 100.0% of mixed-source firms, respectively, reported at least one partnership utilized for raw material sourcing. both homeowner and building-owner partnerships were more prevalent than anticipated, probably due to the effort needed to foster and sustain so many relationships in a supply chain. these relationships are indicative of the sense of community and collaboration stressed by the urbanand reclaimed-wood industries. it was also determined that each firm utilized an average of four partners, which highlights the importance of partnerships for the industries of interest. responses to this question are explained below. it was found that a majority of urban wood firms collaborated with tree removal firms (83.3%), arborists (77.8%), homeowners (75.0%), city governments (69.4%), and urban foresters (58.3%). other partnerships utilized by participating urban wood firms included “cemeteries,” “golf courses,” “developers and waste management companies,” “demolition companies,” “green waste repositories,” “native american tribes,” and “universities.” primary reclaimed wood partners included deconstruction firms (78%), demolition firms (75.6%), building owners (70.7%), and construction and remodeling firms (51.2%). other partnerships utilized by participating reclaimed wood firms included “brokers,” “manufacturers of waste byproducts,” “other segments of a larger company, and “salvage yards.” finally, mixed-source firms maintain relationships primarily with homeowners (72.7%), tree removal firms (63.6%), arborists (58.2%), building owners (56.4%), deconstruction firms (52.7%), urban foresters (49.1%), city governments (49.1%), and construction and remodeling firms (45.5%). the most frequently utilized partnerships for mixed-source firms align closely with those of urban wood companies. other partnerships utilized by participating mixed-source firms included “college campuses,” “material brokers,” “reclaimed wood wholesalers,” “usda forest service,” “waterways and rivers,” “other sawyers,” “other lumber stores,” and utility industry partners.” 3.6 expectations and barriers for growth the survey asked participating firms to rate their expectations for growth over the next 5 years. overall, answers reflected largely optimistic expectations, with 85.6% of companies anticipating modest or significant growth, and merely 1.5% expecting business decline (table 6). this sentiment was general across raw material groups, as a pearson’s chi-squared test determined that there was no significant association between growth expectations and raw material group (p-value = 0.251). almost unanimous optimism surrounding growth reinforces confidence within these industries that urban and reclaimed wood production and consumption are not merely a fad, but have established plans for the foreseeable future. to facilitate growth, firms will need to overcome barriers identified in the survey. the most important barriers, ranked by respondents as a “large barrier” or “extreme barrier,” were lack of financial resources (31.8% of responses), lack of storage space (25.0%), and underperforming or insufficient marketing efforts (22.0%) (figure 1). the high importance of under-performing or insufficient table 6. anticipated company growth as reported by participating firms. anticipated growth overall (%) urban wood (%) reclaimed wood (%) mixed-source (%) grow significantly 37.9 38.9 24.4 47.3 grow modestly 47.7 47.2 61.0 38.2 stay the same 9.1 11.1 4.9 10.9 decline modestly 1.5 0.0 2.4 1.8 decline significantly 0.0 0.0 0.0 0.0 no response 3.8 2.8 7.3 1.8 pearson’s chi-squared test: χ2 = 7.824; p-value = 0.251. 24 bioproducts business 4(2) 2019 marketing efforts as a barrier highlights the need for this study. the barrier rated as least important was poor relationships with suppliers, validating previous findings that a majority of participating firms maintain an effective relationship with at least one partner. according to a pearson’s chi-squared test, only lack of consumer awareness displayed significant association between responses and raw material group (p-value = 0.01). lack of consumer awareness was found to impact urban wood firms more significantly than those utilizing reclaimed or mixed-source raw materials (ranked as a “large barrier” or “extreme barrier” by 36.1%, 12.2%, and 14.5% of firms, respectively). overall, barriers listed in the questionnaire were not considered severe obstacles to participating firms, who ranked them primarily as “not a barrier” and “slight barrier.” specifically, raw material quality and quantity were ranked as less impactful than we anticipated. urban and reclaimed wood processors face challenges from using raw materials containing embedded metals, having potentially lead-containing paints, and lacking structural integrity, and for this reason, it is assumed that such barriers to daily operations exist, but do not inhibit growth as a whole. 4 conclusions the primary purpose of this research project was to identify current marketing practices in the urban and reclaimed wood industries. to accomplish this objective, a survey was distributed to urban and reclaimed wood firms in the united states, with focus on developing a profile of manufacturers, outlining opportunities for and barriers to growth, and identifying current marketing practices using the marketing mix—product, price, promotion, and placement. results from this survey show that, overall, a majority of participating firms have operated for less than 10 years, and that reclaimed wood firms tend to operate at higher capacities than urban wood firms, many of which have less than 10 employees. in general, the responses from participating mixed-source firms resembled those of urban wood firms to a higher degree than did responses from reclaimed wood firms. the major reasons for entering each industry were associated with raw material characteristics as a source of differentiation, and included the desire for unique raw materials, a supply of wood otherwise being underutilized or wasted, and sustainable and local products. the typical consumer was identified as an individual 35 to 54 years of age with upper middle-income status, and gender was noted as irrelevant to purchasing. products and species were variable between raw material groups, and it was noted that firms primarily produced mto over mts product. participating firms indicated that their pricing was, in general, higher than the competition’s, attesting to consumer willingness to pay for differentiated product attributes, specifically those stressed in promotional messaging, such as quality, aesthetics, and customization. promotion was carried out primarily through word of mouth, company webpages, and social media, showing a direct connection between urban and reclaimed wood firms and their customers. the customer-centered nature 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% poor relationships with suppliers lack of market research and poorly identified target markets quantity and/or quality of raw material difficulty working with non-traditional raw materials lack of consumer awareness under-performing or insufficient marketing efforts lack of storage space for raw materials lack of financial resources not at all important slightly important moderately important important extremely important figure 1. importance of barriers to growth as identified by participating firms. pitti et al. — marketing practices in the urban and reclaimed wood industries 25 of the industries is reinforced through the importance of distribution channels such as direct sales, online sales, and retail sales, as well as through the importance of fostering and maintaining supply chain partnerships. a majority of participating firms anticipated modest to significant growth going forward. to facilitate growth, firms will need to overcome the identified barriers, including a lack of financial resources, lack of storage space, and inadequate marketing efforts. as with any research effort, this study had limitations that should be considered when drawing conclusions and making recommendations (dillman, smyth, & christian, 2009). such limitations include the following: (1) questionnaire responses came from only one representative from each of the firms surveyed, and this single opinion may or may not represent those of other employees. (2) although great efforts were made to compile a complete list of companies operating in the industries of interest, there is no certainty that all, or even a majority, were included. many firms in the urban and reclaimed wood industries are small operations, which may not be listed in any directory or may lack an internet presence. thus, generalizations about the population of interest are not possible. (3) measurement errors may have originated from respondent inability to comprehend or complete the survey, leading to inaccurate, incomplete, or speculated results (for example, assumed consumer age, gender, or income). (4) technical errors may have arisen around issues such as a poor internet connection. (5) significant associations between variables were tested using pearson’s chi-square tests, where test power depends, in part, on having “expected counts” greater than one and no more than 20% of those values lower than five. these conditions were not met in all cases, and some loss of power was tolerated. because the urban and reclaimed wood industries emerged to upcycle materials traditionally considered to be waste, there are inherent environmental benefits associated with the diversion of supply from landfills. urban and reclaimed wood production also allows for economic growth by providing employment opportunities and a high value-added outlet for undervalued materials. this study generated information about company characteristics and marketing practices utilized in the value-added urban and reclaimed wood industries important for the formulation of marketing strategy recommendations, which will be the final outcome of this research. 5 references armstrong, g., & kotler, p. 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(2015). the benefits and challenges if using reclaimed timber. retrieved from http://www.yrarchitecture.com/reclaimed-timber-benefits-and-challenges. abstract numerous studies have investigated the impact social media has had on business performance. however, until recently, there has been limited research regarding social media in the u.s. wood products industry. in 2013, a mail survey was conducted to investigate the use of social media as a marketing tool and to examine the factors affecting its use in the wood products industry. although this research yielded valuable information, the consumer side of social media use was not studied. thus, a follow-up study was conducted in 2017 through an online survey to determine how social media marketing impacts the decision-making process of wood products consumers. the survey also examined how respondents use social media to gather information about natural resources and related activities. the top three natural resource activities that respondents used social media to gather information about were (1) natural resource recreation, (2) natural resource disaster preparedness, and (3) natural resource related hobbies. out of 928 respondents, 58% indicated using social media to gather information before purchasing wood products. the top three social media outlets used for gathering data were facebook, youtube, and twitter. respondents also listed having information available on the internet and having prior knowledge or awareness of the brand as important factors that influenced their decision to purchase a wood product. keywords: marketing, social media, wood products, purchasing decision-making process, natural resources social media use in the wood products industry: impact on the consumer purchasing process 1 research forester, usda forest service northern research station and forest products marketing unit, starkville, ms 39759. 2 associate professor of forest resources management, west virginia university, division of forestry and natural resources, morgantown, wv 26505. 3 forest products technologist, usda forest service northern research station, princeton, wv 24740 * corresponding author. email: iris.b.montague@usda.gov. tel: 662-338-3129. acknowledgements: the work upon which this publication is based was funded in part through the usda forest service, northern research station, princeton, west virginia (usda forest service agreement: 17-jv-11242301-090). iris b. montague1*, kathryn arano gazal2, and janice k. wiedenbeck3 bioproducts business 4(3), 2019, pp. 27-40. issn 2378-1394. https://doi.org/10.22382/bpb-2019-003 1 introduction the introduction of social media has changed society in numerous ways (tardanico 2012, olsen & christensen 2015, baskaran et al. 2017, phoon 2017). one of the most substantial changes has been in the way people communicate. social media platforms have emerged as dominant digital communication channels that allow consumers to gather and share information, interact with corporations and other consumers, and evaluate brands they are considering purchasing or have purchased (qualman 2010, chappuis et al. 2011, hudson et al. 2016). this is a very important because consumer involvement through social media is a key element in marketing (hajli 2014). marketing communications using social media have been used by companies around the world to communicate with customers without any restrictions in time, place or medium (kim & ko 2012). the ability to communicate freely about products, brands and companies has fostered the sense of belonging among consumers through interpersonal interactions and dialogue (baird & parasnis 2011, kim & drumwright 2016). these activities produce word-of-mouth (wom) and aid in the consumer purchasing decision process. viral marketing, consumers’ electronic word-of-mouth (ewom) on social media sites, can spread exponentially 28 bioproducts business 4(3) 2019 and allow transmission of messages to thousands and even millions (vilpponen et al. 2006, gunawan & huarng 2015). because of this, social media sites can be an important factor that influences consumers’ purchasing decisions (gunawan & huarng 2015). studies of the impact of social media on consumer purchasing behavior have indicated that trust in vendors is a critical factor that needs to be developed via social media communications to affect on-line purchases (hajli 2014). the perceived usefulness of a potential vendor’s social networking sites also has a large influence on purchase intentions and behavior (hajli 2014). with the increased use of social media in all aspects of everyday life and the continuing change in its use for business purposes, it is important to analyze the effects of social media on business strategies. since the commercial introduction of the internet, there have been numerous studies that have examined the internet and digital, social media and mobile marketing. these studies have shown that the internet has the potential to help consumers by making search easier and choice better (lamberton & stephen 2016). however, in terms of the wood products industry, adoption of technology has been slow compared to other industries. unfortunately, research of technology and internet use in the wood industry has been at a similar pace. vlosky & gazo (1996) were among the first to look at information technology (it) interest in the wood products industry. a series of subsequent studies by vlosky et al. (2002) looked at ecommerce use in various sectors of the wood products industry (vlosky & westbrook 2002, vlosky et al. 2002, vlosky & smith 2003). e-commerce adoption by the wood products industry in specific geographical regions also has been researched (shook et al. 2002, arano 2008, montague & wiedenbeck 2012). with regard to social media use in the wood products industry, montague et al. (2016) and gazal et al. (2016) recently examined social media use among the wood products sector. however, all of these papers specifically examined the manufacturing sector of wood products; studies of consumer use of social media to gather information about wood products before purchasing are lacking. as discussed earlier, social media plays an important role in society and commerce, and the role it has in the wood products industry has expanded substantially during the last decade. however, key questions remain unanswered. this study expands on previous research conducted on social media use by the wood products industry. as opposed to the earlier study, the main goal of this study is to provide an overview of consumer use of social media when making wood product purchasing decisions. to fully understand how consumers use social media during the wood product purchasing process, this study: (1) identified the type(s) of social media sites/apps used in the wood product purchasing process, (2) identified and described how and why consumers use social media, (3) identified and described the perceptions held about social media and traditional media, (4) identified and described key factors that influence and motivate consumers to buy wood products on social media and (5) examined the effectiveness of social media during the wood purchasing decision process. this information is needed by businesses that are concerned about how consumers use social media platforms to gather information about wood products. it gives a fundamental layout of current social media consumer trends as well as consumer attitudes and perceptions about using social media while researching a product. the information gathered from this study can be valuable to companies that already have a social media presence as well as those wishing to incorporate social media into their company’s marketing strategy. this research is not only beneficial to the wood products industry, but to any business interested in learning about the role of social media in the product purchasing decision making process. 2 materials and methods 2.1 questionnaire and data collection an online survey was conducted in the fall of 2017 to collect information on social media use among u.s. consumers who purchased wood products in the last 5 years. the survey, designed by the division of forestry and natural resources at west virginia university, was conducted by survey sampling international (ssi), which is a fee-for-service company that provides market research data collection services. ssi uses panel-based online surveys for data collection. because we knew ssi had participated in earlier surveys of wood products consumers (e.g., cai and aguilar 2014), they were engaged to conduct this survey. ssi currently maintains about 17 million panel participants in over 90 countries (ssi 2018). an online panel is “a sample of persons who montague et al. — social media use in the wood products industry: impact on the consumer purchasing process 29 have agreed to complete surveys via the internet” and is selected mostly through probability sampling or in some cases through nonprobability-based recruitment (aapor 2007). ssi’s system for providing a sample that is representative of the target population involves using “a three-stage randomization process in matching a participant with a survey they are likely to be able to complete. first, participants are randomly selected from ssi’s panels to be invited to take a survey, and these participants are combined with others entering ssi’s dynamix™ sampling platform after responding to online messaging. a set of profiling questions is randomly selected for them to answer (these are methodologically correct questions, never affirmation questions) and upon completion, participants are matched with a survey they are likely to be able to take, using a further element of randomization” (ssi 2018). panel-based, online survey research has grown rapidly in the past decade and has been used in many fields to collect survey data (callegaro et al. 2014). it also has been employed in a number of studies related to forest products marketing. for example, thompson et al. (2006), aguilar and cai (2010) and cai and aguilar (2014) have used ssi data to look at the effects of environmental labeling consumer preferences for wood products and perceptions of consumers about corporate social responsibility in the wood products industry, respectively. the questionnaire used in this research was comprised of three sections and had a total of 32 questions. data collected included information on wood products purchases in the last 5 years, social media use overall, social media use related to wood products purchasing decisions and demographic characteristics. participants were given an opportunity to provide additional comments at the end of the questionnaire. question types in this survey were categorical (multiple choice), rating (interval, 5-point scales) and open ended. ssi administered the questionnaire to a random sample drawn from its online panel of u.s. participants 18 years and older. replicating the sample sizes used from the studies of aguilar and cai (2010) and cai and aguilar (2014), 1,000 observations were targeted for this study. in addition, a sample of 1,000 was targeted to achieve a 3% sampling error at 95% confidence level. ssi continued to collect responses until the targeted number of responses was met. a total of 1,082 responses were collected from the survey. however, 154 respondents did not purchase any wood products in the last 5 years, resulting in a total of 928 usable responses. while collecting probability-based internet panel data, such as that used in this study, is costeffective and able to access large and diverse samples quickly (hays et al. 2015), there are potential issues with regard to sample representativeness and nonresponse bias (couper 2000). to address the issue of nonresponse bias, we followed the approach used by cai and aguilar (2014) by comparing the responses of those who completed a questionnaire and those who did not complete a questionnaire. a method for testing nonresponse bias for mail-based surveys is to test early respondents against late respondents. the basic assumption is that late respondents are a proxy for nonrespondents (lin and schaeffer 1995). the approach by cai and aguilar (2014) follows the same theory but equates the respondents who did not complete the questionnaire to nonrespondents. responses to the question of whether respondents used social media in their purchasing decisions related to wood products were used to test for bias. the result of the kolmogorov-smirnov test (k-s test) indicates that the samples came from the same distribution (k-s statistic = 0.71). thus, the responses of those who completed a questionnaire are not statistically different from those that did not complete a questionnaire regarding social media use in wood products purchasing decisions. to address whether our sample is representative of the u.s. population, we compared the socio-demographic characteristics of our sample to us census data. cai and aguilar (2014) used the same approach since response rate could not be calculated given the nature of the online panel data used. in most cases, our sample is comparable to the us census data. for example, 50.3% of our sample is female, which is comparable to the us census data gender results (50.8%, us census bureau 2016). with respect to annual household income, 57.7% of our sample reported income over $50,000, which is comparable to us census findings (57%). with respect to race, our sample is also comparable to that of the us census data – 73.8% of our sample are white compared to 76.9% for the us census data. our sample is slightly more educated than the census data – about 80.4% of our sample reported having had some college education or having earned a college degree while the united states census bureau (2016) reported about 60.3% of the us population having the same educational attainment. this may suggest that our sample would be more likely to use the internet and social media. 30 bioproducts business 4(3) 2019 2.2 data measures and analysis in addition to answering questions referencing demographics, respondents were asked to rate how important six factors were in influencing their decision to purchase a wood product using a 5-point scale anchored by 1 (not important) and 5 (very important). respondents also were asked to rate their level of agreement with a predetermined list of five statements concerning the advantages of using social media compared to traditional media when buying wood products on a 5-point scale anchored by 1 (strongly disagree) and 5 (strongly agree.) finally, respondents were given a list of five purchasing decision stages and asked to rank how each stage had been affected by social media on a 5-point scale anchored by 1 (least affected) and 5 (most affected). simple descriptive statistics used for ordinal data (medians, frequency distribution of responses) were used to evaluate responses to each question and t tests (1-sample; α = 0.05) were conducted to determine those statements that were overall judged to be significantly different from the neutral score of 3. the kruskal-wallis non-parametric, rank-based test was used to assess the likelihood that the distributions of responses to questions that used the 5-point scale were similar for different groups of respondents (based on age group, gender, education, race, etc.). the wilcoxon scores were compared among groups for several of the significant kruskal-wallis tests to understand the relative importance levels assigned to a characteristic. social media usage levels and respondent age groups are examples of the characteristics tested. 2.3 study limitations there are limitations to our work that are similar to other research employing online surveys. although panel surveys can be administered quickly and are usually cost efficient, there are some disadvantages. because results were obtained from an established panel, the responses may not necessarily reflect those of other u.s. consumers as recent studies based on online surveys have acknowledged biases toward “younger age, white, non-hispanic ethnicity, literate, non-visually impaired, and persons with low time costs” (craig et al. 2013). in addition, a survey design error failed to filter out respondents that did not purchase wood products and resulted in a lower than desired number of useable responses. 3 results and discussion 3.1 demographics each respondent was asked to provide standard demographic information. this included information about age, race, education, income, community type, home ownership and land ownership. as stated earlier, the portion of male respondents (49.7%) and female respondents (50.3%) were almost equal. individuals aged 30-49 years old represented the largest group of respondents (37.6%) followed by individuals in the 50-64 age group (25.5%), the 18-29 age group (25.4%) and the 65 and older age group (11.5%). when asked to indicate their race, 47.5% identified themselves as caucasian/white, 18.3% identified as black/african american, 15.6% identified as asian/pacific islander, 1.1% identified as native american/american indian and 4.2% identified as “other”. when asked about income, 32.9% of the respondents indicated income of $75,000 or more, 21.8% indicated income of $50,000-$74,000, 21.4% indicated income of less than $30,000 and 20.9% indicated income of $30,000-$49,000. the majority of the respondents were college graduates (60.9%) and homeowners (69%). when asked about the community in which they resided, 48.1% indicated living in suburban areas, 32.6% indicated living in rural areas and 19.3% indicated living in urban areas. respondents were then asked if they owned 10 or more acres of land. only 16.9% indicated land ownership of 10 or more acres. 3.2 wood products purchase/usage to understand current wood products purchasing and usage trends among consumers, respondents were given a predetermined list of industrial/do-it-yourself (diy) wood products (lumber type products, pallets, panel type products, and others) and consumer wood products (furniture, flooring, cabinets, novelties, and others) and asked to indicate which of these products they had purchased during the prior 5 years. a majority (61.6%) of the respondents indicated buying lumber in the past five years (figure 1). panels were the next most purchased industrial/diy product (42.1%), followed by pallets (18%) and “other” (1.3%). some of the “other” industrial/diy products listed were scrap wood, fence posts, garden steps and cardboard. consumer wood products purchases were led by furniture purchases (68% of the respondents). flooring montague et al. — social media use in the wood products industry: impact on the consumer purchasing process 31 68% 62% 42% 38% 31% 21% 18% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% pr op or tio n of re sp on de nt s pu rc ha si ng p ro du ct ty pe industrial/diy product consumer product furn itu re lu mbe r pan el floo rin g cab ine ts nov elt ies pall ets othe r c on su mer. .. othe r in du str ial pr od . figure 1. proportion of respondents indicating they purchased various industrial/diy and consumer wood products during the previous 5 years. was the next most purchased consumer product (38%), followed by cabinets (21.1%), novelties (21.1%) and “other” (2.5 %). some of the “other” items listed were shelving boards, doors, marine wood, bedding and trim. in reviewing the data and comments left by the respondents it appears that some consumers have a limited view of wood products and uses. one respondent stated that “boards are just boards.” other respondents stated “i don’t do diy projects in wood” and “i get information i need at lumber yard(s).” this indicates that some respondents think of “wood products” as only lumber, plywood and other products that are considered primary products and do not consider furniture, cabinets and other products that are considered secondary products as “wood products”. this also may indicate a need for more consumer education and product promotion from wood products manufacturers about the many types, benefits and uses of wood products. 3.3 social media use to determine social media use among consumers, each respondent was asked to indicate whether they used social media. they then were given a predetermined list of social media sites/types and asked to select all those used. a majority of respondents (88.1%) use social media. facebook, youtube, twitter, photo sharing sites and linkedin were listed as the top five social media sites/types used by the respondents (figure 2). of note, linkedin is the only site for which the usage by the youngest age group (those ages 18-29) is lower than for the three older age groups. linkedin focuses on professional information, encouraging users to create abbreviated curriculum vitae and establishing professional connections (skeels and grudin 2009), something likely less utilized by the youngest age group. geo-location sites, myspace, forum sites, blog sites and “other” sites were listed as the five least used social media sites/types. other social media research shows similar results when looking at the most popular u.s. sites/types (montague et. al 2016, chaffey 2016). according to chaffey (2016), social media networks are so well established that there are now a core “top 5” social networks which stay on the most popular list year after year. facebook is, without question, the most popular site in the u.s. and worldwide, with youtube the second most popular site (nadeem et al. 2015, the statistics portal 2018). to gain an understanding of current consumer social media trends, respondents were asked a series of questions to determine the reasons for social media use, types of activities conducted on social media and the 32 bioproducts business 4(3) 2019 amount of time spent on social media and using mass media. respondents were given three separate predetermined lists to describe their reasons for social media use and their social media activities and were asked to select all that applied. the top three reasons for using social media were (1) to network with friends, (2) for entertainment purposes, and (3) to gather information (figure 3). interaction with peers is a fundamental human act, and studies agree that peers are the primary agents of socialization, even before family members (shim 1996, köhler et al. 2011, wang et al. 2012). of the predetermined list of activities given, respondents indicated that “liking” photos or other content related to products, sharing product contents (photo, videos, etc.) and commenting on personal experiences with products were the top three activities they participated in as social media users. in this research we thought it relevant to also examine respondent use of social media to gather information about other natural resources and related activities, since these usage characteristics might provide insights on where wood products vendors might place advertisements to receive maximum exposure. respondents were given a predetermined list of natural resource related activities and asked to select all that applied. the top three natural resource activities that respondents used social media to gather information about were (1) natural resource recreation, (2) natural resource disaster preparedness, and (3) natural resource related hobbies (figure 4). although gathering information about natural resource recreation was listed as the top activity, it should be noted that using social media to gather information about natural disasters has increased substantially in the past decade (gao et al. 2011, imran et al. 2013, luna & pennock 2018). in recent years, facebook, twitter, and other social media sites have been used to spread news about casualties and damages, donation efforts and alerts and to share multimedia information such as videos and photos during the california wildfires and the hurricanes that impacted the southeastern u.s. (hughes & palen 2009). respondents were then given two separate predetermined lists to indicate hours spent per week using social media sites and hours spent per week using mass media (tv, radio, magazine, newspaper, etc.) the majority of the respondents (58.9%) used social media sites approximately 6 hours or less per week. of those respondents, 48.6% only used social media 1-3 hours a figure 2.--proportion of responding consumers in different age groups indicating they used the listed social media sites/types. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% pr op or tio n of re sp on de nt s social media sites/types used age of respondent 18-29 30-49 50-64 >64 fa cebook youtube photo twitter daily d eals geolo catio n myspace forums google + other site blo gs lin kedin montague et al. — social media use in the wood products industry: impact on the consumer purchasing process 33 88% 71% 70% 47% 39% 31% 30% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% pr op or tio n of re sp on de nt s reason for using social media soc ial m ed ia us ag e netw ork w ith fri en ds ente rta inm en t inf orm ati on ga the rin g ins tru cti on /ho w-to dea ls/ pro moti on s prof . n etw ork ing 88% 50% 48% 39% 25% 18% 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% pr op or tio n of re sp on de nt s natural resource interest soc ial m ed ia us ag e nat. re s. po licy nat. re s. lan do wne rsh ip nat. re s. ho bb y nat. re s. dis as ter pr ep . nat. re s. rec rea tio n othe r n at. re s. inf o. figure 3. percentage of respondents indicating they use social media (blue bar) and reasons cited for using social media – multiple reasons were noted by many respondents so the totals sum to more than 100%. figure 4. use of social media related to natural resource interests. 34 bioproducts business 4(3) 2019 week. in contrast, 57.3% of the respondents used mass media 7 hours or more per week. of those respondents, 45.3% used mass media 10 hours or more. results from kruskal-wallis rank sum tests showed significant differences among age groups in terms of the number of hours per week in which the respondents viewed social media/mass media. the two younger age groups (18-29 and 30-49) indicated substantially higher participation in social media and the two older age groups (50-64 and >64) indicated substantially higher participation in mass media. 3.4 purchasing decision process studies show that social media is a very powerful tool in product marketing and creating brand awareness and is becoming increasingly more important for consumer decisions (bronner & de hoog 2014). however, the wood products industry has been slow to adopt new technology and embrace social media (montague et al. 2016). to better understand how consumers find information about wood products, respondents were asked a series of questions about their wood product purchasing decision process. respondents were first asked whether they had used social media to gather information about wood products. a majority (54.4%) indicated using social media to gather information about wood products. some of the reasons listed for not using social media were “unaware it was an option”, “i use other sites”, and “i had no need to.” when given the same predetermined list of social media sites/types and asked to select all of the ones used as a source of information before purchasing a wood product, the top five sites/types differed slightly from those indicated for personal use. although facebook, youtube, and twitter were still listed as the top three, google+ and photo sharing sites were listed as 4 and 5. of the respondents that indicated using social media to gather information about wood products they were interested in purchasing, the majority stated that social media was used to gather information 2-3 times a month or less. the kruskal-wallis rank sum test found a significant difference among rank sums median reported social media usage rates for the different age groups and between genders. the wilcoxon rank sums were calculated and compared to assess the differences detected among groups; respondents ages 18-49 (two youngest age groups) were substantially more likely to use social media than were respondents in the two older age groups. also, male respondents indicated greater usage rates for social media than females. ratings were obtained from respondents (on a 5-point scale anchored by 1 = not important and 5 = very important) as to the importance of six factors influencing the wood product purchasing decision. five of the six statements were considered to be “important” or “very important” by more than 70% of consumer respondents (table 1). overall, brand reputation was highly rated by more respondents than the other factors for influencing wood products purchasing decisions and according to hawkins et al. (1998), the level of involvement a consumer has with a product or brand can have a positive or negative impact on the purchasing decision process. consumers are more likely to repurchase products or brands they have had satisfactory experiences with and avoid those that they did not (koivumäki 2001, nam et al. 2011, pappas et al. 2014). it also is the inherent nature of consumers to buy products that are recommended by friends, family members and someone they know in real life or even in virtual world (uddin et al. 2017). the factor that was considered important by a notably smaller proportion of respondents was information from mass media with only 57% of respondents rating this to be important to their purchasing decisions. although information from the internet was not listed as one of the top three factors influencing respondents’ decision to purchase wood products, it was still shown as a significant factor. three of the top roles that social media had in the decision making process were listed as (1) helping in the preliminary search about a product, (2) helping in the comparison of products and (3) helping consumers find product discounts and promotions (figure 5). to obtain a better understanding of consumer media preference when gathering information before product purchase, consumers were given a predetermined list of other media besides social media and asked to choose all that were used to learn about wood products. of the other media listed, television (38.8%), retail store exposure (35%) and magazines (29%) were the top three sources selected that were used to gather information before wood product purchases. radio (13.7%), exposure at an acquaintance’s home (16.3%), newspaper (17.8%) and other media (1.4%) were the least used. catalogs and search engines were listed as other media used. these results are not surprising seeing that there has montague et al. — social media use in the wood products industry: impact on the consumer purchasing process 35 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% helps in preliminary search about product helps in comparing products helps in finding unique discounts and promotions helps in speeding up the purchasing process helps in all aspects of the purchasing process it has no role in purchasing process other reason proportion of respondents r ol es fo r w hi ch s oc ia l m ed ia is u se d used not used figure 5. proportion of respondents using social media to aid in the wood products purchasing process. been a steady shift from print and traditional advertising to internet and social media-based advertising during the last decade. research has shown that there are many reasons why advertisers and consumers prefer social media over traditional media (frandsen et al. 2016, sarikas et al. 2016, uddin et al. 2017). respondents that used social media to obtain information before purchasing wood products were asked about their perceptions regarding the advantages of social media compared to traditional media. respondents generally agreed with all five statements. they believe social media provides more information and easier access to information than traditional media, it provides an effective and powerful platform for consumers to communicate with each other and with companies, it allows them to be informed without being interrupted while doing other activities, it saves them time during the purchasing process and it provides reliable, and credible information (figure 6). based on 2-sided t tests results, all five statements were significantly different from the neutral score of 3. when asked how they viewed a wood product ad messages on social media versus traditional media, 47.7% of respondents indicated a preference for social media, 32.7% indicated that social media and traditional media were the same, 12.7% preferred traditional, 6.5% did not prefer either and .4% liked both because each medium offered something different. table 1. relative importance assigned by respondents to 6 factors that may influence their decision to purchase a wood product.a factors influencing decision to purchase wood proportion (%) assigning a rating of: median (mode) 4 or 5 (important or very important) 1 or 2 (not important or minimally important) brand reputation 4 (5) 77 5 previous experience 4 (4) 75 6 information from peers, friends and family members 4 (4) 74 6 knowledge or awareness of the brand 4 (4) 73 8 information from the internet 4 (4) 71 7 information from mass media 4 (4) 57 12 a n = 505. values are based on a 5-point scale where 1 = not important and 5 = very important. proportions are rounded to nearest whole number. 36 bioproducts business 4(3) 2019 0% 10% 20% 30% 40% 50% 60% info. access reliable info communication avenue saves time not intrusive proportion of respondents fe at ur e of s oc ia l m ed ia strongly agree agree neutral disagree strongly disagree figure 6. level of agreement that the cited feature is an advantage of social media compared to traditional media when buying wood products. respondents were given a predetermined list to determine what attracted their attention within social media when looking for wood products to purchase and asked to select all that apply. “visual elements of products/ads” was the top attribute selected. when asked to select all of the attributes that helped them remember more about wood products/advertisements seen on social media, visual elements also was selected as the top attribute from the predetermined list provided. these results support research that states websites and social media sites that have pictures, visual displays of products and are more interactive do better than those that do not (bruner & kumar 2000, montague et al. 2012, leung et al. 2015) and show the importance of providing consumers with a plethora of visual options. the ability to be able to visualize products such as furniture in one’s home or office is very important to consumers. the introduction of virtual reality/augmented reality has given companies the ability to accommodate these desires. this year ikea rolled out the “place” app for ios users, which gives consumers the ability to preview furniture in their home before purchasing it (mangles 2018). online retail sites have realized increased sales and customer loyalty through the creation of interactive and more realistic portrayal of products that have vibrant imaging and the ability to customize using virtual reality and similar applications (esfahani 2005, lurie & mason 2007, mangles 2018). “product videos/photos” was listed as the top attribute that attracted respondents’ attention. however, when asked what motivated respondents’ to purchase wood products seen on social media this attribute was ranked as a close number two. “positive comments from previous users” was the top motivating factor for consumers. “reviews from friends and acquaintances” was selected as the third most motivating factor. “changing other’s opinions about the respondent through social media postings” and “desire to be like others” were listed as the least motivating factors. while wom is widely regarded as the most influential factor impacting consumer behavior, ewom reaches significantly more consumers (daughtery & hoffman 2014, sohn 2014 ). sixty-six percent of people around the world trust consumers’ opinions posted online about products and services (nielsen 2015). understanding the implications of this is very important as wood products companies decide whether to incorporate social media into marketing strategies. to determine how social media had affected consumers’ purchasing decision process, respondents were given five different stages in the process (table 2) and asked to rank them (on a 5-point scale anchored by 1 = least affected and 5 = most affected). results suggest that consumers judge social media to have the most effect on the purchase review stage and the evaluation and comparison stage of the purchasing decision process. research shows that potential customers are more interested in the recommendations and product reviews of others than the product information of the vendor (hajli 2014). in fact, retailers understand the importance of customer reviews and often request post purchase reviews from customers (park et al. 2007). some even montague et al. — social media use in the wood products industry: impact on the consumer purchasing process 37 offer incentives for reviews. retailers on amazon offer products for consumers to test and review while bestbuy offer reward points for reviews. when asked about the effectiveness of social media in the wood products purchasing process, 24.6% of respondents indicated it was very effective, 38.4% indicated it was effective, 23.4% indicated they were neutral, 12.7% indicated it was slightly effective and 1% indicated it was not effective at all (figure 7). kruskal-wallis nonparametric test results indicated that males viewed social media as being more effective than females. finally, respondents were asked if they were likely to share comments/reviews/information with peers or friends via social media after making a wood product purchase and if they were concerned with privacy issues when using social media during wood product purchases. most respondents indicated that they were likely to share comments/information with peers or friends about their wood product purchase. privacy and web security is often a concern for individuals when purchasing online. however, when asked about privacy issues when purchasing wood products using social media, 13.3% indicated being very concerned, 17.6% indicated being concerned, 20.2% indicated having some concern, 27.7% indicated being neutral on the topic and 21.2% indicated having no concern. 4 conclusion data on the characteristics of us consumers and social media apps/sites used to gather information about wood products during the decision making process were collected through an online survey conducted in 2017. the 928 respondents to the online survey provided insights into the use of social media tools as an 15% 38% 31% 15% 1% 32% 39% 17% 11% 1% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% pr op or tio n of re sp on de nt s perceived effectiveness female male very effective effective neutral slightly effective not effective at all figure 7. consumer rankings, by gender, of the effectiveness of social media as a tool for assisting in the wood products buying process. table 2. relative effect of social media on the 5 stages of the wood products purchasing process assigned by respondents.a stages of the purchasing process proportion (%) assigning a rating of: median (mode) 4 or 5 (effective or very effective) 1 or 2 (not effective or minimally effective) purchase review 4 (5) 72 11 evaluation/comparison of information 4 (4) 72 8 exposure to product or service information 4 (5) 68 13 search for alternatives 4 (4) 56 16 problem recognition 4 (4) 53 20 a n = 505. values are based on a 5-point scale where 1 = least effective and 5 = most effective proportions are rounded to nearest whole number. montague et al. — social media use in the wood products industry: impact on the consumer purchasing process 38 information gathering tool for potential forest products consumers. although consumer use of social media to research and gather information on companies and products is commonplace in the u.s., limited research has been conducted on consumer use of social media to gather information about wood products and the benefits associated with it. results from this study show that respondents are beginning to embrace social media as a way to gather information about wood products. while 88.1% of the respondents indicated using social media, only 54.4% have used social media to gather information about wood products before purchasing. many indicated being unaware that social media was an option to search for wood products information. this shows that there are opportunities available for wood products companies to capture audiences and markets through innovative marketing strategies that incorporate social media. understanding the various social media tools used by u.s. consumers, the information gathered through these tools and the reasons these tools are used could aid companies in developing effective marketing strategies. based on respondents’ comments, there seems to be a lack of knowledge when it comes to the wood products industry and the products the industry produces. these results also can provide information that can aid companies in effectively distributing valuable information about the industry and products. because advances in technology have changed the way businesses and consumers communicate, there are now many ways to market products that allow consumers to develop personal connections with products and brands. visual displays and platforms seem to be very important to respondents in helping them in the decision making process. because of the aesthetic attributes of wood and the numerous products created from wood, the industry is in a position to benefit from visual showcasing and storytelling on various social media applications. according to the results of this study, there is room to increase consumer exposure and awareness of the industry and its products. as the population ages, wood products consumers will continue to shift from being traditional media users to being technology and social media dependent consumers. the us wood products industry’s ability to adjust to this change will most likely determine how it will fare in terms of increasing global competitiveness. 5 literature cited aguilar, f.x., & cai, z. 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(2012). social media peer communication and impacts on purchase intentions: a consumer socialization framework. journal of interactive marketing 26(4), 198-208. https://www.census.gov/ abstract based on a case study of one large company in the swedish forest sector, this article explores the nature and practice of workplace harassment in forestry organizations. a questionnaire answered by 645 employees (92.5% response rate) shows that both women and men report experiences of harassment at work, although in different forms, with different frequencies and with different consequences. a total of 38% of women and 14% of men employed by the company report experiences of harassment at work. both women and men most often experience verbal and psychological harassment by coworkers during day-to-day activities. however, unlike men, women also experience workplace harassment that takes place on and across a wider range of spatial and temporal relations and with various perpetrators involved. also evident was that women respondents had a more negative perception of company culture and gender equality status compared with men, and the most negative perceptions were from women reporting experiences of harassment. based on this case study, the article provides quantitative descriptions of workplace harassment experienced by women in swedish forestry organizations that were previously explored from a qualitative perspective. this article also adds new insights into the existence of workplace harassment in forestry organizations that is not of a sexual nature and that not only women but also men report. keywords: swedish forest sector, forest industry, gender equality, male-dominated, workplace survey workplace harassment in forestry organizations – gendering the experiences of women and men 1 department of business administration, technology and social sciences, luleå university of technology, sweden 2 department of forest resource management, swedish university of agricultural science, sweden * corresponding author: kristina.johansson@ltu.se kristina johansson1*, elias andersson2, therese sehlstedt1 bioproducts business 4(10), 2019, pp. 125–136. issn 2378-1394 https://doi.org/10.22382/bpb-2019-010 1. introduction historically, forestry has primarily involved physically demanding manual work tasks, with practical and symbolic associations with men and particular forms of rural, blue-collar, nature-mastering masculinity (ager 2014, johansson 1994). the introduction of new technology and automatized operations, together with the development of a service-based economy and an increased focus on forestry planning and management, have created a need for more varied competences and skillsets (ager 2014, häggström et al. 2013, swegov 2007). this development has, at least in the swedish forest sector, motivated policy makers and company representatives to promote gender equality, often with a focus on increasing the representation of women, as one of the means to modernize the sector and make it more attractive and competitive (andersson et al. 2018, johansson & ringblom 2017, cf. hansen et al. 2016). promoting gender equality in forestry requires nuanced knowledge of the various ways in which structures, practices, professional values, and skillsets of forestry organizations are constructed in relation to norms of masculinity. while progress has been made (e.g., andersson et al. 2018, andersson & lidestav 2016, brandth & haugen, 2005a, 2005b; johansson et al. 2019b), the existing literature provides limited insights regarding the extent to which gendering structures and practices in forestry take the form of workplace harassment. in a qualitative analyses of women forestry professionals’ testimonies from the metoo-campaign #slutavverkat, johansson et al. (2018) found that sexual harassment connects to broader gendering of power relations at work mailto:kristina.johansson@ltu.se 126 bioproducts business 4(10) 2019 and constitutes a barrier to diversity in forestry organizations (cf. hansen et al. 2016). more quantitative-oriented insights, including incidence or analyses of harassment in relation to specific organizational contexts, are missing in the literature. the necessity of more studies on harassment in forestry is further warranted, considering that women in male-dominated organizations are more likely to experience sexual harassment compared to women in general (e.g., gruber 1998, mcdonald 2012). according to collinson and collinson (1996), the sexual harassment of women by men in male-dominated organizations is a way that men manifest homosocial bonds among themselves and keep women out of their territory. in this way, sexual violence surfaces as a means of control over women (e.g., bagilhole 2002, collinson & collinson 1996, watts 2007b, wright 2016) and as an integral part of organizational life, rather than as an isolated abnormality (e.g., hearn & parkin 2001, hearn et al. 1989). as the line between experiences of ill-treatment as a minority in a male-dominated organization and sexual harassment is subjective and often times blurry, the task of mapping the incidence of harassment is far from clear-cut (cairns 1997, collinson & collinson 1996). analyses of men’s potential experiences of workplace harassment in forestry are also missing in the literature (cf. mcdonald 2012). gendered hierarchies in maledominated organizations subordinate not only women but also some men and certain forms of masculinities. hence, parallel to connell’s (1995) conceptualization of hegemonic masculinities, masculinities are to be understood in plural, making it important to also focus on power hierarchies among men. men, especially newcomers, learners, and novices, tend to be subjected to different instances of ceremonial and ritualistic behavior, including, for example, degrading “practical jokes” (collinson 1988, plester 2015, watts, 2007a). ackroyd and thompson (1999) suggest that rites and ceremonies that defile workers are functional for the group: “they are mechanisms by which informal hierarchies and group identities are developed and sustained” (p. 65). it is thus evident that harassment of both women and men plays a role in constructing and maintaining a workplace culture built on privileging some men over others. motivated by existing gaps in the literature and based on a case study of one large company in the swedish forest sector, the overall aim of this article is to analyze the role and characteristics of workplace harassment in forestry organizations from a gender perspective. the specific research questions of the study are as follows: • what are the characteristics and practice of workplace harassment that women and men experience in the organization? • how do experiences of workplace harassment relate to women and men’s perceptions of the organization? 2. theoretical background — gendering workplace harassment harassment in the workplace, ranging from bullying to direct violence/assault, has been a focus of research over the last three decades – primarily from psychological and legal perspectives (e.g., branch et al. 2013, mcdonald 2012). parts of this research have highlighted the gendered nature and implications of workplace harassment and the explicit sexual dimensions which distinguish sexual harassment from other types of harassment (samuels 2003, zippel 2006). although these types of behaviors are prohibited by law in most industrial countries (mccann 2005), they are still frequent across all types of sectors and organizations. in its various forms, workplace harassment, regardless of whether it is identified as such, has negative consequences for both the organization and the individual exposed to the harassment (berdahl & aquino 2009, welsh 1999). male-dominated organizations and workplaces have been identified as particularly problematic and hostile in terms of the frequency and nature of harassment (e.g., gruber 1998, mcdonald 2012). in these environments, women are less likely to define their experiences as harassment perhaps because, as collinson and collinson (1996) suggest, they want to be considered equal members of the male collective. additionally, the tendency of being harassed is associated with poorer psychological outcomes (collinsworth et al. 2009). this is partly due to the asymmetrical power relations between women and men (thomas 1997) and the fact that heterosexuality is a dominant characteristic of these male-dominated settings (epstein 1996). workplace harassment not only affects the exposed individuals. the witnessing and awareness of harassment in organizations have also been shown to produce negative impacts and stress in persons who are not the targets of these actions and behaviors (e.g., miner-rubino & cortina 2007, raver & gelfand 2005). for both of these groups, harassment has been linked to job-related factors such as absenteeism, lower job satisfaction, lower productivity, reduced motivation, johansson et al. — workplace harassment in forestry organizations – gendering the experiences of women and men 127 and employment withdrawal (e.g., chan et al. 2008, fitzgerald et al. 1997). harassment has also been linked to different organizational levels, indicating differences between blue-collar and white-collar occupations, with a lower reported frequency in the latter (chamberlain et al. 2008, de haas & timmerman 2010, ilies et al. 2003). the most frequently reported forms of workplace harassment are nonphysical harassment, such as verbal remarks and comments (berdahl & aquino 2009, fitzgerald et al. 1997), suggesting that they appear less threatening and are more socially accepted than physical harassment within different contexts, especially in male-dominated and masculinized spaces (cockburn 1991a, collinson & collinson 1989, collinson et al. 1990). in these spaces, masculinized cultures of misogyny can contribute to masking, reinforcing and reproducing harassment in a socially acceptable way through, e.g., various forms of humor, imagery and jargon (cockburn 1991a, thornton 2002, witz et al. 1996). in this study, workplace harassment, in its various forms, is understood as a part of the on-going production of gender (acker 1992) and the organization as it shapes and structures gendered interactions and relations through various forms of control (e.g., berdahl 2007, hearn & parkin 2001, hearn et al. 1989). this is particularly the case in relation to sexuality and male-dominated industries and organizations (bagilhole 2002, cockburn 1991b, collinson & collinson 1989, collinson & collinson 1996, paap 2006, watts 2007b, witz et al. 1996), where harassment often constitutes the basis for performing masculinity (paap 2006) and the institutionalization of heterosexuality (ingraham 1994). thus, following mackinnon (1979, p. 1), we define sexual harassment as “the unwanted imposition of sexual requirements in the context of a relationship of unequal power.” 3. methods this article analyses the responses to a questionnaire collected as part of a case study of a large company within the swedish forest sector conducted during 2017-2018. the study was initiated and funded by the company and focused on gender patterns, harassment, and organizational culture. as most companies within the forestry sector, positions and tasks in the company were divided along lines of gender: 80% of the respondents were blue-collar workers, and 20% of the respondents were office-based workers. men constituted 85% of the respondents, and women constituted 15% of the respondents. the proportion of women was larger among office-based personnel compared to blue-collar workers, mainly because women were predominant in lower-lever administrative positions. men held the majority of managerial and upper-level positions. the company approached the researchers wanting to learn more about the particular circumstances that prevented the company from promoting gender equality. gender equality was defined in the study with both quantitative (the representation of men and women on different levels of the company) and qualitative (the workplace culture and its connection to exclusion and subordination) aspects in mind. the researchers, in dialog with the company, decided on a study design that included a qualitative interview conducted with office staff and a quantitative survey administered to all personnel, covering gender patterns, workplace culture, and harassment. the company’s role was mainly to coordinate the practical aspects of the study that enabled the researchers’ access, while the researchers were in charge of the scientific design. twenty-four semi-structured interviews with men and women office staff at different sites and different levels were conducted during the autumn of 2017. the interviews were analyzed and reported back to the company in the form of qualitative insights on identified problems relating to a macho workplace culture, the dominance of men in management, and sexual harassment, as well as a list of recommended measurements. these insights were then complemented by a questionnaire sent to all personnel measuring their attitudes and their perceptions of the company and its gender equality statutes, including the existence of workplace harassment, presented and analyzed in an additional report. in accordance with the scope of this article, the 645 responses (92.5% response rate) to the questionnaire were placed at the focal point. 3.1 the questionnaire the questionnaire, developed and conducted using the survey automation software program evasys, consisted of three blocks. block one, introduction, included six questions with fixed-answer options focusing on demographic and employment matters (gender, age, allocation, type of employment, form of employment, and education). block two, my workplace, consisted of 28 statements about organizational culture, use of language, and career opportunities. sixteen of the 28 statements concerned women’s and men’s career opportunities and ill-treatment, derived from the interviews 128 bioproducts business 4(10) 2019 with office staff. each statement was designed to cover a specific (but interrelated) aspect of gendered organizations, such as influence, value of competences, and access to networks and different managerial levels. the respondent was asked to state how well each statement described their workplace or work situation on a fourpoint scale ranging from strongly disagree to strongly agree. organizational culture, use of language, and career opportunities are all complex issues that are difficult to reduce to a number of short, demarcated statements. in relation to the overall case study, this part of the questionnaire was designed as a form of complementary, quantitative illustrations or “thermometers” of the more elaborated, qualitative descriptions and analyses provided by the interview portion of the study. block three, offensive treatment and harassment, consisted of questions with fixed-answer options. respondents who stated that they had not experienced harassment answered four questions on their knowledge of company protocols. respondents who stated that they had experienced harassment answered 13 questions (which also surveyed the type of harassment experienced and whether it had been reported to the company). 3.2 analyzing and reporting the data the survey data consisted of responses from 645 employees (92.5% response rate). the analysis of the survey data was conducted using ibm spss statistics software and focused on descriptive and bivariate statistical analysis. the results from cross-tab analyses are the focus of this article. the analyses were performed to identify statistically significant differences between different groups of respondents (e.g., harassed/non-harassed, men/women and blue-collar/white-collar workers) that would characterize and explain the structure of harassment and the experience of different groups within the organization. chi-square tests were used to test the variations between the different groups, and p < 0.05 was used as the level of significance. the chi-square test was carried out on the four-point scale. the data presented in this paper are descriptive, based on quantitative survey data focusing on women’s and men’s experiences of workplace harassment based on the responses to the fixed-answer questions (block three in the questionnaire) and analyses of how the experiences of harassment may relate to variations in women’s and men’s perceptions of the company. the second theme is based on analyses of how women and men (with or without experiences of harassment) rated each of the 28 statements focusing on organizational culture and gender equality statutes (block two in the questionnaire). to illustrate the indication of patterns identified during the analytical process, the data presented in this paper focus on the differences between the responses to one alternative of the four-point scale of each statement. statements formulated on a positive note focus on the response alternative “strongly agree,” while statements formulated on a negative note focus on the response alternative “strongly disagree.” the analyses of the statements identify more overarching variations and similarities in the relation between men’s and women’s experiences of workplace harassment and their perception of the organization. more in-depth analyses of the particular instance of the workplace culture for each evaluated statement are beyond the scope of this article. last, given the subjective nature of harassment, we interpret this result as the percentage of women and men who state that they have experienced harassment, rather than the experiences of harassment per se. due to this study’s grounding in gender theories, “men” and “women” do not refer to essential or natural characteristics but to the result of “situated doings” (cf. west & zimmerman 1989). hence, women and men, and their experiences, are seen as the result of hierarchical ordered subject positions, organized in accordance with normative conceptions of gender differences in maledominated organizations. 4. results and discussions 4.1 women’s and men’s experiences of harassment nearly four in ten women (38%) at the company stated that they have experienced workplace harassment. the corresponding share among men is 14% (table 1). the questionnaire also included a question asking if the harassment experienced was of a sexual nature (yes/ no/don’t know). the finding showed that women were far more likely than men to report experiences of sexual harassment; 57% of women – but only 6% of men – have experienced harassment “of a sexual nature.” the majority of workplace harassment experienced by men and women in the company is not reported to management (table 2). only approximately one-fifth (19.5%) of men and women reported the/all workplace harassment they have experienced to the company, johansson et al. — workplace harassment in forestry organizations – gendering the experiences of women and men 129 and almost as many (16.9%) have reported one/several, but not all instances, of harassment they have experienced. a total of 63.6% of women and men who had experienced workplace harassment had not reported the harassment to the company. regarding potential differences between men’s and women’s reports, the findings suggest that men were less likely than women to report harassment. in terms of motives for not reporting harassment to the company, a large share of respondents reported not feeling that the incident was serious enough (table 3); as many as 45% of the 62 persons who had not reported harassment stated this as the reason. the results show limited differences between women and men respondents, with the exception that women were significantly more afraid of the consequences following a report of harassment than were men. while 30% of the women not reporting harassment were afraid of the consequences, this only applied to 16% of the men not reporting harassment. verbal abuse was the most frequent type of workplace harassment among both women and men who had experienced harassment (table 4). seven out of ten (72%) respondents who had experienced harassment reported verbal abuse, followed by psychological abuse (50%), and physical violence (1%). women and men both reported experiences of psychological abuse (ignoring/excluding, feeling of being left out and/or not listened to), but women (68%) experienced these types of abuse more often compared to men (41%). also evident is that one out of three women (32%) but zero men reported the experience of unwelcome physical contact. in terms of regularity of harassment, the harassment reported in the survey generally occurred more than once: 46% stated that harassment had occurred “more than once, but on isolated occasions.” 30.7% stated that harassment was “repeated,” while only 22.7% stated that the harassment only happened once. regarding the context of harassment, incidents that occurred as part of day-to-day work dominated both women’s and men’s responses: 97% of women and 78% of men stated this option. among women, 13% stated that the harassment occurred during conferences and 29% stated that it took place during “social events,” while none of the men stated these options. most commonly, the offender was a coworker table 2. if respondents reported workplace harassment to the company. respondents who have experienced harassment, n = 77 (women: n = 31; men: n = 46). women men total n % n % n % yes, this incident/all incidents experienced 8 25.8 7 15.2 15 19.5 yes, one/several incidents but not all 8 25.8 5 10.9 13 16.9 no 15 48.4* 34 73.9* 49 63.6* * = p < 0.05 table 1. respondents who have been subjected to workplace harassment in some form, either at or in relation to their workplace. all employees, n = 548 (women n = 81, men n = 467). women men total n % n % n % yes 31 38.3 63 13.5 94 17.2 no 50 61.7 404 86.5 454 82.8 table 3. motive for not reporting workplace harassment to the company. respondents who have experienced harassment but have not reported it, n = 62 (women: n = 23; men: n = 39). multiple selections are possible. women men total n % n % n % i didn’t think it was serious enough 11 47.8 17 46.3 28 45.2 i didn’t know how to go about it 5 21.7 5 12.8 10 16.1 i was afraid of the consequences 7 30.4* 3 7.7* 10 16.1* don’t know 3 13.0 4 10.3 7 11.3 other 3 19.4 9 23.1 12 19.4 * = p < 0.05 130 bioproducts business 4(10) 2019 at the same workplace. this answer was reported by six of ten (61%) respondents who experienced workplace harassment, and the percentage was almost the same among women and men. the second most common type of offender was coworkers at other company workplaces, an alternative stated by almost half (48%) of the women and almost one out of five (18%) of the men. while no men reported harassment by customers, 7% of women did. in addition, 29% of women and 16% of men reported harassment by managers. 4.2 experiences of workplace harassment influence perceptions of the organization how do experiences of workplace harassment relate to women’s and men’s perception of the organization? respondents’ perception of organizational culture and use of language were surveyed via 12 statements (table 5). the findings show that all respondents, independent of comparison group, most strongly agreed that “it is ok to ask others for advice and help to get work done,” while the smallest number strongly agreed that “i find the conversation topics during break and lunch relevant and interesting.” also evident is that persons stating that they have experienced workplace harassment reported a more negative perception of the company, compared to persons who did not report harassment, and this was especially true for women. overall, this discrepancy is the result of a general tendency among persons stating that they have experienced harassment to be less inclined to strongly agree with the statements. however, the responses to a number of statements indicate that harassed respondents were more negative and have a slightly different perception of the organizational culture compared to non-harassed respondents. among women, this difference was found most often in relation to the statements “i am treated with respect” and “my workmates are there for me (support me),” which women who have experienced workplace harassment were far less likely to agree with, compared to non-harassed women. among men, the largest discrepancy between harassed and table 4. the characteristics of workplace harassment women and men have experienced in relation to work. respondents who have experienced harassment. women men total type of harassment a n(31) % n(63) % n(94) % physical violence 0 0.0 1 1.6 1 1.1 verbal abuse 23 74.2 45 71.4 68 72.3 psychological abuse 21 67.7* 41.3* 47 50.0* unwelcomed physical contact 10 32.3* 0 0.0* 10 10.6* context of harassment a n(31) % n(63) % n(94) % part of day-to-day work 30 96.8 49 77.8 79 84.0 conferences 4 12.9* 0 0.0* 4 4.3* social events 9 29.0* 0 0.0* 9 9.6* outside working hours 9 29.0* 5 7.9* 14 14.9* regularity of harassment n(28) % n(47) % n(75) % once 4 14.3 13 27.7 17 22.7 more than once, but on isolated occasions 16 57.1 19 40.4 35 46.7 repeatedly 8 28.6 15 31.9 23 30.7 offender a n(31) % n(63) % n(94) % customer/client 2 6.5* 0 0.0* 2 2.1* coworkers at the same workplace 19 61.3 38 60.3 57 60.6 coworkers at other company workplaces 15 48.4* 11 17.5* 26 27.7* manager 9 29.0 10 15.9 19 20.2 * = p < 0.05 a = multiple selections possible johansson et al. — workplace harassment in forestry organizations – gendering the experiences of women and men 131 table 5. experiences of workplace harassment influence women’s and men’s perceptions of organizational culture and use of language. respondents that strongly agree with the statement. women men harassed not harassed harassed not harassed n(30-31) % n(48-50) % n(61-63) % n(396-403) % i get along with my superiors 13 41.9 49 61.2 21 33.9 188 46.7 there is good collegiality at work 8 25.8* 50 58.0* 28 44.4* 230 57.4* i find the conversation topics during break and lunch relevant and interesting 3 10.0 50 30.0 13 21.0 125 31.1 i am treated with respect 7 22.6* 50 66.0* 18 28.6* 221 54.8* people’s differences are accepted 4 12.9* 50 40.0* 13 21.3* 146 36.2* harassment is not accepted 8 25.8* 49 55.1* 21 33.3* 241 60.3* my workmates are there for me (support me) 6 20.0* 50 54.0* 22 34.9* 218 54.1* people at work understand that i may have a “bad” day 6 19.4* 48 45.8* 18 29.0* 164 40.8* it is ok to ask others for advice and help to get the work done 17 56.7 50 66.0 40 63.5 281 71.0 my workmates share their knowledge and experience of the job 10 33.3 50 60.0 30 47.6* 239 59.5* my skills and/or competences are made use of 7 22.6 50 40.0 13 21.3* 136 33.7* we help one another to work safely 9 29.0* 50 60.0* 31 49.2 191 47.6 * = p < 0.05 table 6. experiences of workplace harassment influence women’s and men’s perceptions of women’s and men’s career opportunities in the company. respondents that strongly agree with the statement. women men harassed not harassed harassed not harassed women and men('s)... n(29-31) % n(46-50) % n(59-62) % n(391-401) % skills and/or competences are given equal value 6 19.4* 22 44.9* 34 54.8* 252 63.0* have the same amount of influence 5 16.1* 20 40.0* 27 44.3* 239 59.6* have the same access to networks in the company 8 25.8* 30 61.2* 30 63.9 275 69.4 have the same opportunities to combine work and parenthood 10 34.5* 32 65.3* 41 66.1 281 70.6 have the same opportunities to become line mangers 9 30.0 28 57.1 32 51.6* 263 65.8* have the same opportunities to become middle managers 8 26.7* 25 54.3* 33 54.1* 250 63.1* have the same opportunities to join senior management 6 20.0 20 43.5 26 44.1* 222 56.8* * = p < 0.05 non-harassed respondents was related to “harassment is not accepted” and “i am treated with respect.” also evident is that in relation to “harassment is not accepted” and “i am treated with respect,” harassed men and harassed women demonstrated far more similar perceptions of the organizational culture, compared to women and men with no experience of harassment. all seven statements relating to women’s and men’s career opportunities (table 6) show that women in general have a more negative perception of the company compared to men. the most negative responses came from women reporting experiences of workplace harassment, and while men who reported experiences of harassment were more negative than men who did not, the 132 bioproducts business 4(10) 2019 differences between the two groups are not as evident as differences in the statements relating to organizational culture and use of language. a general pattern is that independent of comparison group, respondents were least inclined to strongly agree with statements relating to influence and prospect to join senior management, while they were most inclined to agree with statements relating to the ability to obtain work-life balance. the former most likely reflects the hierarchical distribution of women and men in the company, with the top positions at the organization still being strongly reserved for men. interestingly, non-harassed women, harassed men, and non-harassed men strongly agreed far more often than harassed women with the statement “women and men have the same access to networks in the company.” in fact, non-harassed women’s perceptions of women’s and men’s access to networks resembled those of men. this suggests that being a woman and having experiences of harassment (rather than just being a woman) is related to a more negative perception of the equal distribution of access to networks in the company. statements surveying the respondent’s feelings of being mistreated because of their gender show the greatest differences between women who reported experiences of workplace harassment and women who did not, while differences between men exist but are less evident (table 7). all women, although to different extents and in different relative orders, were less likely to disagree with statements concerning feelings of having their skills called into question, being overlooked, having less influence, and receiving unwelcome attention. the statements that showed the greatest differences among women concerned feelings of being less able to enjoy their time at work and having their skills called into question. interestingly, women who did not report experiences of harassment rated the statement concerning their ability to enjoy time at work and support from coworkers nearly the same as men who did not report harassment. compared to women’s reports, men’s reports suggest that they feel mistreated because of their sex to a lesser extent than women, and if they do, the feeling is related to opportunities for promotion, their skills being called into question, and having less influence. also evident was that in relation to these statements, the smallest differences were found between men who did report experiences of harassment versus men who did not. 5. conclusions and future research the survey responses analyzed in this article have made it evident that both women and men employed by a company in the swedish forest sector report experiences of harassment at work, although in different forms, at different frequencies and with different consequences (cf. fielden et al. 2000, guerrier et al. 2009, tallichet 2000). both women and men were most likely to report workplace harassment in the form of verbal abuse (cf. berdahl & aquino 2009, fitzgerald et al. 1997), followed table 7. experiences of harassment influence women’s and men’s feelings of being mistreated because of their gender in the company. respondents that strongly disagree with the statement. women men harassed not harassed harassed not harassed because of my gender, i feel that… n(28-31) % n(47-49) % n(59-63 % n(389-400) % my skills and/or competences are called into question 4 12.9* 28 58.3* 37 59.7 291 72.9 i have less influence 5 16.1* 29 59.2* 40 63.5 293 73.3 i have limited access to networks in the company 12 40.0 28 63.6 40 67.8 292 75.1 i have fewer opportunities to combine work and parenthood 12 42.9* 39 81.3* 41 65.1* 306 77.1* i have fewer opportunities for promotion within the company 8 28.6 28 57.1 35 56.5* 275 69.4* i receive unwelcome attention 6 19.4* 39 83.0* 42 66.7* 311 78.3* i am overlooked during meetings or discussions in my workplace 9 29.0* 31 64.6* 41 65.1* 302 75.9* i get less support from my workmates 13 43.3* 40 81.6* 43 68.3* 318 80.1* i am less able to enjoy my time at work 10 34.5* 41 85.4* 43 68.3* 316 79.8* * = p < 0.05 johansson et al. — workplace harassment in forestry organizations – gendering the experiences of women and men 133 by psychological abuse, by workmates, occurring more than once and as part of their day-to-day work. in addition, compared to men, women also reported more experiences of sexual harassment, of unwelcome physical contact, of harassment by coworkers from other departments and customers, and of harassment during social events and outside work hours (cf. johansson et al. 2018). a relation between experiencing workplace harassment and a more negative perception of the organization was also evident in the case study explored in this article (cf. chan et al. 2008, fitzgerald et al. 1997). most evident was the relationship between gender and the perception of the organization. women as a group viewed organizational culture, use of language, and gender equality status of the organization more negatively than did men. women who reported experiences of workplace harassment were significantly more negative than women who did not, especially concerning feelings of mistreatment because of their sex (cf. chan et al. 2008, collinsworth et al. 2009, fitzgerald et al. 1997). men who reported experiences of harassment demonstrated a more negative perception related to organizational culture and use of language than men who did not experience harassment, but their perceptions concerning gender equality status and feelings of mistreatment because of their gender were more similar. this result suggests that while women’s reports of harassment are related to an increased likelihood of interpreting the organization from a gender perspective and perceiving the company as shaped by gendered hierarchies, men’s reports do so to a lesser extent. why, then, do harassed women have more negative perceptions of the organization? one interpretation is that the experience of workplace harassment itself results in a more negative perception of the company, making the act of workplace harassment the main signifier. another is that a negative (and gender-oriented) perception of the company increases the likelihood of individuals interpreting their experiences in terms of workplace harassment, making perception the main signifier. a third, more dynamic interpretation aligned with the blurry and often subjective line between experiences of ill-treatment as a minority in a male-dominated organization and sexual harassment (cf., cairns 1997, collinson and collinson 1996) is that workplace harassment is one component of women’s more overarching experiences as minorities in organizations that are numerically and culturally dominated by men and masculinity. if so, the strong relation to gender suggests that workplace harassment and perception are part of an on-going production of gender within organizations (acker 1992). the findings provide quantitative descriptions of the workplace harassment experienced by women in swedish forestry organizations previously described from a qualitative perspective derived from the findings of the swedish #metoo (cf. johansson et al. 2018). adding insights into incidences further emphasizes the gendered (cf. gruber 1998, mcdonald 2012, samuels 2003, zippel 2006), potentially heterosexual (cf. epstein 1996) and integral nature of sexual harassment in organizations (cf. hearn and parkin 2001, hearn et al. 1989). it also supports the analytical and practical necessity of acknowledging sexuality in research and gender equality work in the context of forestry organizations (cf. bagilhole 2002, cockburn 1991b, collinson & collinson 1989, collinson & collinson 1996, paap 2006, watts 2007b; witz et al. 1996) and of understanding, and practically engaging with, workplace harassment from an organizational and managerial perspective. the findings add new quantitative descriptions of the incidences of workplace harassment in the forest sector that are not of a sexual nature that both women and men report experiencing. verbal and psychological harassment occurs during day-to-day activities and by workmates, and it can thereby be understood as a product not only of a general gendered and maledominated workplace culture but also of specific gendered characteristics that have consequences not only for women but also for groups of men. the harassment reported by men is more closely associated in time and space with the workplace and their coworkers (e.g., the culture and jargon) (cf. cockburn 1991a, thornton 2002, witz et al. 1996). while these forms of workplace harassment also dominate women respondents’ reports, women report harassment that takes place on and across a wider range of spatial and temporal relations and with various perpetrators involved. similar tendencies have also been shown in previous studies of the swedish forest sector (e.g., johansson et al. 2019a, johansson et al. 2018), describing how the sexualizations of women in the forest sector tend to be made more obvious and become more explicit during social activities involving alcohol, sauna baths, etc. the findings also suggest that women who have been harassed emphasize a feeling of limited inclusion in the workplace (based on, e.g., the respect and support of coworkers), while men more 134 bioproducts business 4(10) 2019 often highlight the potential acceptance of harassment. for the harassed women, the experience is generally more negative and is often also related to their professional identity and role (such a career opportunities and influence) – something that resonates with gendered hierarchical constructions of skills and competences in male-dominated organizations in general (cf. acker 1992, 2006) and within the forest sector more specifically (cf. johansson et al. 2019a, 2019b). the access to networks is one of those structuring aspects that has also been highlighted in previous studies (andersson & lidestav 2016; brandth et al. 2004, 2015). regarding the limitations of this study, drawing from one company case study means that it is not possible to translate the reports on incidence to a sector level. however, combined with existing knowledge of the gendered nature of forestry organizations (e.g., andersson et al. 2018; andersson & lidestav 2016; brandth & haugen 2005a, 2005b; coutinho-sledge 2015; johansson et al. 2019a, 2019b; johansson et al. 2018), it seems likely to suggest that the overarching patterns reported in this case study are applicable to other companies in the sector. although these patterns resonate across different national and organizational contexts, there is still a need for more in-depth, detailed and contextualized knowledge to better understand the structures and mechanisms behind these patterns. also worth evaluating in relation to limitations is the fact that researchers and company representatives collaboratively developed the survey. the company’s involvement in the practical arrangements of this study enabled the employees to respond to the survey on site during working hours. this was beneficial, considering the 92.5% response rate. if the employees had responded to the survey outside of work, this would probably have severe effects on the response rate. however, responding to a questionnaire surveying sensitive issues such as workplace harassment on site, in the same room as your coworkers might impose other limitations. this circumstance might explain why so few of the respondents used the opportunity to make additional reflections and comments on the open-ended question at the end of the questionnaire. from previous experiences, we know that responses to open-ended questions can enable nuanced, qualitative analyses (johansson et al. 2019a, 2019b), but this was not the case here. hence, while the practical arrangement of the study enabled almost all employees to respond to the questionnaire by ticking all its boxes, it was not ideal for obtaining more elaborate descriptions and reflections. however, as this case study also included interviews, securing a sufficient response rate was prioritized. to strengthen the results reported in this article, further inquiries of both a quantitative and qualitative nature are called for. to validate the quantitative descriptions of women’s and men’s experiences of harassment, surveys covering additional organizations and/or forestry labor markets are necessary. to deepen the understanding of men’s experiences of harassment and their relation to the culture and practices of forestry organizations, interviews and on-site observations are needed. this is partly to better understand harassment, not primarily as individual negative “errors,” but as informal interactions of “doing the work” within specific organizational settings (cf. acker 2006). developing and communicating such knowledge is particularly vital for the ability to create policies and routines that prevent and counteract the harassment of not only women but also of men in 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the betterment of their local communities. we utilized secondary data to explore the communities’ crime indexes, population sizes, unemployment levels, education of residents, and percentages of annual resident turnover. we differentiated between firms based on their marketing expertise and the extent to which they were hiring. results suggest that a relationship exists between local community conditions, namely low annual resident turnover and high formal education, and an executive’s beliefs about whether a firm should play a role in bettering its community. executives who reported a belief in bettering their community were also with firms that had greater marketing expertise, and were increasing in size compared to their counterparts. implications are drawn for leadership to engage in community betterment as a form of corporate social responsibility. keywords: community betterment, corporate responsibility, marketing, pallets, wood corporate responsibility via community betterment: characterizing firms and communities in a sample of sme wood manufacturers 1 department of agricultural and biological engineering, 203 abe building, the pennsylvania state university, university park, pa 16802 2 school of labor and employment relations, 506 keller building, the pennsylvania state university, university park, pa 16802 * corresponding author. email: jh-michael@psu.edu; tel: 814-863-2976 acknowledgement: the authors would like to thank the national wooden pallet & container association (nwpca) for assistance with data collection and related support. we acknowledge additional support from the usda national institute of food and agriculture and hatch appropriations under project #pen04602 and accession #1009850. judd h. michael1* and ann e. echols2 bioproducts business 5(4), 2020, pp. 37–50. issn 2378-1394 https://doi.org/10.22382/bpb-2020-004 1. introduction common wisdom says it pays for companies to engage in social responsibility (wang et al. 2016), and more specifically, it pays for companies to better their local communities (hovde 1943, porter & kramer 2002). while being socially responsible may be one justification for firms striving to better their communities, there may also be a business case for a component of corporate social responsibility (csr) known as community betterment (wójcik 2018). for example, businesses are more likely to thrive if the communities they reside in are healthy, as they have a shared fate with the welfare of their community (hovde 1943, besser & miller 2004). the trend toward businesses contributing to their local communities seems to be growing. for example, for-profit hospitals are investing in bettering their communities in a national trend that is occurring in cities across the country (chisolm 2018). we note, however, that no known work has been done to examine wood manufacturers in this specific context of corporate social responsibility. perhaps wood manufacturers could see a myriad of benefits (e.g., enhanced corporate image) if they focused more on their communities and considered local stakeholder interests. large forestry companies were 38 bioproducts business 5(4) 2020 shown to put considerable efforts into community development and relations (vidal & kozak 2008) as part of their corporate responsibility (cr) practices. moreover, local community interactions have been noted as a key area of public debate for the forest products industry (panwar et al. 2006) and thus warrant additional research focus. we presume that leadership at some wood manufacturers already puts efforts toward bettering their local communities, but we don’t know the characteristics of either the firms or the communities. as has been noted previously (han & hansen 2017), many forest products companies are not highly skilled at marketing. perhaps emphasizing community relations is or could be a way of doing non-traditional marketing for industry firms. we chose to conduct exploratory research into the relationship between community betterment and small wood manufacturers by focusing on the transport packaging industry. the aims of our research included investigating the associations between community attributes and executives’ desires to better their communities, with additional focus on the firm’s marketing and hiring. pallet producers are a key component of the transport packaging industry and were an appropriate venue for a number of reasons. for example, as light manufacturers they will require access to a local workforce of both managerial and blue-collar employees. moreover, while the largest pallet corporations will sell or rent their products nationally, all other producers will deal with more localized business partners for sales, rental and/ or retrieval of used pallets (e.g., dunn et al. 2000). thus, transport packaging firms have the potential for strong local connections in terms of both business partners and human capital. this work sampling from sme (small and medium-sized enterprises) forest products manufacturers provides a contrast to previous works focusing on cr in larger corporations (e.g., han & hansen 2012) 2. contextual and conceptual background the conceptual background for our research comes from carroll’s four-part “pyramid of csr” (carroll 1991, 2016). this depiction has been one of the most popular constructs of csr and helps to visualize how community betterment fits into the larger picture of business’s responsibility to stakeholders. carroll’s framework for csr included the elements of economic, legal, ethical, and philanthropic (figure 1). it is noted that philanthropic efforts are some of the most important components of corporate responsibility. carroll (2016) states that corporate philanthropy includes all forms of voluntary corporate giving, including monetary gifts, product or services contributions, volunteerism, and community development. these would also include any other discretionary contributions to the community at large or to local stakeholder groups. taken together, corporate philanthropy can be seen as a way for the firm to better its local community, while perhaps satisfying stakeholder demands. the components of the pyramid of csr as designed by carroll (2016) differ from corporate community involvement (cci) in that cci refers more narrowly to the provision of goods and services to nonprofit and civic organizations by corporations (burke et al. 1986). our view on community betterment includes more than just nonprofit and civic organizations. carroll (1991) argued almost 30 years ago that businesses are expected to contribute financial and human resources to the local communities where they operate, while also improving the quality of life. we would contend that in today’s world there is even greater expectation for small and medium-sized enterprises to make the same contributions. while some executives may contribute in a strictly altruistic manner, most firms engage in philanthropy to augment or enhance their reputation (carroll 2016). this implies that there is a business case to be made for community betterment and suggests that most if not all business leaders should consider such investments. the literature on the business case for csr has evolved over the past decades, such that many of today’s authors are more supportive of csr’s benefits. it wasn’t always this way, with authors such as friedman (1970) and levitt (1958) arguing that the primary social responsibility of a firm’s management is to increase profits. jensen & meckling (1976) also discussed the agency view that the “agent” (i.e., manager) should act primarily to maximize the welfare of the principal. recently, research has illuminated the business case for specific csr components, such as community betterment, to show that businesses can benefit from engaging in acts of corporate social responsibility (barnett 2019, fombrun et al. 2000). that is, firms do better by ensuring that society does well, in part because helping to address local problems can improve a firm’s relationships with its primary stakeholders (e.g., by promoting trustworthiness) (barnett 2019). michael and echols — corporate responsibility via community betterment: characterizing firms and communities 39 godfrey et al. (2009) express this when they say that demonstrating concern for others in society enables firms to build trust with their primary stakeholders. thus, serving others in the community by doing any one or more of a host of different activities, such as donating to local charities or sports teams, sponsoring the local food bank, investing in local entrepreneurs, etc., can endear the firm to the community via betterment efforts (c.f., barnett 2019). residents see that the firm is committed to making the community a better place to live, and this in turn endears the firm to the community. given this rationale for community betterment reflecting csr, a top executive may include in their firm’s agenda a goal of bettering the local community, with the related goal of indirectly generating increased profits. we found very few studies connected to research on community indicators as used in the present study. no studies exist that directly explore firms and community betterment in terms of community descriptors, or firms’ marketing or hiring strategies. thus, our research should be viewed as exploratory, referring to the fact that there is a dearth of directly applicable literature on our constructs as they specifically pertain to community betterment. however, we do draw upon literature related to factors contributing to various forms of community investment, while assuming that investing in a community can be a form of betterment. from the literature that does exist on community betterment, we note that besser (1998) found that the majority of small business owners are committed to providing support for their community. besser & miller (2001) differentiated between business managers on the basis of community-level social responsibility, leading us to believe that top managers will differ in their responses to community betterment. besser & miller (2001) reinforced the notion that community support is a strategy for business success by showing “a significant segment of small business operators believe in tenets of the enlightened self interest model of business social responsibility, that is, that doing good is good business” (p. 221). but this begs the question of what are the characteristics of communities that leaders want to better, and are there firm-level attributes that are similarly related. the initial goal of our research is therefore to investigate the associations between community attributes and wood manufacturing executives’ desires to better the communities in which they operate. secondly, we explore community betterment with respect to the firm’s marketing and hiring. these latter objectives enable us to begin to support the business case for community betterment, albeit indirectly. the following sections begin by detailing five community indicators with hypotheses for how they may relate to community betterment. we then propose two be a good corporate citizen be profitable obey laws and regulations desired by society required by society required by society expected by societydo what is just and fair legal responsibilities economic responsibilities ethical responsibilities philanthropic responsibilities figure 1. pyramid of csr (source: carroll 2016). 40 bioproducts business 5(4) 2020 additional firm-level variables to provide greater insight into how those characteristics may relate to executive opinions. 2.1 community indicators in the present exploratory study, we look to traditional indicators of communities (e.g., crime, population size, unemployment, education level, and turnover) in order to determine whether the communities that pallet executives report an interest in bettering have characteristics in common—characteristics that distinguish them from communities that executives do not express an interest in bettering. our analyses used these five constructs in part because they are well-known community indicators that are frequently weighed when deciding to locate to an area (see rabianski et al. 2001 for a review). our dependent variable is community betterment, and our independent “community indicator” variables are crime, population size, unemployment, education level, and turnover. 2.1.1 crime crime can have a ripple effect in an economy, with negative impacts on both business and society (graham 2012). firms (in this study we will consider firms and their executives as representing each other) in our target industry may react to these negative impacts by being less willing to engage in betterment activities in communities with higher crime rates. if so this might be reflective of overall, unequal external investments (with these investments being a proxy for betterment) in neighborhoods based on crime rates (saporu et al. 2011). one of the most discussed examples comes from mortgage lenders that restrict lending (or adopt predatory lending practices) in certain high-crime communities (williams et al. 2005). more affluent, low-crime neighborhoods are rewarded by banks with greater investments in forms ranging from philanthropy to direct lending; it is thought that this occurs in part because poorer neighborhoods with higher crime levels provide less “exchange value” to the efforts of community and business leaders (velez et al. 2012). moreover, it is thought that “…property crime is more visible to banks and potential investors and may dampen investment more directly than violent crime” (velez et al. 2012, p.1048). finally, it has been suggested that merely fear of local crime may stimulate and even accelerate community decline; this decline can be due to individuals and organizations withdrawing from community life (skogan 1986). that crime may “dampen” a local community’s ability to attract external resources may be an important factor related to our respondents’ willingness to better their communities. therefore, we propose that executives of firms located in low-crime areas will be more interested in bettering the local community than are executives of firms in high-crime areas. hypothesis 1. the higher the crime rate, the lower the firm’s belief that a firm should better its community. 2.1.2 population size there are a variety of reasons why community size could have an impact on local firms and their willingness to engage in betterment. for example, besser (1999) believed that the community work performed by a firm in a small community is likely to be more visible than would be the case for a firm in a large community. yet, larger populations have more to offer firms with regards to such matters as labor force, connections to other firms, and amenities (c.f., ferreira et al. 2016). cities with large and growing populations are attractive to firms, but they may be associated with congestion, crime, and related problems (gabriel & rosenthal 2004). in such a context, firms may become more successful than would have been possible in smaller communities and thus, such firms may have greater ability to give back to the community. however, given the dearth of literature on the relationship between giving to a community and community size, we build on besser’s (1999) and hovde’s (1943) cases to posit the following in favor of smaller locales: hypothesis 2. the smaller the population size, the higher the firm’s belief that a firm should better its community. 2.1.3 unemployment the unemployment rate may be a factor in determining whether and the extent to which firms give back to their local communities. if unemployment is high, it is likely that many people will be in need of assistance from services such as food banks and other charitable organizations; firms can have a positive impact by providing employment and by giving to these charities. however, we take the position that firms will be less likely to contribute to community betterment when unemployment michael and echols — corporate responsibility via community betterment: characterizing firms and communities 41 is high because they have less need to make themselves look attractive to job seekers, since the supply of potential employees obviously exceeds the demand (c.f., backhaus et al. 2002, greening & turban 2000). hypothesis 3. the higher the unemployment rate, the lower the firm’s belief that a firm should better its community. 2.1.4 education level the overall educational level of a community’s population is thought to be correlated with a number of relevant variables. for example, not only is educational attainment related to what amenities citizens demand from their communities, but also to the investments individuals are willing to make in bettering a community (testa & sander 2010). this can be manifested at the individual level by more households choosing to make greater investments in their local community (e.g., home improvement, volunteering, donating, etc.) as the average educational level increases. the relationships noted above may occur in part due to the correlation between adult education attainment and other factors such as criminal activity, social disorganization, poverty, etc. (tach et al. 2016). another underlying factor may be the inverse correlation between academic achievement and local socioeconomic conditions (reardon 2012). poor socioeconomic conditions in so-called “distressed communities” have led to various policy solutions (e.g., the community reinvestment act) designed to overcome historically lowered investment in these low-income, low-education communities (macey & miller 1993). we therefore recognize that communities with lower educational levels may have concurrent socioeconomic conditions that often lead to reduced willingness to engage in betterment actions by businesses such as lenders. this leads us to predict that executives in other industries, such as the one we focus on, may also lower their belief that poorly educated communities should be invested in via betterment efforts. hypothesis 4. the more educated the community, the higher the firm’s belief that a firm should better its community. 2.1.5 turnover turnover of community members, also known as transience, is believed to be correlated with a number of community-related variables. some of these may be tangible to a local business leader and thus relevant to decisions made with respect to bettering the local community. for example, in communities where turnover is high, residents are transient and the community is viewed as less stable. people who do not live in a community for very long often do not try to make their community better, and they are less willing to invest in the area. low levels of investment may be reflected, for example, in higher levels of renting versus home ownership, with transient renters sometimes perceived as a threat to community safety (rollwagen 2014). the rate of turnover in a community may affect a firm’s interest in contributing to community betterment, due to the various negative impacts from high turnover. for example, high turnover in a local workforce (especially in rural areas) mirrors a regular movement of workers and their families, with no opportunity to develop close ties and no common sense of community (grey 2000). high turnover has also been suggested as a factor driving higher crime rates (broadway 1990). higher transience in community members implies that a firm’s ability to keep employees (especially bluecollar workers) will be reduced. high levels of employee turnover lead to a variety of increased costs for employers (tziner & birati 1996) as well as overall lowered organizational performance (shaw 2011). therefore, firms operating in high-turnover communities may have a lowered willingness or ability to commit resources to community betterment. hypothesis 5. the lower the turnover in the community, the higher the firm’s belief that a firm should better its community. 2.2 firm-level indicators next, we explore two firm-level constructs—marketing expertise and hiring—that may explain a desire to pursue community betterment. 2.2.1 marketing expertise community betterment is a form of doing good that can be seen as a form of marketing (andreasen 1994, hildebrand et al. 2011, hovde 1943, maignan & ferrell 2004). appealing to local communities and spending energy to better your community is a similar form of marketing (hovde 1943). marketing expertise is related to positive company performance (morgan et al. 2009), 42 bioproducts business 5(4) 2020 and high performing companies are likely to give back to their communities because they can (c.f., besser 1998). thus, strong marketing expertise may be associated with strong beliefs about bettering one’s community. marketing expertise makes sense in that a primary motivation for contributing to the community is a desire to help the firm’s business; that is, contributing to the community is by no means purely altruistic (barnett 2019, carroll & shabana 2010). it is reasonable to hypothesize, therefore, that a firm with strong marketing expertise may seek to better its community as a way to create positive outcomes for the firm itself. we therefore propose the following: hypothesis 6: the higher the firm’s level of marketing expertise, the higher the firm’s belief that a firm should better its community. 2.2.2 hiring a firm that is hiring will be more motivated to contribute to its community, as doing so signals a relationship and a sense of dependability (barnett 2019). by contributing to its community and making its work in this area known, a firm indicates that it cares about its employees’ quality of life outside work and as a result may attract a workforce that is more loyal and skilled. prospective employees are attracted to companies that participate in corporate social responsibility (backhaus et al. 2002, greening & turban 2000, turban & greening 1997) because, as barnett (2019) claims; “…the firm’s employees may view it as more trustworthy and so a more desirable place to work” (p. 10). trustworthiness breeds loyalty (fombrun et al. 2000); there is thus value in using csr as a way to make a firm attractive to prospective employees (c.f., voegtlin & greenwood 2016). this leads to our last hypothesis: hypothesis 7: the more the firm is hiring, the higher the firm’s belief that a firm should better its community. 3. methods we utilized a survey to collect primary data from executives in the pallet industry. these data were collected over two time periods, and then analyzed with secondary data obtained from a variety of government sources. the following sections provide details on our methodology, including the industry profile, data collection, and variables. 3.1 industry profile we focused our study on executives at pallet manufacturing firms. pallets, otherwise known as “transport packaging,” are generally made from wood and are used as a platform to move product throughout the supply chain. all firms in our sample dealt primarily with wooden pallets. there are an estimated two billion pallets in use at any given time in the u.s. and up to 80% of all products in the u.s. are moved on pallets (carrano et al. 2014). most pallet producers will sell pallets, while a few (generally the large poolers) only rent their pallets. further, firms have the option of producing new pallets or refurbishing used pallets that are purchased on the open market from retailers and other supply chain partners. the pallet industry consists of a small number of large (revenues over $100 million) rental firms (i.e., chep and peco), which were purposely excluded from our sample; there are approximately 2,100 smaller producers, including those with revenues under $1 million in sales (mcginley 2019, quesada et al. 2012). thus, while the size of the firms varies significantly, there is little concentration in the pallet manufacturing/recycling industry. regardless of firm size, the pallet industry is generally very labor intensive, with minimal automation (and less capital intensity) outside of new pallet production (mcginley 2019). pallet producers also vary in their geographic location. some producers choose to locate in rural areas due to lower operating costs, but others choose to be in or near an urban area, since proximity to a city provides better access to both markets and used pallets. 3.2 sampling and data collection our research is survey-based, with this method being a dominant approach in measuring csr (wang et al. 2016). an initial survey (i.e., time1 data) was administered to collect data from firms operating in this industry, with a second survey (i.e., time2 data) used to collect longitudinal data approximately one year later. we pre-tested our surveys with a panel comprising both management scholars and industry experts. after we had finalized the time1 instrument, the president of the wooden pallet industry’s leading trade association sent an email to upper-level executives of 1,195 firms that consisted of both members and non-members of the association. the mailing list was screened by the association so that only those with executive positions would be included. we michael and echols — corporate responsibility via community betterment: characterizing firms and communities 43 use the term “executive” to describe our respondents, since that describes their position within the firm. our sample was designed to capture responses only from upper management, since they would be in the best positions to have knowledge of the matters in question. the email provided a brief description of the study, encouraged participation, and included a link to the online questionnaire to be completed by the executive. based on techniques found to be successful for mail surveys, a series of follow-up emails was sent in the next two weeks in an effort to increase participation (dillman et al. 2008). we received a total of 183 responses from the time1 collection. after we had removed incomplete responses and responses from non-manufacturers, the usable sample consisted of 136 responses. our adjusted time1 response rate was 11.4%. for the time2 data collection, we sent emails to all 136 time1 respondents and asked them to complete another online survey. we received 105 surveys but could only confidently match 99 of these with the time1 responses. our adjusted response rate for time2 was 72.8%. of these, we retained only the firms headquartered in the united states, such that our sample at this point in the process comprised 89 firms. we then used secondary-source archival data to supplement the survey data. we collected data from the us census bureau as found on www.realtor.com/local/ [zipcode]/ for each zip code in which the firms in the sample were located. we used www.realtor.com/local/ [zipcode]/ as our source of us census data because it was readily available, well organized, and easily accessible, compared to the way in which the data were formatted by the us census bureau—and it is freely available to the layperson. for each zip code, we collected data summarized by the us census bureau to describe the communities in which the firms were located. when we use the word “local” we mean within the firm’s zip code. we had missing data for three firms, and thus our final sample comprised 86 firms. the mean age of the 86 firms in our sample was about 35 years. on average, firms in our sample had 59 full-time production employees (from 2 to 375). only four of the respondent firms had 250 or more full-time production employees, and 70 of the firms had fewer than 100 such employees. to address concerns related to nonresponse bias, we compared the answers of early respondents with those of late respondents. we evaluated the mean responses to the survey questions for the executives who completed the survey before the stated deadline and for those who completed the survey after the deadline had passed. the perceptions of the late respondents are assumed to be more similar to those of non-respondents than to those of early respondents (kanuk & berenson 1975). therefore, significant correlations between item measures and the survey completion date would point to the existence of nonresponse bias (combs & ketchen 1999). using t-tests, we compared the mean responses of these two groups for multiple variables. the results of these tests indicated that early respondents did not differ significantly from late respondents for any of the chosen variables (p < 0.001), thereby mitigating concerns in regard to potential nonresponse bias. 3.3 dependent variable 3.3.1 community betterment we focused on one dependent variable from our survey: firms bettering their communities. the exact wording of the relevant survey question was “please check the response that best describes your agreement with the following statement: companies should contribute to the betterment of their local communities.” responses were collected across a 1-5 likert scale from strongly disagree (1) to strongly agree (5) with neutral (3) in between. the term “community betterment” is open and means to makes one’s community better in whatever ways the responder sees fit. 3.4 independent variables the first five independent variables below are taken from descriptions on the www.realtor.com/local/[zipcode]/ website as provided by the us census bureau. the point of using these variables is that they are easily understood and easily accessed by the layperson and business professional alike, as well as by policy-makers looking to research community indicators and thus estimate community betterment likelihoods based on our findings. 3.4.1 crime this variable captures the percentage of property crime, as related to population for the zip code under investigation, as either above or below the national average. we considered only property crime, in part because it is more likely than personal crime to be business-related 44 bioproducts business 5(4) 2020 and more visible to management. according to the us census bureau, the crime index of 100 represents the national average. 3.4.2 population size this variable represents the size of the community (number of residents in that zip code) per the us census bureau. the measure for population is an actual count. 3.4.3 unemployment this variable, which can range from 0 to 100%, represents the unemployment rate for the zip code under investigation, per the us census bureau. 3.4.4 educational level this variable, which can range from 0 to 100%, refers to the percentage of people in a zip code’s population who have graduated with a bachelor’s degree, per the us census bureau. 3.4.5 turnover the percentage of annual turnover refers to the percentage of residents who move from the zip code each year. this variable can range from 0 to 100%, per the us census bureau. 3.4.6 marketing expertise this variable was measured using one question on the survey: “compared to other companies in the industry, please rate your company’s position in terms of having expertise in marketing.” we used a 1-5 likert-based scale for this question, whereby (1) was much weaker, (3) was no different, and (5) was much stronger. the higher the score, the greater the firm’s level of marketing expertise. 3.4.7 hiring we measured hiring using the formula: natural log time2employment minus natural log time1-employment. time2-employment and time1-employment each refers to the total number of production employees in the firm. if the firm is increasing the number of its employees, then it is hiring. 3.5 control variable 3.5.1 firm size firm size was measured by the natural log of the number of production employees employed during time1 (lepoutre & heene 2006). firm size matters to a firm’s sustainability efforts, and especially when it comes to pursuing business functions like marketing and hiring (gallo & christensen 2011). previous findings with forestbased corporations showed that corporate responsibility activities differ by company size (han & hansen 2012). 4. results table 1 provides descriptive statistics and a correlation matrix for the variables included in our initial analysis. as shown in table 1, the correlations among our independent variables are low. we performed our initial analyses using forward linear regression. crime, population size, and unemployment were not supported, thus they were excluded from being entered into the linear regression model where community betterment was the dependent variable. this means that hypotheses 1, 2, and 3 are not supported. crime, population size, and unemployment do not explain any of the variance in community betterment. there is no relationship that we found with these three variables and our dependent variable. both education level and turnover, however, did enter the model, and thus those two variables are explored in greater detail below. to test hypotheses 4 and 5, we regressed education level and turnover on community betterment. the results of our linear regression models are presented in table 2. each of these two independent variables— educational level and turnover—significantly contributed to the model. this result confirms support for hypothesis 4 and hypothesis 5. firms with executives who express a belief in bettering the local community are located in communities in which the residents tend to be educated with a bachelor’s degree, and are located in communities in which residents do not move often. in fact, for laypeople using the www.realtor.com/local/ [zipcode]/ website, one can enter the zip code of the company under consideration and note that for every .014 change in education level, the company’s belief that firms should better the community goes up by 1 point. likewise, for each .039 decrease in turnover, the company’s belief the firms should better the community goes up by 1 point. table 2 shows that the control variable, firm size, was also entered in order to test hypotheses 6 and 7. firm size contributes to a significant change over the baseline model of community indicators. this means michael and echols — corporate responsibility via community betterment: characterizing firms and communities 45 table 1. means, standard deviations, and correlations. variable mean std. dev. 1 2 3 4 1. community betterment 3.82 0.75 2. firm size 3.56 1.15 .22* 3. crime 2.46 88.36 0.00 0.22* 4. population size 21,393 15,592 -0.04 0.09 0.39** 5. unemployment 6.18 1.71 -0.02 0.18+ 0.20+ 0.04 6. educational level 24.86 14.16 0.23* -0.09 -0.12 0.02 7. turnover 17.40 5.20 -0.28** 0.18 0.25* 0.20+ 8. marketing expertise 0.00 1.00 0.17 -0.06 -0.02 -0.10 9. hiring 0.49 1.96 0.33** -0.14 -0.01 -0.02 variable 5 6 7 8 1. community betterment 2. firm size 3. crime 4. population size 5. unemployment 6. educational level -0.23* 7. turnover 0.10 -0.06 8. marketing expertise 0.08 0.06 0.23* 9. hiring -0.19+ 0.38** -0.19+ 0.18+ pearson product moment correlations based on two-tailed tests (n = 86) ** p ≤ 0.01; * p ≤ 0.05; + p ≤ 0.10 table 2. linear regression analysis—community descriptors and marketing capabilities on community betterment. beta, community indicators model [h4, h5] beta, firm size (control) model beta, marketing expertise model [h6] beta, hiring model [h7] constant 4.138*** 3.555*** 3.019*** 3.018*** control variables firm size 0.190** 0.185** 0.197** independent variables education level 0.014* 0.015** 0.013* 0.009 turnover -0.039** -0.047** -0.043** -0.038** marketing expertise 0.158* 0.139* hiring 0.089* r-square 0.142 0.224 0.269 0.311 r-square change 0.082** 0.045* 0.042* model f 6.873** 7.876*** 7.447*** 7.226*** *** p ≤ 0.001; ** p ≤ 0.01; * p ≤ 0.05; the beta coefficients shown are non-standardized; (n = 86) 46 bioproducts business 5(4) 2020 that firm size explains some of the dependent variable, and thus, controlling for such explanation is meaningful. we then regressed marketing expertise on community betterment and found that the more marketing expertise a firm has, the greater its interest in bettering its community, as both the variable, marketing expertise, and the model were statistically significant (at p ≤ 0.05). hypothesis 6, therefore, was supported. lastly, we regressed hiring on community betterment. the more employees the firm is hiring, the greater it believes that firms should better their communities. the results of this final model—i.e., the hiring model—show a substantial improvement over those of the control-only model and of the marketing expertise model. further, the hiring model tells us that all three independent variables contribute in statistically significant ways to explaining community betterment; executives of firms with a higher marketing expertise in communities with a higher percentage of educated residents with a bachelor’s degree and a lower percentage of annual turnover within their zip code express a stronger wish to better their communities than do executives in the opposite circumstances. and as stated previously, having marketing expertise (morgan et al. 2009) and, by association, practicing good firm management overall are related positively to hiring (growth), as well as to corporate social performance (dutton et al. 1994). therefore, because hiring is statistically significant, we find support for hypothesis 7. 5. discussion one of our main goals with this research was to investigate the community-level characteristics that a sample of wood manufacturers expressed an interest in bettering. that is, we asked whether there were differences between the local communities that pallet manufacturer executives expressed a wish to better and the local communities for which they did not. our findings did show significant differences, with executives who expressed a belief that firms should better their communities being located in communities in which the population held more bachelor’s degrees than average (c.f., hypothesis 4) and for which annual population turnover was low (c.f., hypothesis 5). neither crime, population size, nor unemployment showed any relationship to whether firms expressed a wish to better their local communities. a second purpose was to ask how the firms that expressed a wish to better their local communities differed from those where the executive did not express a wish of this nature. we predicted that firms would differ by marketing expertise (hypothesis 6) and hiring (hypothesis 7). that is, firms with higher levels of marketing expertise would be more prone to bettering their communities than would firms with lower levels. hypothesis 6 was indeed supported. we also posited that firms would differ by hiring: firms that increased the number of their employees between time1 and time2 would be more likely to support community betterment than would firms that did not do this. such was the case, as we found support for hypothesis 7. we find the relationship between community betterment beliefs and marketing expertise to be especially interesting. the greater the firm’s perceived marketing expertise compared to its competitors, the more the firm’s manager believed in community betterment. firm size was controlled for, and marketing expertise still had a positive significant relationship with the extent to which executives reported believing that firms should better their local communities. however, firm size was not the only explanatory factor in the model. change in firm size, or hiring of production employees, also contributed to explaining a firm’s reported interest in community betterment. thus, we posit that firms with a reported desire to better their communities are marketing-motivated, while growing their workforce, and hence are more willing to invest in educated, low-turnover communities during this process than are other firms. this result may be understood as suggesting that it is plausible for a wood manufacturer to make its community better by investing in it under the marketing rationale, in part because doing so will attract the types of new hires it can depend upon (borzaga & defourny 2001). this is a business case for community betterment in that such preference for social action is done as marketing for a business outcome: hiring. labor-related issues have historically been a challenge for the pallet industry (e.g., dunn et al. 2000), and the positive influence of enhanced community relations would be especially important in times of tight labor markets. 5.1 implications and future research we can draw several managerial implications from this research. the first is that leadership at sme wood manmichael and echols — corporate responsibility via community betterment: characterizing firms and communities 47 ufacturers should consider engaging in community betterment as part of their corporate responsibility practices. community betterment should be seen as a component of philanthropy and is a form of cr that forest and wood-based companies should focus more on. even small companies can afford to invest in community betterment, and thus it should be part of any firm’s overall cr portfolio. it costs very little to show support for a local community, especially in rural areas where many wood producers operate. second, while firms in general are thought to benefit from improved relationships with key stakeholders, sme wood manufacturers may benefit from community betterment as a specific means to engender better relations with local stakeholders. serving others in the community by doing any one of a host of different activities, such as donating to local charities or sponsoring the local food bank, can endear the firm to the community via betterment efforts. we suggest that wood manufacturers will see a variety of benefits (e.g., enhanced corporate image) if they focus more on their communities and considered local stakeholder interests. large forestry companies put considerable efforts into community development and relations (vidal & kozak 2008) as part of their cr practices, and sme firms may benefit from similar efforts. future research could delve deeper into community-focused cr as a means of non-selling, integrated marketing that some have suggested is needed in our industry (han & hansen 2017) and to investigate the links between philanthropy, local investments, and business outcomes. given that our measure of “community betterment” was a single item, future research should endeavor to develop a more robust measure of this concept to more accurately reflect management beliefs; having a valid and reliable measure of community betterment will be an important step for any researchers hoping to study this concept. it would be helpful to replicate our findings with other segments of the wood-based industries to determine if other firms could also benefit from this form of cr. moreover, local community interactions have been noted as a key area of public debate for the forest products industry (panwar et al. 2006) and thus warrant additional research focus. and finally, testing key relationships over time would allow for cause-and-effect relationships to be determined. 5.2 limitations as with any survey-based research our study has limitations. nonresponse bias is a common problem with survey data, and yet we attempted to test for evidence of such an effect. it should also be noted that we are not seeking to promote these findings as representing an entire industry (either pallets or overall wood manufacturing). we do acknowledge that our sample is from just one segment of wood manufacturers, and this is a business-to-business industry instead of a business-toconsumer segment. our research assumes that respondents have some feel for the attributes of their local communities and are cognizant of needs and changes going on around them. given that ours is a sample of relatively small businesses, it seems logical to assume that management would have a closer understanding of stakeholders in the local community. the use of zip codes to represent a community also has limitations. for example, the firm may be located at the edge of one zip code while its relevant community may be located in an adjacent zip code. the crime variable used in this research perhaps could have been more inclusive than the narrow definition we used (e.g., including crime measures beyond just property crime). our dependent variable, community betterment, was left open to interpretation by respondents; that is, it is in the eye of the beholder. the respondents were not asked to indicate actual betterment behaviors, but instead were asked only about their attitude toward betterment toward their communities. as such, we did not qualify this variable to define it as a specific definition of “betterment.” a related limitation is that betterment was a single item measure and thus has less validity than a multi-item measure. our marketing variable suffers from the same limitation. lastly, we wish to make the point that our exploratory research here is correlational and not causal. it was set up as an exploratory study to determine if any relationships existed at all, and if so, which ones. we have found that there could be worthwhile relationships for future study based on our initial perfunctory findings. 6. conclusions corporate social responsibility has been suggested as an important focal area for forest products industry leader48 bioproducts business 5(4) 2020 ship (panwar et al. 2006), and community betterment should be seen as a form of corporate responsibility. not all industry leaders may think of their community as a viable option for investing time and money, but we suggest that wood manufacturers will benefit, in part because investing in one’s local society can improve a firm’s relationships with its primary stakeholders (e.g., local policy makers, business partners, etc.) (barnett 2019). godfrey et al. (2009) reinforce this when they suggest that demonstrating concern for others in a firm’s localized environment enables firms to build valuable relations with their primary stakeholders. this research is one of the first studies to look at the demographic and geographic conditions in which wood-based manufacturers operate and the relationship between these conditions and what a firm’s executive believes about the firm’s social responsibility. our results suggest there is a relationship between community betterment and firm-level attributes. perhaps leaders who are smart enough to have increased marketing expertise, and run their business well enough to need increasing numbers of employees, are also savvy enough to know the benefits of investing in local communities. we would therefore suggest that knowledgeable executives understand the value in community betterment as a form of cr, and they reap multiple benefits that less knowledgeable managers do not. this would reinforce previous 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mortgage lending. social problems 52, 181–208 wójcik, p. 2018. the business case for corporate social responsibility: a literature overview and integrative framework. journal of management and business administration: central europe 26(1), 121–148. abstract in the context of urban development and construction, professionals working as urban planners have a key role in influencing the implementation of national building codes at the local level, and can thus influence the use of material-based opportunities to promote sustainable development. with growing recognition of wood material as an alternative to concrete in multi-story construction, it is interesting to analyse planners’ perceptions of alternative materials, as well as planners’ perceptions of how they are themselves being influenced by diverse actors. based on our survey data collected from the 30 largest finnish municipalities, we analyse to what extent municipal planners experience lobbying and investigate whether this perceived lobbying effect is visible in the planners’ perceptions of material-based sustainability in the case of multi-story building. according to our results, finnish urban planners perceive, on the one hand, wood materials from the perspective of their solid environmental and other quality attributes in building, and, on the other hand, from a more generic technological and regulatory perspective, compared to building with concrete. furthermore, we observed a significant lobbying effort aimed at professionals responsible for urban planning decisions in the largest finnish municipalities, but further research is needed concerning the influencing mechanisms of this lobbying. keywords: sustainable construction, wood material, urban planning, professionals, lobbying effects of lobbying among urban planners in finland – views on multi-storey wooden building 1 natural resources institute finland (luke), viikinkaari 4, fi-00790 helsinki, finland 2 department of forest sciences, university of helsinki, p.o. box 27, 00014 helsingin yliopisto, finland 3 helsinki institute of sustainability science (helsus), finland * corresponding author. email: katja.lahtinen@luke.fi; tel: +358 29 532 2191 acknowledgements: the authors are grateful for the funding provided by puumiesten ammattikasvatussäätiö foundation, the finnish forest foundation, and finnish innovation agency tekes (grant number 9642/31/2016). in addition, valuable feedback from the reviewers is gratefully acknowledged. katja lähtinen,1* anne toppinen,2,3 nicki malm2 bioproducts business 4(7), 2019, pp. 77–92. issn 2378-1394. https://doi.org/10.22382/bpb-2019-007 1. introduction managing environmental impacts, along with creating social and economic benefits for the construction sector, is of fundamental importance when enhancing sustainable development (european commission 2011). one option to decrease the adverse effects is to make a transition from non-renewable building material usage to renewable, as well as by developing material recovery and recycling processes in construction waste management (takano et al. 2015). the environmental sustainability of the building sector can thus be enhanced by using less fossil-based materials, favoring materials with lower environmental impacts, or by taking advantage of the potential of renewable energy during various life cycle phases of construction (ortiz et al. 2009). a growing recognition of wood material uptake is observed in multi-story construction as part of the rise of the green building concept (darko et al. 2017), which also includes the use of hybrid structures such as combining wood and steel in structural solutions (wang et al. 2014, toppinen et al. 2019). häkkinen and belloni (2011) note that, more than the lack of building technologies or assessment methods, sustainable building is hindered by organizational and procedural difficulties entailed by adopting new methods, or because of insufficient capabilities to manage social, cultural, and political challenges (theaker & cole 2001). in all, according to recent studies, future prospects for the rise of multi-story wooden buildings (mswb) are determined by changing national building regulations (e.g., toppinen et al. 2019, hurmekoski et al. 78 bioproducts business 4(7) 2019 2018), strategic renewal within companies and related business networks (toppinen et al. 2018), and urban planning procedures that either support or hinder mswb market diffusion (franzini et al. 2018). environmental benefits of increased wood use in construction are often seen as a positive aspect for enhancing mswb (e.g., hemström et al. 2011, sathre & o´connor 2010). compared with other materials like concrete, steel, and bricks used as bearing structures for mswb, wood either used as a structural material as such or in combination with other materials has been found to have many competitive advantages related to carbon storage, energy efficiency, and technological benefits (dodoo et al. 2014, santi et al. 2016, liu et al. 2016, asrubali et al. 2017, chiniforush et al. 2018). together with decreasing the environmental impacts of construction materials, the development of new services for the maintenance of buildings and decentralized renewable energy supply solutions are needed to enhance sustainable construction (häkkinen & belloni 2011). for example, significant energy savings through high efficiency heat, ventilation, and air conditioning systems could be gained by using hygroscopic materials, such as wood, as building materials (osanyintola & simonson 2006). in addition, the choice regarding structural materials appears to have a stronger effect on environmental aspects and energy balances than do the interior materials used in buildings (takano et al. 2015). however, the achievement of benefits, especially carbon storage and energy efficiency benefits, requires consideration of sustainable forest management practices, efficient usage of side-products originating from processing industries, and long life-cycles of wooden buildings (gustavsson & sathre 2011). in parallel, increasing wood utilization in urban multi-story construction has been hindered by concerns connected to the technological properties of wood in construction affecting, e.g., fire and humidity resistance or the feeling of safety (e.g., mahapatra & gustavsson 2008, gosselin et al. 2017). these concerns have somewhat decreased, however, since the adoption of fireresistant technologies and the alleviation of regulations against mswb construction (riala & ilola 2014). another technical concern often emphasized is the lower sound insulation of wooden structures, together with general engineering aspects such as stability, durability, the vulnerability of wood to decay, or increased maintenance costs (hemström et al. 2011, roos et al. 2010). compared to the situation some years ago, there has been a considerable amount of research and development work done, which has added practical understanding of different engineering aspects of mswb (asrubali et al. 2017, östman et al. 2017). despite this, negative attitudes towards industrial wood construction still exist, e.g., among consumers (gold & rubik 2009, lähtinen et al. 2019) and architects (roos et al. 2010, hemström et al. 2011, conroy et al. 2018, markström et al. 2018), particularly regarding the fire safety of wooden houses. since most of the finnish municipality planners have their educational background in architecture (kangasoja et al. 2010), especially in the context of finland, architects’ views play a fundamental role when studying the mswb market diffusion in reference to urban planning. a key question when promoting more sustainable building initiatives in the urban environment is who makes the building material choices affecting the sustainability performance of construction? along with companies, governmental bodies (ortiz et al. 2009), local municipalities (holm et al. 2011), and urban planners (retzlaff 2009) have been found to have a focal role in improving the sustainability of the building sector and supporting uptake of using wood as a construction material for residential and commercial buildings (quesada et al. 2018). at the governmental level, the diffusion of sustainable construction practices can be accelerated by norms and standards or through supporting actions such as subsidies for research and development (beereboot & beereboot 2007). in urban planning at the local municipality level, enhancing sustainable development is multi-faceted: it includes issues such as the reduction of energy use and emissions per capita, the minimization of wood production impacts on ecosystems, decreasing the consumption of environmentally harmful construction materials, or the circular use of renewable materials from local sources, all aiming at the provision of a healthy environment for citizens (næss 2001). from the perspective of studying the role of urban land management and promotion of sustainable development, finland is an interesting research context. under current regulation, urban planners have a governing role and possess significant power to promote political goals regarding sustainable construction: they can either set guidelines for certain material prerequisites, or municipal planning decisions may also directly affect the approval process of local building permits. in finland, urban planners are civil servants and their duties are lähtinen et al. — effects of lobbying among urban planners in finland – views on multi-storey wooden building 79 informal strategies used by private developers to bypass the formal structures of the urban planning process in ireland. these lobbying processes can also be systematic to the degree that they become institutionalized within urban decision-making processes. for example, consultation processes present in the finnish urban planning involve a public hearing with a wide network of stakeholders (see e.g., kuronen et al. 2010). while these processes can begin to resemble characteristics of professional lobbying, their effects have not been previously studied in the context of mswb. in spite of changes in building codes, business development in mswb, possibilities for municipalities enhancing conditions for sustainable building through urban planning initiatives, and the governmental promotion of wood construction (e.g., wood building programme in the ministry of environment in finland), the market share of mswb completed in finland has not increased drastically (from 1% to 6% in 2010–18). in addition, despite the fact that lobbying appears to be common, very little research-based evidence exists showing to what extent lobbying occurs in the context of mswb construction, or whether lobbying has had any effect on reaching the goals of lobbyists. to fill this void, our study examines these gaps in the context of mswb in the case of finland through two primary research questions: (1) how do urban planners perceive the role of wood as a sustainable construction material? (2) to what extent do urban planners face lobbying attempts, and are there linkages between lobbying attempts and views of urban planners on mswb or their views on wood as a building material in the urban environment? 2. conceptual background 2.1 stakeholder influencing strategies in the context of urban planning stakeholder theory (freeman 1984) emphasizes the role of interrelationships between groups of people and individuals, who affect or are affected by each other in the social system. urban planning as a social system comprises complex networked relationships of a myriad of people, and thorough decision impacts with economic, environmental, and social consequences. stakeholder salience (i.e., “the degree to which managers give priority to competing stakeholder claims”) is a key concept of the stakeholder theory, as introduced by mitchell et al. (1997), and it recognizes that various groups of people governed by the land use and building act (1999). this means targeting the goals of sustainable development, and meeting the requirements for public participation processes in urban planning. while elected politicians in local governments approve the land use plans drafted by urban planners, the planners can themselves also directly influence the content of these (puustinen 2004). to compare with other countries, in finland both municipalities and individual planners have a more fundamental role in designing national land use and planning system (peltonen & sairinen 2010). first, municipalities have “planning monopolies” in their territories and especially the biggest cities have considerable power in land use management, since they are important landowners. second, in the finnish land planning system, urban planners are in a key role to conduct both spatial design and implementation of all phases of planning processes within the boundaries of law. according to säynäjoki et al. (2014), finnish urban planners have “essentially unlimited mandate to devise sustainable solutions”. furthermore, in the finnish land use management system, urban planners do not only draft plans, but they also ensure that all important aspects of the planning decisions are considered. due to this, planners commonly refer to external information sources or consult other experts. in formal procedures, the various impact assessments and surveys regarding building material selection are conducted at the early stages of urban planning and zoning projects (peltonen & sairinen 2010). a ruling by the supreme administrative court (kho 2015:56) in finland is particularly interesting when viewed from the possibility of enhancing material selection criteria in urban planning processes by setting requirements for specific building materials (franzini et al. 2018). in that historical decision, the court rejected the appeal of the finnish concrete industry association to outlaw the decision made by the city of helsinki to zone one residential area for buildings made with wooden structures. as a result of having a role of negotiation mediator among different stakeholders during the planning processes (peltonen & sairinen 2010), urban planners are typically involved also in informal networks with the private construction sector (e.g., mäntysalo & saglie 2010). in some cases, involved communication also includes lobbying attempts (mcguirk 2000), aiming to affect decision makers or officials (milbrath 1963). for example, fox-rogers & murphy (2014) observed the existence of 80 bioproducts business 4(7) 2019 and individuals may have different levels of power and urgency as influencers within the systems. the interesting question therefore is which of the stakeholders have the most influential power on urban planners, and why? from the building sector’s viewpoint, urban planners certainly have power: their actions can directly influence the business opportunities of single companies and entire industries. as an example, priority given for particular construction materials affects (and is affected by) both individual firms and industrial associations promoting particular businesses, such as the ones building with concrete or wood. planners’ relationships with companies are also legitimate, as communication between municipality authorities and companies is part of a “legitimate” system comprising, e.g., informal strategy planning processes. if the role of planners is to produce legally binding documents that may impact firm performance, then according to the typology of mitchell et al. (1997), the planners’ claims can also be urgent. hence, when planners’ claims are urgent, the planners form a definitive stakeholder group for construction companies, and vice versa. from the perspective of non-governmental organizations (ngos), and more generally of citizens, urban planners can influence through planning processes, which affect living surroundings (burby 2003). compared to involvement with the business sector, urban planners also face social requests and regulations to integrate citizens and ngos into planning processes, e.g., to promote public well-being and legitimize the decisions of local authorities (häikiö 2012, horelli 2017). consequently, these stakeholder relationships are also legitimate, especially if they comprise clear definitions of responsibilities between authorities and citizens, and if these result in cooperative, deliberative, and transparent decisionmaking processes and accountable final decisions (van buuren et al. 2014). the early definitions of lobbying tend to draw from milbrath’s (1963) view concerning lobbying as an action conducted by an interest group representative to initiate discussion and information transfer, while according to berg (2009), lobbying can be considered a form of advocacy. differences between lobbying, representation, and consultation are presented in table 1, which shows stakeholder communication to be essentially related to delivering and receiving information. more importantly, lobbying and representation are viewed as forms of communicating vested interests, and also consultation processes can at some point begin to resemble a lobbying process. in the context of urban construction projects, communication between project management and the public, and the maintenance of good stakeholder relationships are critical success factors (olander & landin 2005, yang et al. 2009). the power of a given stakeholder group is suggested to contribute most to stakeholder salience (parent & deephouse 2007), although urgency and proximity are also important in construction project decision-making when dealing with stakeholder claims (yang et al. 2014). table 1. differences between lobbying, representation, and consultation (adopted from hillier, 2000). lobbying representation consultation direction of communication primarily one-way, from interest groups to the government primarily one-way, from interest groups, associations, elected politicians, and experts to the government primarily two-way, from the government to groups or clients, and from these groups and clients to the government objective to change legislation or policy to suit the interests being represented to convey views, information, perspectives, and interests of a broader community into the policy process to improve service along with support for services and policies through communication with clients and stakeholders government viewed primarily as key decision makers, politicians, and senior officials viewed primarily as the political executive viewed primarily as the department or agency delivering services non-government viewed primarily as interest groups and associations representing relatively narrow or specific interests viewed primarily as citizens with fairly general interests and values that need to be reflected in the policy process viewed primarily as clients and stakeholders with respect to a specific policy program examples industry association meetings with ministers, resident action groups petition to elected representatives, senior officials telephone ministers elections, polling, task forces, and royal commissions roundtables, extended workshops that involve discussion and analysis of policy issues, and program design and delivery lähtinen et al. — effects of lobbying among urban planners in finland – views on multi-storey wooden building 81 in addition, earlier research indicates that lobbying towards change is more difficult than lobbying to maintain status quo (mahoney 2007, hojnacki & kimball 1999). it appears evident that those who wield highest economic power have the means to bypass formal planning processes. for example, a norwegian study found that those with the highest power to reject or approve zoning plans were lobbied, firstly, during non-transparent communication between the lobbyists and decision makers; secondly, during the formal public hearing processes; and finally, during the actual political decision-making stage (falleth et al. 2010 cf. wøhni 2007). in their case analysis, mäntysalo & saglie (2010) explored the private sector’s influence on planning activities in finland and norway. their results suggest that informal communication between private sector actors and governmental authorities indeed occurs, and this may cause unethical situations in procedural stages of planning. 2.2 influencing urban planners as decision makers urban planners are a broad group of professionals in charge of coordinating land use planning in cities and other administrative entities, with the power to influence planning processes as information gatekeepers, communicators, preparers, and introducers of the plans (puustinen 2004). as information gatekeepers, planners receive information during planning processes, and they may have the power to decide whom to pass or not pass this information to. in preparing and introducing plans, they can also affect the outcomes of the processes via dialogue with political decision makers. during the plan formulation phase, the knowledge base and capability of the planner to communicate the importance of various aspects of the plan to non-professional decision makers reflects on their possibilities to make well-grounded decisions and to avoid conflicts among various stakeholder groups (e.g., peltonen & sairinen 2010). local authorities, including urban planners, are considered powerful bodies for implementing sustainable building policies: in addition to controlling land use decisions and building permits, they can also collectively act as a lobbying voice for enhancing multiple sustainability issues (retzlaff 2009). according to rydin et al. (2007), embedding the knowledge of planners on sustainable construction requires more in-depth dialogue between various actors in the construction processes, e.g., by enhancing common understanding and learning, by shaping knowledge into formal plans, and in the development and maintenance of actor networks. compared with governmental bodies, local authorities thus have a more practical role in enhancing sustainable construction by promoting small-scale experiments, learning from best practices, and supporting mutual learning via networks within municipalities (holm et al. 2011). both formal (e.g., public participation) and informal processes (e.g., municipal strategic planning) have become important in the urban planning processes (sehested 2009, puustinen et al. 2017). for example, finnish urban planners value ecological aspects in the context of sustainable construction, but evidence also shows that challenges have occurred in implementing impact assessments (peltonen & sairinen 2010) and integrating ecological information into planning processes (yli-pelkonen & niemelä 2006) in particular. information for planning processes is also provided by consultants and informal personal contacts. a reason for this may be that planners are lacking personal expertise in measuring ecological sustainability. from the perspective of mswb, there is a risk that the knowledge on industrial wood construction among urban planners is weak, at least in finland. for example, according to a recent qualitative study (franzini et al. 2018), about half of the interviewed urban planners admitted to personally having deficiencies in their knowledge on mswb topics. although environmental aspects are commonly emphasized in urban planning and in promoting sustainability transformation, social constructs, such as access to core services, social interaction and participation in groups and networks, and community stability (along with a sense of human safety and security) are also not minor issues (dempsey et al. 2009). because of this, professional urban planners can, in their decision-making schemes, be in constant conflict between various sustainability-related goals: economic growth and efficiency, environmental protection, or equality of people (i.e., social justice, economic opportunities, and income parity) (campbell 1996). regarding the usability of environmental information, rydin et al. (2007) discovered that planners in london, great britain considered information to be too scattered, technical, and general in nature to be useful in urban planning processes. in addition, deficiencies in communication between planners and external experts in sweden (eliasson 1999), and planners and researchers in finland (säynäjoki et al. 2014), hindered the integration of various types of knowledge into urban planning processes. 82 bioproducts business 4(7) 2019 2.3 scope of factors influencing planners’ perceptions on wood as a building material politically devised instruments and regulatory factors, along with relationships within stakeholder networks within the construction industry are suggested to affect the diffusion of innovations (e.g., blayse and manley 2004). in the case of mswb companies, cooperation among stakeholders has been emphasized as an important factor for strengthening innovation capabilities (hansen 2010), while governmental policy instruments provide a more generic platform as a source of innovations (tykkä et al. 2010). the need for industrial renewal in the construction sector, through changes in attitudes and novel ways of working, was requested as early as the 1960s (carter 1967). the development of industrial processes and off-site manufacturing methodologies has been a fundamental issue regarding sector renewal (e.g., wafaa & goulding 2011). yet, market diffusion of these new types of building processes is slow, especially if urban planners and customers have insufficient knowledge of the benefits (e.g., impacts on building quality) compared to traditional building technologies based on the high rate of on-site production (leabue & viñals 2003, warszawski 1999). in the scope of industrial construction, mswb can be considered an environmentally oriented innovation, affecting not only ecological sustainability issues, but economic and social aspects as well. according to brege et al. (2014) and riala & ilola (2014), the lightness of wood as a building material provides a key competitive advantage compared to concrete building, in addition to its easier transportation and advanced prefabrication possibilities. from the end-users’ viewpoint, timber buildings are also considered pleasant living environments with better indoor air quality (gold & rubik 2009). 3. data and methodology to answer our two research questions outlined in the introduction, the data of our study were gathered during spring 2014 and analyzed in conjunction with two university master’s degree projects in 2014 and 2017, with specific targets concerning mswb solutions. a finnish definition for residential mswb considers it to be in use year-round and to have at least three apartments, at least two of which are placed on top of each other. the building’s supporting frame and surface materials are mostly made of wood in accordance with effective building regulations. the data are based on an online questionnaire sent by e-mail to 728 recipients, who at the time were civil servants working on urban planning decisions. the themes of the questionnaire were defined by employing scientific and professional literature combined with other materials (e.g., newspaper articles) connected to mswb, sustainable building, and urban planning, especially in finland, but also in other countries. after that, a professional urban planner working with, e.g., mswb issues in the helsinki metropolitan area was interviewed to receive empirical feedback for the topics of the study and to design the final questionnaire. finally, prior to actual data gathering, the functionality of the data gathering procedure (i.e., contents of the cover letter and online link to the questionnaire sent by e-mail) was pretested among researchers, who had not been participating in the actual questionnaire creation. since there is no comprehensive directory of urban planners in finland (i.e., no information on the whole population), we had to choose the public officials potentially working in municipality planning one by one for the study by using the official municipality internet pages as a main source for contact information. in addition, since there are various professional titles for municipality planners in finland, in the cover letter respondents were instructed to respond only if their work was related to urban planning. otherwise, they were asked to forward the questionnaire to a colleague in their municipality filling this criterion. compared to a postal survey, utilizing electronic data gathering enabled respondents to easily forward the cover letter and questionnaire to colleagues, when necessary (herewith referred as forwarding procedure). in addition, since the initial data gathering was implemented as a part of master’s degree projects, electronic data collection enabled notable cost savings compared to other alternatives. our data gathering approach had impacts on both the possibilities to assess the reliability and to ensure the validity of the results. the risk of social desirability bias (e.g., nederhof 1985) was decreased by employing an online questionnaire and ensuring the anonymity of respondents already at the data gathering phase. in the context of urban planning, lobbying may be considered to be socially undesirable and is probably a highly sensitive topic for public authorities to discuss even at general level. regarding reliability and validity assesslähtinen et al. — effects of lobbying among urban planners in finland – views on multi-storey wooden building 83 ments, due to the forwarding procedure in the online data gathering, information on the identity of the actual respondent was lost. as a result, it was not possible to assess the impacts of non-response bias (e.g., sjöström et al. 1999) on the reliability (e.g., testing whether similar results would be gained by repeating the research) or validity (e.g., congruence between the responses between respondents and non-respondents) of the results. however, simultaneously with the challenges in evaluating the reliability and validity, the forwarding procedure enabled managing the risks related to the acquirement of “incorrect answers” (e.g., respondents misunderstanding the questions due to their lack of knowledge). according to sjöström et al. (1999), incorrect-answer bias is abreast with non-response bias, another major factor that may distort questionnaire survey results. thus, the forwarding procedure had both strengths and weaknesses in relation to the quality of our research work: while making analysis non-response bias was not possible due to lack of information on the actual receivers, it simultaneously enabled decreasing social desirability bias (i.e., the respondents were anonymous already at the data gathering phase) and incorrect-answer bias (i.e., respondents without knowledge or experience on the topic were encouraged to leave themselves out from the study sample). the municipalities chosen for the study were the 30 largest finnish municipalities by population, accompanied by the city of heinola, which is slightly smaller but has been one of the pioneering cities in the field of mswb. there were three reasons for focusing on the biggest municipalities: first, the largest municipalities in finland play a key role in meeting the challenges of ecologically sustainable urbanization (yli-pelkonen & niemelä 2005) through, e.g., the enhancement of sustainable building initiatives (franzini et al. 2018). second, as significant landowners, bigger cities have considerable power in making land use decisions (peltonen & sairinen 2010). third, compared to smaller communities, the largest municipalities are assumed to have more central guidance and coordination for meeting the increasing requirements, e.g., in stakeholder communication for building trust between public administration and citizens (bäcklund & mäntysalo 2010), which is also closely connected to recognition of lobbying attempts. fourth, compared to larger cities in finland, acquiring e-mail contact information of people working with urban planning issues was more challenging in the case of smaller municipalities, combined with the fact that the division of work in planning issues seemed to be less structured in terms of ensuring efficient data gathering. after two rounds of e-mail reminders, 102 responses were received (response rate 14%) from 26 different municipalities. by population, the 26 municipalities represented in the data contain approximately 54% of the population of finland (statistics finland 2016). thus, despite a fairly low response rate, our results provide entirely new insights on the little studied phenomena of lobbying and mswb market diffusion in finland, especially in larger municipalities. by education, the majority (81%) of the respondents were architects, while the rest had various types of education otherwise related to urban planning (e.g., landscape architects, engineers in building technique or geodetics). compared to kangasoja et al. (2010), the educational background of the respondents was in accordance with the finnish urban planners’ professional education in general. according to the current occupational titles, targeting the questionnaire to the municipality employees working with urban planning succeeded well, since all of the respondents were working with issues directly connected to urban planning (e.g., heads of zoning department, zoning architects, municipality architects). thus, from the perspective of validity of the results, there are solid grounds to assume that data are composed of responses of knowledgeable professionals, who were capable of providing insights on the actual situation in the finnish urban planning system. all analyses of the study were conducted with ibm spss statistics software. in addition to descriptive statistics, we used exploratory factor analysis by following “the eigenvalues greater than one” rule with kaiser normalization, maximum likelihood estimation, and varimax rotation. factor analysis is a statistical method that allows reducing a set of items into a more operable number of categories or latent “factors,” which essentially include the same information as the original data (harman 1976, kim & mueller 1978). in our study, exploratory factor analysis enabled reducing the number of items describing respondent views on wood materials especially in the context of mswb. initially, in this study the factor analysis was implemented by utilizing 11 questions with items describing ecological, economic, technological, and social sustainability aspects of mswb. the sample's suitability for factor analysis was 84 bioproducts business 4(7) 2019 confirmed with the kaiser-meyer-olkin (kmo) measure for sampling adequacy (0.792). bartlett’s test is clearly statistically significant (p ≥ 0.05), and thereby confirms the data to be appropriate for factor analysis according to conway & huffcutt (2003), the factor analysis results reporting should include the extraction model, number of factors, factor interpretation and computation, eigenvalues, communalities, degree of variance explained, and a factor loading matrix. prior to accepting the two-factor solution as the most interpretable and robust for further analysis, several rounds of test analyses with different numbers of items were executed. of the three items excluded from the final two-factor solution, one had a communality loading lower than 0.2, one had issues for loading on multiple factors, and the last one caused remarkable problems during interpretation of the analysis, and was removed after careful consideration. by figures, the two-factorial result explained 46.4% of the total variance in the results. this can be deemed sufficient for our analytical purposes. in addition, the two extracted factors were tested against background variables with one-way analysis of variance (anova), which allows the comparison of two or more means and provides information concerning potential statistically significant differences among means (tabachnick & fidell 2013). after factor solution finalization, anova was conducted to determine whether or not the lobbying status of the respondents affected their views on mswb. for the post hoc multiple comparison in anova, fisher’s least significant difference (lsd) test method was applied. compared to other post hoc comparison methods (e.g., tukey’s test), lsd is a more powerful method, e.g., to avoid finding differences between groups when differences do not actually exist (williams & abdi 2010). in the analysis, lobbying status was assessed with two questions: “does construction industry operating in your municipality or in the neighboring municipalities affect urban planning decisions in your municipality?” and “do industrial interest groups try to affect urban planning decisions in your municipality?” being targeted by lobbying attempts was defined by different combinations of “yes,” “no” and “i do not know” as illustrated in table 2. in the anova analysis, lobbying status was employed as an independent variable and the generated factors as dependent variables. as the extracted factors describe respondent views, the results provide information concerning the perceived effect of lobbying on respondents’ views. the analysis was made for the entire population and for the planners with at least 10 years of working experience. regarding the working experience, tests were implemented both according to the respondents’ general working experience in the field of urban planning and more specifically in their current professional position. in the anova results, a cut-off point p ≤ 0.100 was utilized to report the statistical significance of the results. from the perspective of interpretation of the results, it means that statistically observed differences between respondents belonging to three lobbying categories were supported by the empirical data at least at 90% probability level, instead of being caused by chance (carver 1978). 4. results 4.1 urban planners’ perceptions of wood material as a construction material figures 1–8 illustrate the agreement (i.e., respondents who agreed completely or fairly much), disagreement (i.e., respondents who disagreed completely or fairly much), and uncertainty levels (i.e., respondents who neither agreed nor disagreed, or who were unsure of their opinion) concerning different statements related to the sustainability of mswb among the respondents. in all, respondents were most like-minded (appr. 90% were of a similar opinion) about two statements: the possibility of implementing mswb while simultaneously utilizing domestic wood and fulfilling sustainable table 2. lobbying status of the respondents by three categories. “do industrial interest groups try to affect urban planning decisions in your municipality?” does construction industry operating in your municipality or in the neighboring municipalities affect urban planning decisions in your municipality? yes no i don’t know yes lobbied lobbied lobbied no lobbied not lobbied not lobbied i don’t know lobbied not lobbied does not know if lobbied lähtinen et al. — effects of lobbying among urban planners in finland – views on multi-storey wooden building 85 figure 1. “mswb helps realizing the 20-20-20 targets set by the eu in our country”. figure 3. ”mswb eases decreasing the share of energy consumption of buildings and construction of total energy consumption in our country”. figure 6. “mswb is from the perspective of construction techniques in a similar position with concrete building in urban planning in our country”. figure 5. “mswb is developed to a high enough standard to guarantee similar quality as alternative building techniques in our country”. figure 4. “mswb is a cost-effective alternative compared to using other construction materials in our country”. figure 2. “mswb is possible by utilizing domestic wood while still realizing sustainable development in our country”. figure 7. “mswb is from the perspective of national legislation in a similar position as concrete building in urban planning in our country”. figure 8. “mswb has beneficial ecological qualities (e.g. carbon storage), and i therefore wish it to become common in our country”. 86 bioproducts business 4(7) 2019 development (figure 2) and the existence of strong carbon benefits from mswb (figure 8). the majority of respondents also agreed on the potential of mswb to help realize the eu’s renewable energy 20-20-20 targets (71%), to conserve energy (77%), and to be developed well enough to guarantee similar construction quality as other alternatives (66%) (figures 1, 3, and 5). yet, related to these three themes, a fairly large proportion of urban planners remained uncertain (20–28% of the respondents) of their opinions concerning the question. from a regulatory perspective, respondents disagreed quite strongly on the claim that mswb would be in the same position in national legislation compared to concrete construction (figure 7). thirty-four percent agreed, 35% disagreed, and slightly over 30% were unsure of their views. views regarding mswb in urban planning from the perspective of the construction techniques in reference to concrete were also fairly scattered (i.e., 49% agreed, 24% disagreed, and 27% were uncertain) (figure 6). finally, respondents were most uncertain (41%) about the cost-efficiency of mswb compared to other construction materials (figure 4). the factor solution reduced the operable amount of original items in the data from eight to two latent factors, which also gave an acceptable ratio of cronbach alphas of over 0.7 (table 3). the two calculated factors were named as factor 1: “mswb is characterized with solid sustainability benefits and quality properties” and factor 2: “mswb is competitive against concrete construction”. in the second stage we utilized these two extracted factors as to analyze the perceived effect of stakeholders’ lobbying efforts on these respondents. 4.2 degree of lobbying and effect on respondents’ views on wood as a sustainable building material we used the following questions from the questionnaire to determine the lobbying status of the respondents: “does the construction industry operating in your own or in a nearby municipality influence the planning decisions made in your municipality?” and “do industrial interest organizations attempt to influence planning decisions in your municipality?” as shown in table 4, 42% of respondents stated that they had been experiencing one or both types of lobbying in their work, and the share was nearly the same for respondents who were claiming they had not faced lobbying. interestingly, 17% of respondents were unaware of whether they were being lobbied or not. the length of work experience in the current position or experience in working for urban planning did not substantially change the perceptions of the planners of having been a target of lobbying. table 3. results from the final rotated two-factor solution. communalities (extraction) factor loadings 1 2 “mswb helps realizing the 20-20-20 targets set by the eu in our country” 0.477 0.677 “mswb is possible by utilizing domestic wood while still realizing sustainable development in country” 0.479 0.688 “mswb eases decreasing the share of energy consumption of buildings and construction of total energy consumption in our country” 0.457 0.652 “mswb is a cost-effective alternative compared to using other construction materials in our country” 0.440 0.555 “mswb is developed to a high enough standard to guarantee similar quality as alternative building techniques in our country” 0.336 0.437 “mswb is from the perspective of construction techniques in a similar position with concrete building in urban planning in our country” 0.752 0.845 “mswb is from the perspective of national legislation in a similar position as concrete building in urban planning in our country” 0.400 0.630 “mswb has beneficial ecological qualities (e.g. carbon storage), and i therefore wish it to become common in our country” 0.369 0.547 cronbach’s alpha 0.774 0.706 eigenvalues 2.700 1.010 explained variance, % 27.45 18.94 factor 1: “mswb is characterized with solid sustainability benefits and quality properties” factor 2: “mswb is competitive against concrete construction” lähtinen et al. — effects of lobbying among urban planners in finland – views on multi-storey wooden building 87 table 5. multiple comparisons anova for the full sample of respondents. dependent variable (i) group (j) group mean difference (i-j) std. error p-value factor 2 “mswb is competitive against concrete construction” lobbied not lobbied -0.319 0.192 0.100 table 6. multiple comparisons anova for respondent groups that have worked in urban planning ≥10 years. dependent variable (i) group (j) group mean difference (i-j) std. error p-value factor 2 “mswb is competitive with concrete construction” lobbied not lobbied -0.543 0.191 0.006 not lobbied does not know 0.502 0.281 0.079 table 4. lobbying status of respondents. entire sample ≥10 years in urban planning current position frequency % frequency % frequency % yes 43 42.2 34 48.6 19 45.2 no 42 41.2 27 38.6 19 45.2 does not know 17 16.7 9 12.9 4 9.5 total 102 100.0 70 100.0 42 100.0 while close to one-fifth of the respondents (17%) were uncertain whether industries or industrial interest organizations had affected planning decisions in their municipalities, in the case of ngos and citizens (e.g., resident associations and nature conservation organizations) such uncertainty did not exist. instead, all of them had explicit opinions on the issue: 96% of the respondents stated that these stakeholders influence urban planning, while only 4% responded that they do not. as the respondents were like-minded concerning the influence of ngos and other citizens on urban planning processes, the role of individual firms and industrial organizations is of special interest to our study. anova results for the entire population of respondents show statistical evidence that the groups of lobbied and non-lobbied respondents differ from each other for factor 2 (i.e., their perceptions on the potential of mswb to compete with concrete construction) (table 5). similar evidence for factor 1 (i.e., sustainability benefits and quality properties of mswb) was not found. compared with the entire population of respondents, the results regarding factor 2 become clearer when acknowledging longer work experience in urban planning (table 6). for respondents that had worked in the field of urban planning for at least 10 years, we received statistical evidence that in factor 2 there are differences both between groups of lobbied and non-lobbied respondents and between non-lobbied respondents and those unaware of lobbying. regarding factor 1, indications on statistically significant effects of lobbying were found. as some respondents may have long work experience in managing particular urban planning tasks, lobbying impacts were also analyzed for the group of respondents that had worked in their current positions for 10 years or more (table 7). according to the results, among this group of respondents at the minimum 90% probability table 7. multiple comparisons anova for respondent groups who have worked in their current position in the field of urban planning ≥10 years. dependent variable (i) group (j) group mean difference (i-j) std. error p-value factor 1 “mswb is characterized with solid sustainability benefits and quality properties” lobbied not lobbied -0.337 0.199 0.098 factor 2 “mswb is competitive with concrete construction” lobbied not lobbied -0.600 0.216 0.008 88 bioproducts business 4(7) 2019 level, statistical evidence on the differences exist between the lobbied and non-lobbied urban planners regarding both factor 1 and 2. thus, especially among urban planners with profound experience in their current working position, lobbying seem to have broadly affected their perceptions both of the sustainability benefits and quality properties of mswb, as well as the competitiveness of mswb with concrete construction. 5. discussion and conclusions the construction sector is among the economic activities that can potentially make a greater contribution to societal goals for sustainable development by adopting more sustainable material choices. in the context of urban planning, professional planners have a key local-level role in influencing the implementation of national building codes, and thereby in making sustainable material choices. as wood is increasingly recognized as a potential alternative to concrete in multi-story construction, there is a keen interest to understand urban planners’ perceptions of mswb, and to what extent these planners face material-related lobbying attempts. from the perspective of authority, according to säynäjoki et al. (2014), in finland urban planners have significant opportunities to advance sustainable development through land use management decisions. moreover, regarding communication and avoiding conflicts, they are also in a key role when making zoning decisions within municipalities (peltonen & sairinen 2010). instead of being governed, e.g., strictly by normative judicial practices connected to municipality-related legislation and norms, even compared to other nordic countries, finnish urban planners have a lot of room to make their autonomous choices in zoning and materialbased decision-making procedures (hytönen 2016). thus, being a potential subject of influencing is not separate from planners’ official professional task, but a part of the general request of being moderators of change, e.g., in different types of collaboration. for example, according to lazarevic et al. (2019), organizational practices in the municipalities, and through relevant actor-network reconfigurations, would be one prominent avenue to accelerate mswb market diffusion in finland. related to this, the focus in our study was to assess urban planners’ perceptions of mswb, and also to evaluate whether lobbying attempts perceived by these planners seemed to be linked to their expressed views on mswb. our results from the factor analysis on survey-based data collected from the 26 largest municipalities in finland suggest that urban planners see using wood in mswb, on the one hand, from the perspective of its solid environmental and other quality properties in buildings (factor 1), and on the other hand, from a more generic technological and regulatory perspective, compared to concrete material (factor 2). furthermore, evidence of lobbying efforts aimed towards urban planners in finnish municipalities was found. however due to the characteristics of the data, we are unable to conclude, e.g., what kinds of organizations have attempted to affect the urban planners, what have been the actual influencing processes, and in what ways these attempts may have affected more specific opinions of planners on mswb. the results of our study also indicate that lobbying efforts in finland are aimed to a greater degree at more experienced municipal planners. definitive reasons for this observation cannot be deducted based on the collected survey data, but a few potential explanations can be suggested, and, although it can be assumed that the likelihood of being exposed to lobbying increases in the course of time, it is probably not the only explanation for the phenomena. since especially in the finnish context, urban planners have a considerable amount of power as decision-makers within municipalities, it is likely that the ones with the longest working experience are also the most targeted with lobbying efforts. first, compared to less experienced planners, the most experienced professionals have been in both formal and informal (hillier 2000) dialogue with different stakeholders (e.g., politicians, associations, governmental experts, companies, citizens) for the longest time, especially in a specific position in a particular municipality. due to their experience, these planners are probably considered as more powerful actors (falleth et al. 2010 cf. wøhni 2007) with the potential to make more of an impact in the planning processes, compared to the ones with less experience in their position. second, social network processes and structures evolve over time (borgatti & halgin 2011). thus, targeting the lobbying efforts towards the most experienced planners within a particular municipality may be expected to result in broader networking impacts on the urban planning processes, increasing the effectiveness of lobbying attempts. third, trust is fundamental between urban planners and different stakeholders and is based on their lähtinen et al. — effects of lobbying among urban planners in finland – views on multi-storey wooden building 89 past interactions, reputations, shared values, and social similarities (laurian 2009). consequently, planners with the longest experience, especially in specific tasks, have likely gained professional credibility, adding to their attractiveness as lobbying targets. fourth, sometimes the line between communication and influencing can be a fine one, e.g., when trying to find efficient practices to enhance the diffusion of new types of building practices or in striving to avoiding conflicts between different stakeholders. as the tasks of facilitating dialogue and increasing network power fundamentally belong to the urban planners (booher & innes 2002), it is probably the most experienced professionals who are integrated in the most challenging land-use decision-making processes that involve active lobbying efforts. the planners’ views associated with the competitiveness of mswb compared with concrete construction consistently showed differences between the lobbied and non-lobbied planners. by contrast, regarding the opinions on the sustainability benefits and quality properties of mswb, we found statistical evidence of differences between lobbied and non-lobbied planners only for the planners with more than 10 years of working experience in their current position. again, this could be explained by the greater power associated with the experienced planners’ positions and their more extensive networks. previous research suggests that the lack of integrating ecological aspects into planning, which has been observed in urban planners, relates to a lack of professional education, experience, and communication with scientists and other experts on sustainability issues (yli-pelkonen & niemelä 2006, säynäjoki et al. 2014, eliasson 1999). in addition, the relevant time horizon for the studies reaffirming the solid environmental performance of mswb is only the past 10–15 years. we should note that although the construction industry was identified as the party engaging in lobbying attempts, the results of our study do not provide additional information concerning a more exact identity of these lobbyists. our data indicate that lobbyists have been both individual companies and various industrial interest organizations, but apart from that, we cannot conclude what types of companies or organizations they were. the construction industry as a whole constitutes several different actors within the building networks (toppinen et al. 2019), such as architects, building material manufacturers, housing construction, and infrastructure contractors. hence, it would be an oversimplification to suggest that the influencing attempts recognized by the planners are made by any single fragment of this industry. regarding the legitimacy of the planning process, an interesting result is that while nearly all respondents acknowledged influence from the general public (e.g., citizens), they did not acknowledge the influence of companies and industrial organizations. this may be due to legislation requiring public participation in urban planning processes, while business organizations are not required to participate. due to this, it is probably easier for planners to recognize and admit to the existence of lobbying efforts from “legitimized” stakeholders. still, business organizations appear to have influencing mechanisms aimed at urban planners, putting local democracy at risk for several reasons. first, although planners may recognize the influencing attempts and are able to manage them, if these attempts are not openly communicated in the municipality, they may pose a risk for social justice and the equality of people. second, planners not even recognizing influencing attempts may be an even greater problem, as decision makers with a high degree of administrative power do not, in this case, perceive the risks in their roles as public authorities. third, even if no influencing attempts are aimed at all the planners, we cannot rule out that some of them may not want to openly discuss the topic due to its sensitive nature. a key limitation of our study is the implemented single-country approach and the use of convenience sampling, which limits the generalization of these findings beyond our sample. therefore, future research should focus more explicitly on construction companies, associations, and consultants active in the building sector. to strengthen the legitimacy of participatory processes, studies should be conducted on whether business actors could also have some official participation role in the processes, in a similar manner as the general public and various civil society organizations. the role and importance of urban planners as, e.g., negotiation mediators between different stakeholders (peltonen & sairinen 2010) and active communicators enhancing sustainable construction (e.g., rydin et al. 2007), has been recognized in myriad studies. in all, there seems to be a need for developing formal communication processes between planners and business organizations to support, e.g., the implementation of small-scale niche experiments, which could be drivers for systemic sustainability changes in 90 bioproducts business 4(7) 2019 construction and housing (holm et al., 2011). in addition, although we approached economic and social aspects of construction in our study, e.g., through themes related to local forest resource usage and the cost-efficiency of mswb, a more comprehensive analysis of economic and social aspects of mwsb should be conducted in the future (see, e.g., toppinen et al. 2013, wang et al. 2014). 6. references asrubali, f., ferracuti, b., lombardi, l., guattari, c., evangelisti, l., & grazieschi, g. 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(2006) use of ecological information in urban planning: experiences from the helsinki metropolitan area, finland. urban ecosystems 9(3): 211–226. doi 10.1007/ s11252-006-8591-8 abstract with the development of finished houses in china supported by the government, housing developers play a critical role in the purchase of flooring products. on the other hand, wood flooring manufacturers know the importance of forest certification for export, but pay less attention to the domestic market. this study evaluated both housing developers’ and wood flooring manufactures’ perceived benefits of forest certification in china, using a survey. for manufacturers, the three most important benefits of adopting forest certification were to “meet foreign customers’ purchasing requirements,” “support sustainable forestry and protect the environment,” and “meet corporate social responsibility goals.” for housing developers, the most important benefits of using certified flooring were to “acquire new consumers from domestic market (e.g., green consumer),” “achieve product differentiation,” and “brand the house with high-end image.” the largest perception gap between the two groups of respondents was with respect to “gain financial aids (e.g., tax and loan).” the findings suggest that there is an increasing demand for forest certified products from housing developers in china, which requires manufacturers to enhance their marketing strategies to meet the domestic demands for certified flooring. keywords: wood flooring manufacturer, housing developer, perceived benefit of forest certification, coc certification, china marketing strategies for certified wood flooring in china: the gap in manufacturers’ and developers’ perceived benefits 1 graduate school of agricultural and life sciences, the university of tokyo, japan * corresponding author. email: masafumi@g.ecc.u-tokyo.ac.jp acknowledgements: this research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. qin tan1, kohei imamura1, kenji nagasaka1, masafumi inoue1* bioproducts business 7(2), 2022, pp. 19–32. issn 2378-1394 https://doi.org/10.22382/bpb-2022-002 1. introduction wood and wood products utilization are related to the issue of climate change mitigation through carbon stocks, sustainable forest management, and greenhouse gas emissions (sathre and o’connor 2010, griscom et al. 2017). furthermore, they can provide economic benefits by increasing economic activities of wood products companies (e.g., komata et al. 2012, fuchigami et al. 2015, kawamura and inoue 2020), including those that provide construction building materials (asif et al. 2007). maintaining sustainable forest management is an important prerequisite to achieving positive outcomes through utilizing wood products. forest certification, such as by the forest stewardship council (fsc), is critical in this aspect. this study focuses on china because of its large and rapidly growing domestic market. china is the third largest flooring market in the world behind the united states and india (statista 2020). the sales volume of wood flooring in china was 292 million m2 in 2005, and had increased by 142% to 415 million m2 in 2017 (cnfpia 2018, zhang 2008). this growth is closely tied to the fast development of residential housing construction and remodeling. before the global financial crisis of 2008, the sales of wood flooring had enjoyed a high growth rate, above 8% on a year-on-year basis. domestic demand for wood flooring reached 360 million m2 in 2007. after the global financial crisis, the first growth peak of demand was in 2009 and 2010, when the growth mailto:masafumi@g.ecc.u-tokyo.ac.jp 20 bioproducts business 7(2) 2022 growth in china. to date, there are over 95,000 housing developers in china (national bureau of statistics 2019). more than 60% of the market is dominated by 100 housing developers. the 10 largest housing developers control 28% of the market share, and the combined sales reached 444 billion yuan in 2019 (crea 2020). this is characteristic of the highly oligopolistic nature of china’s real estate market. forest certification has emerged in response to social demands, such as the adoption of forest principles and agenda 21 in the earth summit of 1992. there are two international certification schemes, namely, the forest stewardship council and the programme for the endorsement of forest certification (pefc), that provide a guarantee that the wood used in the products comes from a wellmanaged forest. in china, one million hectares of forest had been certified by the fsc, with 9,161 chain of custody (coc) holders as of december 2019. this accounted for 23% of fsc-coc certificates in the world (fsc 2019). since 2014, the chinese forest certification scheme has been endorsed by pefc (pefc 2022). two million hectares of forest have been certified by pefc in china, with 418 coc certificate holders as of june 2020 (pefc 2020). moreover, the chinese government recently issued incentive policies for the development of green buildings (miit & mohurd 2015, mohurd 2017). green building programs assess the energy efficiency of a building. these programs also extend to several other sustainability criteria, including sustainable sourcing of building materials (unece/ fao 2011, yu et al. 2014). this requires housing developers to use environmentally friendly materials; therefore, manufacturers have an opportunity to expand certified products in the domestic market. for instance, the most frequently used international green building certificate—the leadership in energy and environment design (leed)—offers credit for using fsc-certified materials only (räty et al. 2012, fsc 2015). according to the review of green marketing research by wymer and polonsky (2015), consumers are concerned about environmental issues (national geographic 2012), whereas their purchase behavior for green products is lackluster (peattie and crane 2005, wong et al. 1996). there are gaps between consumer attitudes and behaviors in many cases rate reached 6% and 11%, respectively. china is also the world’s largest producer of wood flooring. wood flooring production in china reached 830 million m2 in 2017, which accounts for 20% of the wood flooring produced worldwide (dccc 2019, sfa 2017). this study considers that these two aspects make china a good example for clarifying the marketing strategies of wood flooring manufacturers. this study focuses on the wood flooring market in china, where “rough” (unfinished) houses have taken the predominant share of the residential housing market over the past years (furumi 2014, li et al. 2017). homebuyers purchase interior materials, including flooring products, in the building materials market on their own (furumi 2014, li et al. 2017). wood flooring manufacturers sell products, which include solid hardwood, laminated, and engineered flooring, to end users through manufacturer-owned stores, including e-marketplaces and sales agencies in china (figure 1). however, according to the government, finished houses have been replacing rough houses in urban china in recent years, which reduces waste and pollution in the process of house decoration (mohurd 2017). the government has also tightened housing measures and has suppressed real estate speculation. housing developers now must purchase all interior materials, including flooring products, for homebuyers. this indicates that housing developers are replacing end users in becoming the major consumer segment for wood flooring. in the future, housing developers’ activities will be considered an essential part of the supply chain of wood flooring (figure 1). thus, a change in marketing strategies will be critical for wood flooring manufacturers. presently, there are more than 2,300 wood flooring manufacturers in china, of which approximately 800 manufacture solid wood flooring, 500 produce engineered wood flooring, 900 produce laminate flooring, and 150 produce bamboo flooring (jfwia 2017). most are small-scale manufacturers; however, the 100 largest solid flooring manufacturers are estimated to account for 40% of all solid wood flooring, and the 10 largest engineered flooring manufacturers produced 50% of all engineered wood flooring in china (iwmg 2006). the number of housing developers increases every year along with the rapid rate of economic tan et al. — marketing strategies for certified wood flooring in china: the gap in manufacturers’ and developers’ perceived benefits 21 (bamberg & möser 2007, thøgersen 2004, wymer and polonsky 2015). an eco-brand attribute is not sufficient to cause consumers to switch the purchase brand, especially when the eco-brand attribute is coupled with a premium price (drozdenko et al. 2011, wymer and polonsky 2015). however, several marketing studies have shown that there is a niche for ecofriendly products in wood product markets (e.g., anderson and hansen 2004, aguilar and vlosky 2007). additionally, more consumers have come to be concerned about forests and forestry and acknowledge forest certification in china (luo et al. 2017, tan et al. 2019). previous studies showed that end users intended to buy certified wood products, although their willingness-to-pay was small (vidal et al. 2005, overdevest & richenbach 2006, liu et al. 2007, wang et al. 2011). but recent studies have shown an increase in their willingness-to-pay (e.g., liu et al. 2016, luo et al. 2017, tan et al. 2019). considering the recent increase in chinese consumers’ demand for certified products, there is also potential demand for certified wood flooring. tan et al. (2019) and tan et al. (2020) reported high purchase intentions and price premiums for certified wood flooring among consumers in major chinese cities. however, the attitudes of manufacturers and developers in china toward the adoption of forest certified wood flooring are not well understood. therefore, it is necessary to find the gap between their perceptions and demands for certified products. in this study, we assessed the gap between the perceived benefits of forest certification held by the wood flooring manufacturers and housing developers in china. manufacturers could better utilize certified wood flooring by recognizing the perceived benefits of the product for housing developers. 2. literature review chen et al. (2011) assessed the awareness and knowledge of forest certification among chinese forest products manufacturers in order to analyze the extent to which they are considering adopting forest certification and what motivates such decisions. the results showed that although various efforts have been made to increase awareness of forest certification in china, the respondents’ understanding of forest certification was very low. potential economic benefits were the most frequently cited reason for adopting certification, with other reasons including gaining or maintaining competitive advantages over their counterparts, improved access to domestic and export markets, increasing customer awareness, and enhancing corporate social responsibility. some respondents recognized that making certification mandatory was necessary for widespread certification, given the limited economic benefits of certification. montague (2011) identified the attitudes of primary hardwood manufacturers toward coc certification in the appalachian region in the united states. the majority of respondents were small, noncertified manufacturers and had negative attitudes toward coc certification, although they perceived themselves figure 1. supply chain of wood flooring in china considered in the study. 22 bioproducts business 7(2) 2022 to be environmentally conscious. as for their reasons to gain coc certification, most of them answered to follow the requests from their customers or to gain some type of market advantage. bowers et al. (2012) asked wood products manufacturers in china and vietnam about the ways forest certification had been implemented in their business and challenges they faced when adopting forest certification, and they analyzed what factors contributed to the commitment to forest certification. in addition, they identified country-specific factors that influence companies’ decisions to obtain forest certification by comparing the cases in china and vietnam. the results showed that acquiring certified raw material supply, market awareness, and certification costs were the main constraints to adding certified wood products to the sales mix of the company. the results also indicated that there is a lack of domestic supply of certified materials, which leads to a heavy reliance on imported materials, which incurs additional costs. perceived benefits of forest certification differed significantly between the two countries, with market benefits being the most effective driver for certification. tolunay and türkoglu (2014) investigated the perspectives and attitudes towards coc certification systems and certified forest products among companies of the forest products industry in turkey. the results showed that there were differences in perspectives and attitudes towards coc certification schemes among the four main branches of the forest products industry in turkey. it was revealed that coc certification was known mostly by the paper industry because companies had experienced sales problems due to the lack of coc certification. roe (2015) assessed how regulations on illegal wood imports by japan and western countries affected the attitudes and perceptions of firms in china and vietnam, their use of coc certification, and the material sourcing and export market decisions of industry managers. the results showed that as firms increase in size, they sell less domestically and become more aware of and supportive of regulations, and that firm’s awareness of timber legality regulations plays a major role in whether a firm decides to obtain certification. vietnamese firms were found to have low awareness of the regulations, but high support for certification. chinese firms had a more negative attitude toward regulations, while having a higher awareness of them. there were differences between domestically-focused firms and those exporting to foreign markets in expectations for a potential market. 3. method 3.1 questionnaire design two types of questionnaires were prepared, one for manufacturers and one for developers. both questionnaires were prepared in simplified mandarin chinese by the first author, who is a native speaker, and the other authors double-checked the englishtranslated questionnaires by the first author. the manufacturers’ questionnaire comprised four parts: (1) the manufacturer’s profile, which included the number of employees, annual turnover, products, business location, and information regarding wood flooring, including origins of the wood, export shares, and countries to which the flooring was exported (2) information on coc certification adoption containing adoption experience (year and times), future plans of adoption, and target customers (3) perceived benefits of forest certification, as determined by asking manufacturers to measure 13 potential benefits on a 7-point likert scale,1 with the 13 items chosen based on previous research (chen et al. 2011, bowers et al. 2012) (4) perceived challenges of adopting forest certification for manufacturers without the intention of adopting coc certification, as determined by responses to a 5-point likert scale question. the housing developers’ questionnaire was also comprised of four parts: (1) the housing developer’s profile, including the number of employees, annual turnover, business location, and information regarding the flooring products, such as the purchasing process of flooring, purchase contracts, and areas covered by wood flooring per house 1this study applied a 7-point likert scale (“7” = strongly agree, “1” strongly disagree) according to wakita et al. (2012) and taherdoost (2019), who pointed out that it can reveal respondents’ awareness more accurately. tan et al. — marketing strategies for certified wood flooring in china: the gap in manufacturers’ and developers’ perceived benefits 23 (2) current use and intention for further use of certified wood flooring (3) perceived benefits for the use of certified wood flooring, as determined by asking developers to measure 12 items on a 7-point likert scale, referring to the manufacturers’ perceived measurements (4) perceived challenges of using certified wood flooring for housing developers that have never previously adopted certified wood flooring, as determined by responses to a 5-point likert scale question. 3.2. data collection and analysis sampling methods in survey research are divided into the probability and non-probability sampling methods (bryman 2012, till and matei 2016, vehovar et al. 2016). in the former method, the sample is stochastically collected from the population; hence it is possible to infer information about the population through statistical analysis. in the latter method, a sampling procedure is non-stochastically conducted; hence the representativeness of the sample to the population cannot be guaranteed. in general, nonprobability sampling has a larger sample error and lower survey cost than probability sampling, but this is not always the case (callegaro et al. 2014, vehovar et al. 2016). non-probability sampling methods include convenience sampling, quota sampling, snowball sampling, and judgmental sampling (bryman 2012, vehovar et al. 2016). convenience sampling targets people accidentally, haphazardly, or through an unrestricted approach such as in shopping malls or on the street. quota sampling is an improved convenience sampling with some socio-demographic quotas (e.g., region, gender, age) in order to reflect the population of an area. snowball sampling collects respondents through a chain of referrals in which existing respondents refer the survey to other people who meet the survey objective. judgmental sampling targets representative people of a population based on the knowledge and credibility of the researcher. for this study, we applied a snowball sampling method (according to bryman 2012) because, based on the preliminary interviews with wood building manufacturers in japan operating in china, we found that it would be very difficult to have direct access to wood flooring manufacturers and housing developers concerning forest certification in china. alternatively, we could ask them to introduce their affiliate firms or business acquittances regarding our target business field in china to launch snowball sampling. the survey was carried out from october 2019 to january 2020. the e-mail, consisting of an invitation letter for participating in the survey and a structured questionnaire, was sent to the wood flooring manufacturers and housing developers. in order to initiate snowball sampling, four research collaborators were selected from the authors’ acquaintances who have contacts among chinese wood flooring manufacturers and housing developers. two of the research collaborators are employees of wood building material manufacturers in japan, and the other two are university professors in china, who were then able to refer us to survey participants. consequently, 27 questionnaires were returned, 10 from manufacturers and 17 from housing developers. all returned questionnaires were effectively completed. the sample size of this study does not allow for conducting advanced quantitative analysis (e.g., clarifying the structure of company’s awareness through exploratory factor analysis or evaluating the reliability of data by cronbach’s alpha). hence, this study conducted a qualitative explanation of each respondent company and discussed the potential for increased adoption of certified wood flooring in the real estate market of china. in order to examine the gap between manufacturers’ and developers’ awareness, this study compared the mean values of perceived benefits of forest certification. 4. results and discussion 4.1 general profile of manufacturers and housing developers most of the surveyed manufacturers were located in yangtze delta, including shanghai city and the jiangsu and zhejiang provinces, where the largest wood-processing and exporting manufacturers operate. classifying the company size by the number of employees, the ten manufacturers were divided into three groups: five small manufacturers (a–e) with 20–300 employees, four medium-sized manufacturers (f–i) with 301–1,000 employees, and one 24 bioproducts business 7(2) 2022 large manufacturer (j) with over 1,000 employees. compared with the respondents in the study by chen et al. (2011), which surveyed 20 wood product manufacturers in china, fewer respondents of this study were large-sized manufacturers and more were medium-sized manufacturers. regarding the overall turnover in 2018, eight manufacturers had turnover in the range of 20–400 million rmb2, one manufacturer had a turnover of over 1,000 million rmb, and the final manufacturer preferred to not answer this question. three manufacturers sold their products only on the domestic market, and six manufacturers sold products both in domestic and overseas markets (table 1). compared to chen et al. (2011), where 30% of the respondents were export-oriented firms, the respondents in this study included more exportoriented firms. regarding export markets, five manufacturers had exported products to the united states and europe, markets that have imposed strict forest certification regulations on imported wood products. for instance, manufacturer d exports all products to japan. this study is similar to chen et al. (2011) in that there are exporters to the united states and 2 rmb or yuan renminbi; the current conversion rate is 1 rmb = 0.15 usd (in june 2022). europe, whereas this study is unique in that there are exporters to japan. the findings on the origins of the wood indicated that geographic proximity presents an opportunity for manufacturers to acquire certified roundwood from foreign countries where forest certification is well developed. for instance, the manufacturers in yangtze delta (a, c, e, h, and j) imported wood from north america, and european and russian timbers were acquired by manufacturers in northeastern china (d and f). according to the u.s. lacey act and the eu timber regulation, wood products sold in those markets are required to be made from legally logged woods (ec 2010, efi 2012, usda 2013). additionally, the russian federation has been actively participating in the fight against illegal logging. the forest code of russia, which was announced in 2006, sets out a detailed list of permitted forest uses, including wood harvesting (schloenhardt 2008). the russian government announced that it would be banning the export of unprocessed logs as of 2022 (european parliament, 2021). on the other hand, most of our 17 surveyed housing developers were located in the yangtze river delta. the respondents were divided into three groups according to “issuing the measures for classification table 1. basic information of the surveyed wood flooring manufacturers. manufacturer location number of employees turnover (million rmb) a revenue from exports (%) top exporting countries b top origins of wood b had already obtained coc certification a shanghai 20–300 20–400 30 philippines, korea, canada russia, china, usa no b shanxi 20–300 20–400 0 ― n/a (c) no c zhejiang 20–300 20–400 0 ― china, usa, canada no d liaoning 20–300 n/a c 100 japan china, russia, canada yes e zhejiang 20–300 20–400 60 europe, usa, southeast asia china, russia, usa yes f jilin 301–1000 20–400 90 europe, usa europe, russia, china yes g shanghai 301–1000 20–400 0 ― china yes h shanghai 301–1000 20–400 40 usa, others russia yes i guangdong 301–1000 20–400 20 usa, europe peru, cambodia yes j zhejiang over 1000 over 400 20 usa, canada, germany n/a c yes note: (a) million rmb in 2018; (b) the questionnaire asked respondents to list up to three countries in a row; (c) the manufacturer preferred not to answer this question. tan et al. — marketing strategies for certified wood flooring in china: the gap in manufacturers’ and developers’ perceived benefits 25 survey, and they planned to renew the certificate when the current certificates expired. among the seven, four largeand medium-sized manufacturers (g–j) had adopted the coc certification more than once. this is different from the findings by chen et al. (2011), where only one of the twenty wood product manufacturers that participated in their survey had obtained forest certification. the manufacturers’ main information resources regarding forest certification were forest certification institutions and wood products associations, such as china’s national forest products industry association. some manufacturers also gained the information from their wood material suppliers and the chinese government. 4.2.1 perceived benefits of adopting forest certification regarding customer segments of certified products, nine manufacturers (with g the only exception) answered that the major demand came from overseas customers. on the other hand, four manufacturers (e, h, i, and j) answered that domestic housing developers were their target customers. while previous studies have already shown the motivation to meet regulations in developed countries (e.g., yu and xiao of large, medium, small and miniature enterprises for the purpose of statistics” (national bureau of statistics 2017) as follows: 11 large-sized companies (64%) with turnover of more than 800 million rmb; three medium-sized companies (18%) with 60–800 million rmb; and three small-sized companies (18%) with less than 60 million rmb. the respondents in this study were mostly from large-sized housing development companies, which account for the majority of the share of china’s real estate market (crea 2020). all responding housing developers produced finished houses. eight had 5 to 10 years’ experience, five had less than 5 years’ experience, three had 10 to 15 years’ experience, and one had more than 15 years’ experience (table 2). it was found that 13 housing developers held long-term contracts with wood flooring manufacturers, showing that housing developers are an important flooring products customer group for chinese manufacturers. 4.2 manufacturers’ experiences and future intentions of forest certification of all the surveyed manufacturers, seven (d–j) had obtained forest certification (coc) at the time of the table 2. basic information about the surveyed housing developers. housing developer location number of employees turnover (million rmb)* building experience of finished houses (years) long-term contract with manufacturers k shanghai less than 600 more than 800 5–10 yes l anhui less than 600 less than 60 10–15 yes m jiangsu less than 600 more than 800 less than 5 yes n zhejiang more than 3000 more than 800 5–10 no o jiangsu more than 3000 less than 60 less than 5 no p jiangsu more than 3000 less than 60 less than 5 no q shanghai less than 600 more than 800 5–10 yes r shanghai less than 600 more than 800 5–10 yes s jiangsu 600–3000 more than 800 5–10 yes t guangdong less than 600 60–800 5–10 yes u jiangsu less than 600 more than 800 10–15 yes v shanghai less than 600 60–800 more than 15 yes w shanghai more than 3000 more than 800 10–15 yes x shanghai less than 600 more than 800 5–10 yes y chongqing 600–3000 more than 800 less than 5 yes z shandong more than 3000 more than 800 less than 5 no aa fujian less than 600 60–800 5–10 yes * million rmb in 2018. 26 bioproducts business 7(2) 2022 2004, chen et al. 2011, tolunay and türkoglu 2014), this study showed the importance of the demand from domestic housing developers, as well as overseas demand. these four manufacturers mentioned that housing developers could find potential benefits in using certified products for their properties, such as achieving differentiation of their houses, gaining a positive public image, and meeting homebuyers’ requirements of an eco-friendly indoor environment. this implies that some manufacturers have already perceived the advantages for housing developers to utilize certified products that are going to emerge during the early development stage of the finished housing market in china. 4.2.2 perceived challenges to adopting forest certification of the three manufacturers that had not obtained coc certification, manufacturer c indicated that they would not obtain it in the future. the others (a and b) were uncertain about obtaining it at the time of the survey. each of these three manufacturers were small in scale. previous studies showed that company size is an important factor in a manufacturer’s commitment to coc certification (montague 2011, bowers et al. 2012). the fee for coc certification adoption was a major concern for smaller manufacturers. for instance, to join the organizations offering fsc-coc certification costs between 2,500 and 10,000 usd, which is adjusted for company size, number of employees, and several other factors (mcllhenney and hayter 2014). there are also other fees, including the costs of annual inspections and management of an extensive audit trail (mcllhenney and hayter 2014). moreover, our findings revealed that the target market of each manufacturer might also influence their intentions. manufacturers b and c targeted the domestic market, and manufacturer a’s top two exporting countries were the philippines and korea, where illegal timber import regulations, such as the u.s. lacey act, have not yet come into force (hoare 2015). 4.3 housing developers’ experiences and future intentions of forest certification among the 17 housing developer respondents, 15 had used wood flooring. eleven of them answered that wood flooring covered between 10% and 30% of the area per house they sold. only four responding housing developers used wood flooring for more than 30% of the area per house. two housing developers had not used wood flooring yet; however, they answered that they planned to purchase wood flooring for achieving profits and making environmental contributions. five housing developers indicated that they had used certified wood flooring in their properties. eleven housing developers expressed a strong intention to use certified wood flooring in the future, and five of them reported that they already had a purchase plan that would be conducted in the next three years. 4.3.1 perceived benefits of adopting forest certification eleven housing developers also cited the benefits of using coc certified products in their properties. seven of them mentioned that they intended to achieve economic benefits, such as increased house sales and price premiums. six housing developers mentioned other benefits, such as contributing to the environment and gaining social benefits, including achieving corporate social responsibility (csr) goals, and four housing developers mentioned increasing their public image. prior studies of wood product manufacturers have identified potential economic benefits (chen et al. 2011, bowers et al. 2012): improved access to domestic and export markets (yu and xiao 2004, chen et al. 2011, tolunay and türkoglu 2014); gaining or maintaining a competitive advantages over their counterparts (chen et al. 2011, montague 2011, bowers et al. 2012); increasing customer awareness (chen et al. 2011, montague 2011); and enhancing csr (chen et al. 2011), corporate image, recognition, and reliability (chen et al. 2011, faggi et al. 2014, paluš and kaputa 2009) as reasons for adopting certified forest products. 4.3.2 perceived challenges to adopting forest certification six housing developers reported that they were uncertain whether they would use coc certified wood floorings in the future. five of them mentioned that the high price of coc certified wood floorings was a primary challenge. cost concerns were followed by a lack of supply and low awareness of forest tan et al. — marketing strategies for certified wood flooring in china: the gap in manufacturers’ and developers’ perceived benefits 27 certification on the part of both end users and the company’s management groups. other reasons were lack of government support, shortage of certified products from cooperative manufacturers, and lowprice premiums. bowers et al. (2012) pointed out that certified raw material supply, market awareness, and certification costs were the main constraints for chinese manufacturers in adopting certified wood products. housing developers are considered to have the same challenges as wood product manufacturers for adopting certified wood products. this study then analyzed the perceived important properties of the flooring that influenced purchase decisions (table 3). eco-friendly properties and quality of the flooring (e.g., durability) were the two most important properties for housing developers who had used the certified wood flooring. by contrast, price and quality were perceived as the most important properties by housing developers who had not used wood flooring. this suggests that the higher price of the coc certified products would be a major challenge for the housing developers who had not used coc certified wood floorings. 4.4 gap between manufacturers and housing developers in perceived benefits of coc certification manufacturers expected to gain price premiums from foreign markets, but they had lower expectations from the domestic market (table 4). previous studies have indicated high price premiums for forest certification in north america and europe (grönroos and bowyer 1999, jensen et al. 2003, kruger 2010, thompson et al. 2010, cai and aguilar 2013) and those are major export markets for chinese wood flooring manufacturers (roe 2015). additionally, bower et al. (2012) showed that fsc’s market-related benefits are not recognized by chinese manufacturers because of low public awareness in the domestic market. housing developers expected to gain price premiums from domestic end users through the use of certified products in their houses (table 4). this expectation might be attributed to customer segmentation strategies implemented by housing developers. most finished houses in china are concentrated in major cities (hernández 2016, crecc 2019). the 10 largest provinces and cities in term of the supply of finished houses reached a total of 1.82 million units in 2018 (crecc 2019). the top four provinces, guangdong, jiangsu, zhejiang, and shan-dong, have high population densities and high per capita gdp (nbsc 2017). thus, residents’ economic ability is considered as a key incentive for developing finished houses. as long as end users intend to buy and pay a price premium for environmentally friendly houses, housing developers would be expected to increase the utilization of certified building materials. wood flooring manufacturers ranked “support sustainable forestry and protect the environment” and “meet csr goals,” which indicate the social and environmental benefits of forest certification, in second and third place, respectively. this was higher than the items on achieving economic benefits in the domestic market (table 4). this finding aligned with bowers et al. (2012), which suggested that the chinese government had decreased its focus on the economic benefits of forest certification, but was increasingly encouraging wood products manufactable 3. housing developers’ perceived important properties of flooring products. perceived benefit number of housing developers in total with experience using coc certified wood flooring without experience using coc certified wood flooring price 12/17 71% 2/5 40% 10/12 83% quality 10/17 59% 4/5 80% 6/12 50% brand 2/17 12% 0/5 0% 2/12 17% design 2/17 12% 0/5 0% 2/12 17% eco-friendly 6/17 35% 3/5 60% 3/12 25% service 0/17 0% 0/5 0% 0/12 0% 28 bioproducts business 7(2) 2022 turers to place a high priority on environmental and social interests, such as the manufacturer’s public reputation and employment. wood flooring manufacturers regarded coc certification as a tool to gain market access to foreign markets, especially north american and european countries (yu and xiao 2004, chen et al. 2011, tolunay and türkoglu 2014). the items “meet foreigner customers’ purchasing requirements” and “gain access to new market (e.g., eu and usa)” were ranked first and fourth, respectively, among the perceived benefits of forest certification. however, housing developers perceived the coc certification differently. they expected to gain direct economic benefits and competitive advantages through the use of certified products in their houses. the items “acquire new consumers (e.g., green consumers),” “achieve product differentiation,” “brand the house with high-end image,” and “achieve price premiums” were ranked by housing developers as the top benefits (table 4). the largest gap between manufacturers and housing developers appeared with the item “gain financial aids (e.g., tax and loan).” manufacturers perceived financial aids, such as tax incentives and loans, to be an incentive to obtain a coc certification (table 4). chinese government subsidies, such as export tax rebate and low-cost land use rent, have provided chinese manufacturers significant support in obtaining forest certification to expand their international market share (nie 2007, cao et al. 2011). thus, manufacturers might expect similar financial aid for domestic production from the government. however, housing developers have rather low expectations of financial aid from the government (table 4). the chinese government released a series of policy incentives (e.g., the “green credit guideline” and the “guidance on building green financial system”) to encourage housing developers to promote green building programs (meec 2010, wang et al. 2019). the green building program encourages housing developers to expand the use of environmentally friendly products, including certified products in their properties (cao 2011). however, those financial aids have not yet been directed to the use of certified products in the finished houses. both manufacturers and housing developers rated “achieve product differentiation” as being important, table 4. mean values of perceived benefits of forest certification indicated by manufacturers and housing developers. items manufacturer housing developers support sustainable forestry and protect the environment 6.29 5.36 meet csr goals 6.14 5.09 build an environmentally friendly corporate image and attract more investors 5.43 5.36 gain financial aids (e.g., tax and loan) 5.43 3.41 achieve product differentiation 5.14 5.73 achieve price premiums from domestic market 4.29 5.45 acquire new consumers from domestic market (e.g., green consumer) 5.29 5.82 meet foreigner customers’ purchasing requirements 6.43 ― gain access to new market (e.g., eu and usa) 6.00 ― achieve price premium from export market 5.57 ― meet housing developers’ purchasing requirements 5.29 ― meet domestic end users’ purchasing requirements 5.00 ― reduce operating costs through developing green technologies 4.71 ― brand the house with high-end image ― 5.64 achieve green building certification (e.g., leed) ― 4.93 obtain government’s affordable housing project ― 4.00 obtain a longer payable period from manufacturers ― 3.27 note: the responding manufacturers and housing developers measured items on a 7-point likert scale, with “7” indicating “strongly agree” and “1” indicating “strongly disagree.” tan et al. — marketing strategies for certified wood flooring in china: the gap in manufacturers’ and developers’ perceived benefits 29 with mean ratings of over 5 points (table 4). this response revealed that gaining competitive advantage associated with forest certification had been acknowledged by wood floorings manufacturers, as well as housing developers. moreover, the results showed that both manufacturers and housing developers perceived a benefit from expanding domestic market shares associated with forest certification; the items of “maintain or gain domestic market shares” and “acquire new consumers (e.g., green consumers)” were rated more than 5 points (table 4). this finding confirmed that housing developers’ interest in the widespread use of certified products was rooted in a concern for direct economic gains, along with other highly ranked economic benefits, such as “brand the house with high-end image” and “achieve price premiums.” 5. conclusion the adoption of forest certification was motivated by wood flooring manufacturers seeking to improve access to foreign markets. the manufacturers had fewer motivations for expanding coc certified wood floorings for the domestic market in china than for the export market because of low public awareness among chinese consumers, compared with the awareness of consumers in europe or the usa. conversely, this study showed a strong demand for certified products, including flooring, from housing developers that induced the wood flooring manufacturers to produce coc certified wood floorings for the expanding domestic market shares and the export market. this study suggests that forest certification is an effective tool whereby manufacturers can satisfy housing developers’ environmental requirements for their houses, and it can create a better relationship between manufacturers and housing developers. the most critical property of wood flooring is its aesthetics. the most attractive wood species are relatively scarce, and their high economic value becomes a driver for conducting illegal logging. to prevent this, forest certification schemes should be expanded. the current chinese housing developers’ marketing strategies could encourage coc certified wood floorings, which would eventually mitigate ongoing global environmental and economic issues. finally, the results of this study should be used carefully when trying to generalize about marketing strategies for wood flooring manufacturers and housing developers in china because the data in this study were obtained through non-probability sampling and the sample size is very small, compared to the total number of flooring manufacturers and housing developers there. 6. references aguilar, f. x. & vlosky, r. p. 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(2008). an analysis of the supply chain in china’s wood flooring industry. master’s thesis. zhejiang university of technology, china. retrieved from https://cdmd. cnki.com.cn/article/cdmd-10337-2009216362.htm abstract as a result of the rise of the digital market, social media has emerged as one of the most popular marketing tools. consumers today increasingly rely on social media when shopping, and thus it can influence consumer behavior and purchasing decisions. similarly, a growing number of wood products companies are using a variety of social media approaches for their marketing efforts as they seek to remain competitive in the digital marketplace. although previous studies have examined social media use by wood products companies, none have examined social media use by wood products consumers. wood products companies can design more effective social media marketing efforts if they understand the decision process of potential customers with regards to social media. thus, a survey was conducted in 2017 to investigate factors affecting social media adoption among wood products consumers in the u.s. in the context of private social media use or business-to-consumers (b2c) context. the results show that social media adoption by consumers is influenced by the ease of use and perceived usefulness of social media, product characteristics, demographic characteristics (e.g., gender, age, income) and situational factors (e.g., community type). understanding the factors that motivate wood products consumers’ social media adoption is important when developing and designing social media marketing strategies that target consumers’ needs. keywords: social media, wood products, digital market factors affecting social media adoption among wood products consumers in the united states 1associate professor of forest resources management, west virginia university, division of forestry and natural resources, morgantown, wv 26505. 2 research forester, usda forest service northern research station and forest products marketing unit, starkville, ms 39759. 3 forest products technologist, usda forest service northern research station, princeton, wv 24740 * corresponding author. email:kathryn.arano@mail.wvu.edu. tel: 304-203-0525. acknowledgements: the work upon which this publication is based was funded in part through the usda forest service, northern research station, princeton, wv (usda forest service agreement: 17-jv-11242301-090). kathryn arano gazal1*, iris b. montague2, janice k. wiedenbeck3 bioproducts business 4(5), 2019, pp. 51– 62. issn 2378-1394. https://doi.org/10.22382/bpb-2019-005 1 introduction digital technology has paved the way to the development and growth of a digital economy and the rise of the digital marketplace. one of the popular tools that have emerged as a result of the rise of the digital market is the use of social media as a marketing tool. “social media is a broad term that refers to software tools that create user-generated content that can be shared” (o’reilly, 2005) that has paved a way to social media marketing, a form of internet marketing that utilizes social networking websites as a marketing tool (techtarget, 1999-2018). globally, the use of social media has been rising annually, reaching 2.66 billion in 2018 (emarketer, n.d.), paving the way to the increase in the use of social media marketing, which is therefore becoming an integral element of 21st-century business (felix et al. 2017). social media has drastically revolutionized traditional marketing approaches and brought marketers to a new era (muthiah and kannan 2015) that has changed how marketers and consumers communicate. the use of social media in marketing has offered benefits to both businesses and consumers. for example, for businesses, social media marketing has resulted in increased brand recognition, improved brand quality, increased sales, increased user interactivity by stimulating users to post or share contents, increased inbound traffic, reduced marketing costs, improved search engine rankings, and increased understanding of consumer behavior and preferences 52 bioproducts business 4(5) 2019 (palmer and koenig-lewis 2009, chikandiwa et al. 2013, schweidel and moe 2014, ashley and tuten 2015). on the consumer side, social media allows consumers to gather and share information and to evaluate brands/ products through product reviews during the purchasing process; promotes efficiency; and offers convenience, broader selection of products, competitive pricing and cost reduction (bayo-moriones and lera-lopez 2007, chappuis et al. 2011, qualman 2013, hudson et al. 2016). consumers today are therefore relying more on using social media technology in their shopping experience (pookulangara and koesler 2011). as a result, social media are increasingly influencing consumer behavior and purchasing decisions (jashari and rrustemi 2017). thus, social media does not only impact how companies promote their products, but also how consumers make decisions when they buy products. it is therefore important to understand how consumers use social media in their buying process and how such tools are influencing the way they behave. such information can provide important inputs to companies to design more effective social media marketing efforts. the current study investigates the factors affecting social media adoption among wood products consumers in the u.s. within the b2c marketing context (i.e., private purchasing context). understanding the factors that influence individuals’ adoption of social media when buying wood products for personal use will provide important baseline information on social media networking use by these consumers. marketers in the wood products industry who are interested in using social media as a platform to market their products to private wood products consumers (i.e., b2c) can use this information as a guide in the development of marketing campaigns that are attractive to current and potential consumers. understanding the factors that influence consumer adoption and the frequency of use of social media tools can assist marketers in selecting the type of social media to use and determining how to best structure their social media content (sago 2013). 2 background literature 2.1 social media adoption most studies on social media adoption have focused on companies/organizations in relation to social media use in marketing, benefits of social media, and factors affecting adoption (sinclaire and vogus 2011, mandal and mcqueen 2012, thackeray et al. 2012, durkin et al. 2013, nah and saxton 2013, dahnil et al. 2014, lorenzoromero et al. 2014, ainin et al. 2015, ndekwa and katunzi 2016, wood and khan 2016, abubakar et al. 2017, matikiti et al. 2018). fewer studies have looked at social media adoption on the consumer side. these studies have looked at the impacts of social media on consumer behavior and purchase intentions (pookulangara and koesler 2011, hajli 2014, muthiah and kannan 2015, jashari and rrustemi 2017) and factors affecting social media adoption or the intention to use (parra-lopez et al. 2011, lin et al. 2011, akar and mardikyan 2014). with regards to the wood products industry, there are limited studies that have examined social media adoption. most of the related studies focused on internet usage in general (i.e., e-commerce). for example, vlosky (1999) examined the application of internet-based technologies for conducting business in the top 100 companies (by product volume) in the solid wood products and pulp and paper sectors of the wood products industry in the united states and canada. his findings showed that less than 50% of the companies surveyed made use of internet-based technology. arano and spong (2012) examined e-commerce adoption among west virginia wood products firms and showed that only 47% have adopted e-commerce in their business. montague (2011) examined the application of social network media among the appalachian hardwood manufacturers and only 9% of those surveyed used social media as a marketing tool. these studies have shown that wood products companies have been lagging behind in the use of ecommerce in their businesses and more so in the application of social media as a marketing tool. more recently, montague et al. (2016) investigated social media use in the wood products industry in the u.s., and their results showed that close to 58% of respondents currently use some form of social media, and that the most common social media tool implemented was facebook. further analysis determined that respondents’ adoption of social media was influenced by company age, net sales revenue, product type, website content, perceived importance of e-commerce, and perceived ease of social media use as a marketing tool. about 94% of the respondents thought that social media was an effective tool for marketing (gazal et al. 2016). although these studies show the importance of social media use for the wood products industry, none have examined social media use by wood products consumers. understanding consumer use of gazal et al. — factors affecting social media adoption among wood products consumers in the united states 53 wood products for private use or consumers’ use of social media tools to gather information about wood products they purchased in the last 5 years for personal use (b2c context). 3 data and methods 3.1 survey data the targeted sample for this study are wood products consumers in the u.s. thus, an online survey was conducted in the fall of 2017 to collect information on social media use among u.s. consumers who purchased wood products in the last 5 years. to avoid confusion regarding what comprised wood products, survey respondents were given the definition of wood products as “any material derived from trees for direct consumption most notably, products used for fuel, building, renovation, diy projects, furnishing, and decoration”. further, consumers were asked which types of consumer products they purchased in the last 5 years. we categorized the product types into two: industrial wood products for diy projects (lumber-type products such as boards, parallel laminated veneer; and pallets, panel-type products like plywood, particleboard, and oriented strand board) and consumer wood products (furniture, flooring, cabinets and novelties). the diy phrase was added to the industrial product category description to make sure only consumers purchasing products for private use responded to the survey and not businesses who might have purchased industrial-type products for professional use. the survey was conducted by survey sampling international (ssi), which is a company that provides market research data collection services. ssi uses panelbased online surveys for data collection. currently, it maintains about 17 million panel participants in over 90 countries (ssi 2018). an online panel is “a sample of persons who have agreed to complete a survey via the internet” that is selected mostly through probability sampling or in some cases through nonprobability-based recruitment (aapor 2007). ssi’s system for providing a sample that is representative of the target population involves using “a three-stage randomization process in matching a participant with a survey they are likely to be able to complete. first, participants are randomly selected from ssi’s panels to be invited to take a survey, and these participants are combined with others entering ssi’s dynamix™ sampling platform after responding to online messaging. a set of profiling questions is randomly social media when purchasing wood products can provide important inputs to wood product companies so they can design a more effective social media marketing campaign. thus, this study examines social media use by wood products consumers in the u.s. 2.2 conceptual framework there are a number of theoretical models that explain consumers’ intention to adopt a new technology. one of the most accepted models is the technology acceptance model (tam) by davis (1989) that is used to examine factors affecting the acceptance of information technology by organizations, as well as individuals. this model assumes that usefulness and perceived ease of use determine an individual’s intention to adopt a new technology. if a technology is perceived to be useful and easy to use, it is more likely an individual will adopt the technology. davis et al. (1992) later modified this model to include an “enjoyment” construct. other models have evolved from this earlier model and have incorporated other factors in explaining adoption intention. other exogenous factors that were added to the tam model to explain technology adoption include consumer traits (e.g., demographic: gender, age, education, etc.; and personality characteristics: expertise, self-efficacy, etc.), situational factors (e.g., geographical distance, lack of mobility, etc.), product characteristics, previous experience, and trust in the new technology (dabholkar and bagozzi 2002, o’cass and fenech 2002, venkatesh et al. 2003, monsuwe et al. 2004, venkatesh and bala 2008). with respect to social media, previous studies also have used the tam model in examining characteristics of social media users (hsu and lin 2008, hossain and de silva 2009, steyn et al. 2010, casalo et al. 2010). this study extends the tam model by looking at social media adoption by wood products consumers and considering it to be as an adoption of “new technology”, which can be influenced by a number of factors. factors identified in the tam model and variations of the tam model were examined to build a more comprehensive model that explains the social media adoption behavior of wood products consumers. “adoption” of social media refers to usage of any social media tool (e.g., facebook, twitter, youtube, blogs, forums, daily deals, etc.) to gather any information about wood products consumers have purchased in the last 5 years. it also is important to point out that this study focuses on wood products consumers’ social media adoption when they purchase 54 bioproducts business 4(5) 2019 selected for them to answer (these are methodologically correct questions, never affirmation questions) and upon completion, participants are matched with a survey they are likely to be able to take, using a further element of randomization” (ssi 2018). panel-based online survey research has grown rapidly in the past decade and has been used in many fields (e.g., market research, social research, psychological research, medical research, etc.) to collect survey data (callegaro et al. 2014). it also has been employed in a number of studies related to forest products marketing. for example, aguilar and cai (2010) and cai and aguilar (2014) have used ssi data to look at the effects of environmental labeling consumer preferences for wood products and perception of consumers about corporate social responsibility in the wood products industry. ssi administered the survey questionnaire for west virginia university to a random sample drawn from its online panel of the u.s. population 18 years and older. drawing from the studies of aguilar and cai (2010) and cai and aguilar (2014), 1,000 observations were targeted for this study. in addition, this sample was targeted to achieve a 3% sampling error at 95% confidence level. ssi continued to collect responses until the targeted number of responses were met. information collected from the survey included the types of wood products purchased in the last 5 years, social media use in general, social media use related to wood products purchasing decisions, and demographic characteristics. 3.2 empirical model following the tam model and its modifications, an empirical model was developed to examine factors affecting social media adoption among wood products consumers. it is hypothesized that adoption of social media among wood products consumers is influenced by perceived usefulness, perception of ease of use, product characteristics, consumer traits, and situational factors. the empirical model is therefore expressed as: for the independent variables, perceived usefulness (use) was represented by a variable that measures consumers’ perception about the usefulness of using social media to acquire information on products/services and getting information about deals/promotions. it is hypothesized that if wood products consumers find social media useful in their wood products purchasing process, they will be more likely to adopt social media. previous studies have shown that perceived usefulness is a significant determinant of the adoption of new technology (davis 1989, davis et al., ,1992, venkatesh and davis 1996, wang et al. 2003, green and pearson 2011, sago 2013). perceived ease of use is also a significant determinant of technology adoption (davis 1989, agarwal and prasad 1999, venkatesh and morris 2000, wang et al. 2003). individuals are more likely to use a new technology if it is easy to use (jayasingh and eze 2010, green and pearson 2011). time spent on social media sites was used as a variable to represent perceived ease of use (ease). time spent on social media was used as a measure of ease of use based on the findings of cha (2010) and peslak et al. (2012) regarding the positive association of perceived ease of use and amount of time spent on social networking sites. that is, if people think social media is easy to use or they find it easy to use, then they spend more time on it. in addition, according to parra-lopez et al. (2011), the experience acquired from using and trying can reduce the perception of risks, thus favoring future use, because accumulated experience leads to a more extensive knowledge base and more solid technological abilities. in this process, the tools become simpler to use and thus favor the “perception of ease of use” (torkzadeh and lee 2003). therefore, it is hypothesized that the more time wood products consumers spend on social media, the more likely they will use this platform in their wood products purchasing process. variables representing product type included three categories, defined as follows: product1 – the consumer purchased consumer products only (e.g., furniture, flooring, cabinets, novelties); product2 – the consumer purchased industrial products for diy only (e.g., lumber, pallets, panel type products); or both – the consumer purchased consumer products and diy-only industrial products. the baseline category (i.e., both) was dropped from the model to avoid perfect collinearity. thus, the estimated coefficients of the two variables left in the model were interpreted relative to the baseline category. in the context of online shopping, monsuwe et al. (2004) social_med = β0 + β1use + β2ease + β3product1 + β4product2 + β5male + β6age + β7educ + β8income + β9race + β10community + β11mass + ε (1) where βi are the model coefficients and ε is the error term. the dependent variable (social_med) is measured as “1” if the consumer used social media to gather information about wood products and as “0” if not. gazal et al. — factors affecting social media adoption among wood products consumers in the united states 55 mentioned that a consumer’s decision to shop online is influenced by the type of product under consideration, as there are certain products that are more suitable for online shopping. similarly, it is hypothesized that the type of wood products being considered for purchase will influence the decision of wood products consumers to adopt social media. among consumer traits, demographic variables such as gender (male), age (age), income (income), education (educ), and race (race) were included in the empirical model. studies have shown that the adoption of new media technologies is associated with gender, age, income, and education (burke 2002, porter and donthu 2006, zhang et al. 2009, carey and elton 2010, chen 2010). with regards to age, younger and middle-aged groups are more likely to adopt new technology. this is also true regarding social media adoption (gerlich et al. 2012). based on the findings from other studies, it also is hypothesized that younger wood products consumers are more likely to adopt social media. similarly, those with higher incomes and higher education are more likely to use social media when they purchase wood products. studies have shown that those with higher incomes adopt technology sooner and those with more education adopt technology more readily (madden and savage 2000, burke 2002, leung 2001, lin 2004, peter et al. 2006, cha 2010). with regards to gender, the evidence is mixed (carey and elton 2010). earlier studies have shown that males are more likely to adopt a new technology than are females (larose and atkin 1988, jeffres and atkin 1996, laukkanen and pasanen 2008). more recent studies are now showing that women are more likely to use new media technology like social media (leung 2001, burke 2002, sohn and lee 2007). with regards to race, studies have shown that communities of color are more active on social media than are whites (lopez at al. 2013, smith 2014). it also hypothesized that whites are less likely to adopt social media than other races when it comes to purchasing wood products. monsuwe et al. (2004) suggested that situational factors have to be taken into account to fully understand consumers’ motivation to engage in online shopping, such as mobility, geography, attractiveness of alternatives, etc. similarly, the adoption of social media can, therefore, be affected by these factors. two situational factors were included in the model: consumer’s community type (community), or rural versus urban residents, and time spent on mass media (mass). with regards to community type, research shows that urban residents are more likely to use social media than are rural residents (pew research center 2018a). this study also hypothesized that urban wood products consumers are more likely to adopt social media than are suburban or rural consumers. time spent using mass media (tv, radio, magazine) can be used as a proxy for “attractiveness of alternatives”. mass media are viewed as alternatives to social media as sources of product information (mangold and faulds 2009, libai et al. 2010, bruhn et al. 2012). it is hypothesized that consumers who spend more time using mass media are less likely to use social media. descriptions of the independent variables are shown in table 1. 3.3 analysis binary logistic regression was used to estimate the model parameters because of the binary nature of the dependent variable. logistic regression is based on the cumulative logistic probability function and estimates the probability of a certain action, given a set of categorical characteristics (pindyck and rubinfield 1981): where pi is the probability that a consumer adopts social media, βi the model coefficients, and xi the independent variables. limdep (version 8.0) software was used to estimate the model parameters. summary statistics were also calculated for the variables included in the model and other variables collected from the survey. 4 results and discussion 4.1 survey results a total of 1,082 responses were collected from the survey. however, 154 respondents did not purchase any wood products in the last 5 years, resulting in a total of 928 usable responses. some advantages of probabilitybased internet panel data, such as we used in this study, are that it is cost-effective and able to access large and diverse samples quickly (hays et al. 2015); however, there are issues with regards to how the sample selected is representative of the population and nonresponse bias (couper 2000). to address the issue of nonresponse bias, we followed the approach used by cai and aguilar (2014). the responses of those who completed/finished the survey questionnaires and those who did not complete the �� � ��� � 1� ��� � � 1 1 + 𝑒𝑒��������� (2) 56 bioproducts business 4(5) 2019 survey questionnaires were compared in terms of their responses to the question of whether they used social media in their purchasing decisions related to wood products. the result of the kolmogorov-smirnov test (k-s test) indicates that the samples came from the same distribution (k-s statistic = 0.71). thus, the responses of those who completed the survey questionnaires are judged to be not statistically different from those that did not complete the survey questionnaires regarding social media use in wood products purchasing decisions. to address whether our sample is representative of the u.s. population, we compared the socio-demographic characteristic of our sample to us census data. cai and aguilar (2014) used the same approach, since the response rate could not be calculated, given the nature of the online panel data used. in most cases, our sample is comparable to the us census data. for example, a little over 50% of our sample was female (50.32%), which is also the case with the us census data, where 50.80% of the us population is female (us census table 1. description of the variables used in the empirical model that examines the factors affecting social media adoption among wood products consumers in the u.s. variables definition citations/references perceived usefulness use consumers’ perception about usefulness of social media in acquiring information about products/services in obtaining deals/promotions; 1 = yes and 0 = no davis 1989, davis et al.1992, venkatesh and davis 1996, wang et al. 2003, green and pearson 2011, sago 2013 ease of use ease time spent on social media sites per week; 0 = 0 hour, 1 = 1-3 hours, 2 = 4-6 hours, 3 = 7-9 hours, and 4 = 10 hours or more torlzadeh and lee 2003, cha 2010, jayasingh and eze 2010, green and pearson 2011, peslak et al. 2012, parra-lopez et al. 2011 product types product1 purchased consumer products (furniture, flooring, cabinets and novelties) only in the last 5 years; 1 = yes and 0 = if otherwise monsuwe et al. 2004 product2 purchased industrial products for diy only (lumber-type products such as boards, parallel laminated veneer; and pallets, panel-type products like plywood, particleboard, and oriented strand board) in the last 5 years; 1 = yes and 0 = if otherwise demographics male 1 = male and 0 = female larose and atkin 1988, jeffres and atkin 1996, maden and savage 2000, leung 2001, burke 2002, lin 2004, peter et al. 2006, porter and donthu 2006, sohn and lee 2007, laukkanen and pasanen 2008, zhang et al. 2009, carey and elton 2010, cha 2010, chen 2010, gerlich et al. 2012, lopez et al. 2013, smith 2014 age consumer age; 1 = 18-29 years, 2 = 30-49 years, 3 = 50-64 years and 4 = 65 years and over educ highest educational attainment; 1 = high school or less, 2 = some college or associates degree, and 3 = college graduate or more income annual household income in u.s. dollars u($); 0 = less than $30,000 and 1 = $30,000 and more race 1 = caucasian and 0 = other (hispanic, black or african american, native american/american indian, asian/pacific islander, other race) situational factors community community type; 1 = urban and 0 = other mangold and faulds 2009, libai et al. 2010, bruhn et al. 2012, goss 2016, pew research center 2017, pew research center 2018amass hours spent on mass media per week; 0 = 0 hours, 1 = 1-3 hours, 2 = 4-6 hours, 3 = 7-9 hours and 4 = 10 hours or more gazal et al. — factors affecting social media adoption among wood products consumers in the united states 57 bureau 2016). with respect to annual household income, 57.65% of our sample reported income over $50,000, which is almost identical to the us census data of 57%. with respect to race, our sample is also comparable to that of the us census data —73.80% of our sample was white compared to 76.90% for the us census data. our sample is slightly more educated than the census data. about 80.39% of our sample reported having some college degree or higher, while the us census bureau (2016) reported about 60.25% of the us population having the same educational attainment. this may suggest that our sample would be more likely to use the internet and social media. 4.2 social media use among wood products consumers a little over half (54%) of the u.s. wood products consumers surveyed indicated using social media to gather information about wood products. this is relatively lower, compared to the u.s. average of overall social media users, which is at 69% (pew research center 2018a). since consumers are starting to use social media to gather information about wood products, this lower usage indicates that social media can become an important marketing platform for wood products companies to reach their consumer base. a study by gazal et al. (2016) indicates that about 58% of wood products companies in the u.s. have used some form of social media, which is comparable to the consumer side found in this study. in terms of types of social media, facebook, youtube, and twitter were listed as the top three social media sites/types used by the respondents, averaging 85%, 63% and 42%, respectively. however, the top three social media sites utilized by wood products companies were facebook, linkedin, and twitter (gazal et al. 2016, montague et al. 2016). although facebook and twitter are popular among both wood products producers and consumers, this study shows that there is an opportunity for wood products marketers to expand their marketing efforts through youtube. more wood products consumers (63%) rely on youtube than linkedin (26%) to gather information about wood products, and currently, youtube is underutilized by producers as a marketing tool. in fact, in addition to facebook, youtube now dominates the social media landscape among american users (pew research center 2018b). 4.3 factors affecting social media adoption the results of the logistic regression model (table 2) indicate that a number of factors affect the decision of wood products consumers to use social media when they gather information about wood products. specifically, the intention of wood products consumers to use social table 2. results of the empirical model that examines the factors affecting social adoption among wood products consumers in the u.s. variablea parameter estimate (se) p value marginal effects means (sd) constant -0.530 (0.398) 0.182 use 1.912 (0.168) <0.001 0.222 0.502 (0.500) ease 0.323 (0.073) <0.001 0.056 2.201 (1.249) product1 -1.247 (0.239) <0.001 -0.230 0.142 (0.349) product2 -2.700 (0.561) <0.001 -0.439 0.060 (0.236) male 0.800 (0.170) <0.001 0.140 0.497 (0.500) age -0.466 (0.095) <0.001 -0.080 2.231 (0.956) educ 0.113 (0.113) 0.314 0.020 2.263 (0.766) income 0.355 (0.207) 0.086 0.062 0.786 (0.410) race -0.060 (0.191) 0.754 -0.010 0.738 (0.440) community 0.344 (0.176) 0.050 0.060 0.356 (0.479) mass -0.063 (0.069) 0.355 -0.011 2.773 (1.290) likelihood ratio = -432.373 chi-square value = 294.923 p value = 0.000 total number of observations = 890 a see table 1 for variable definitions. 58 bioproducts business 4(5) 2019 media is driven by their perceptions regarding ease of use and usefulness, as well as by other exogenous factors. wood products consumers’ adoption of social media is strongly influenced by their perceptions about the usefulness and ease of use of social media tools. in terms of usefulness, the results indicate that consumers who think social media can be used to acquire information on products/services, as well as deals/promotions, are more likely to use the platform when shopping for wood products. this means that they may find social media to be a useful medium to gather information about wood products, thereby improving their shopping experience. usefulness refers to the individual’s perception that using a technology will improve or enhance performance (davis 1989). for the variable representing ease of use, wood products consumers who spend more time on social media sites per week are more likely to use social media to gather information about wood products. according to davis (1989), ease of use is the perception of the individual that using the technology will be free of effort. in the context of this study, the more time consumers spend on social media the more familiar they become with how it works, thereby making it easier for them to use this platform when shopping for wood products. repeated use of a technology leads to an increasing knowledge base regarding how the technology works, thereby making its application simple (parra-lopez et al. 2011). usefulness and ease of use are generally known to be positively related to technology adoption, and the same is true for social media use among wood products consumers. the product 1 and product 2 were found to significantly affect the decision to use social media. specifically, consumers who purchased consumer products only are 23% less likely to use social media than are those who purchased both consumer and industrial products, and those who purchased industrial/diy products only are 44% less likely to use social media than are those who purchased both consumer and industrial products in the last 5 years. since certain products are more suitable for online shopping (monsuwe et al. 2004), it follows this is also true when consumers use social media for information gathering as part of on-line shopping. the results of this study indicate that consumers who purchased both consumer and industrial wood products for diy use social media when they gather information about these products. consumers use social media when they have a variety of products to purchase because it makes for more efficient shopping. social media typically can provide product information without necessitating that consumers physically go to stores, and therefore can significantly help consumers in their purchasing process. in fact, almost everyone (99%) who used social media agreed that social media had helped them in all aspects of their purchasing process (i.e., preliminary search, comparing products, finding discounts and promotions, and speeding up the buying process). among wood products companies, the focus of social media marketing was only on consumer products (gazal et al. 2016). this study indicates that wood products marketers may benefit from expanding their use of social media marketing to include industrial products for diy use (e.g., lumber, pallets, panels, etc.). among the demographic variables, gender, age, and income were found to be significant predictors of social media adoption. the results showed that younger consumers were more likely to adopt social media. for example, as age increased, the probability of using social media decreased by 8%. age is considered to be one of the most significant demographic factors affecting technology adoption (fang et al. 2011). this finding is consistent with other studies regarding the negative relationship between age and technology adoption in general (wood 2002, rogers et al. 2017), as well as age and social media adoption (cha 2010, lin et al. 2011, gerlich et al. 2012, jashari and rrustemi 2017). most of the social media users in the u.s. belong to the younger age group (pew research center 2018a). younger generations are usually more technologically savvy, so it is expected that they are more likely inclined to use social media when they research a product. in addition, older consumers may perceive the benefits of using a new technology (e.g., internet or social media) to be less than the cost of investing in the skill to do it (ratchford et al. 2001). while majority of the social media users in the u.s. are female (pew research center 2018a), the results of this study showed that males were 14% more likely to use social media to gather information about wood products, compared to females. as mentioned earlier, the effect of gender on technology adoption is mixed. however, according to burke (2002), men usually express greater interest in using various types of technology when shopping, compared to women, who usually prefer catalog shopping. men are usually known to adopt new technology earlier (jeffres and atkins 1996) but women usually catch on (cha 2010). while there are gazal et al. — factors affecting social media adoption among wood products consumers in the united states 59 more women now who use social media, this study shows that males are still more inclined to use social media when shopping for wood products, suggesting that the use of social media among wood products consumers is still in its early stages. in terms of income, the results of this study were consistent with other studies that show a positive relationship between income and social media adoption (e.g., maden and savage 2000, burke 2002, leung 2001, lin 2004, peter et al. 2006, cha 2010). specifically, those with an annual household income of $30,000 or more are 6.2% more likely to use social media than those with less than $30,000 annual household income. in fact, the majority of the social media users in the u.s. belong to the higher income category (pew research center 2018a). this is because those who have higher incomes are more likely to have multiple devices that enable them to easily go online (anderson 2017) and therefore can access services such as social media. while education and race were not significant in our model, these two demographic categories had the expected signs, as other studies have shown. education had a positive sign, which means that consumers with higher education are more likely to use social media (burke 2002, lin 2004, peter et al. 2006, cha 2010, gerlich 2012). race had a negative sign, which means that whites are less likely to use social media than those who belong to other races. other studies have shown that those who belong to communities of color are more likely to use social media than are whites (lopez 2013, smith 2014). with respect to the situational factors examined in the model, community type was found to be significant in consumers’ decision to use social media. consumers who live in urban areas were 6% more likely to use social media when shopping for wood products than were those who live in suburban or rural areas. social media is also more common among urban users in the u.s. than in the suburban or rural areas (pew research center 2018a, goss 2016). one reason for this is that consumers who live in urban areas usually have better internet access and are therefore more able to access social media tools. while rural america has made large gains in adopting digital technology in recent years, this group still lags behind urban users when it comes to using digital technology like broadband, smartphones, and other devices (pew research center 2017). the variable representing “attractiveness of alternatives” or in this case the time spent per week using mass media (tv, radio, magazines, newspapers, etc.) was not significant, but had the expected sign, which is negative. that is, wood products consumers who spent more time using these different media were less likely to use social media when gathering information about wood products. 5 summary and conclusions the interaction of consumers and marketers through social media is growing in importance with the rapid increase in social media use and its popularity. around seven of ten americans use some form of social media (pew research center 2018a). as social media use continues to grow, more consumers will rely on these tools when making purchases. this provides retailers an opportunity to expand their marketing campaigns to a wider range of consumers. wood products companies have always been slow to adopt new technology, but a recent study by gazal et al. (2016) shows that social media use has grown significantly since montague’s initial study in 2011. on the consumer side, no known prior study has looked at social media adoption among wood products consumers. wood products companies and marketers should benefit by focusing on how wood products consumers use social media when making wood products purchasing decisions. such information is important in assessing the features of their social media marketing efforts that will help attract consumers to their products. it is important for companies to know whether consumers are technology ready (e.g., if they use social media or are not familiar with it) in order to create a successful marketing campaign through social media (paquette 2013). understanding technological readiness can determine if marketing via social media would be a good fit for the company’s target market. the goal of this study is to look at social media adoption among wood products consumers by examining factors that affect the adoption of social media among wood products consumers. with consumers now increasingly creating content about brands (e.g., product reliability ratings, on-line product reviews), information previously under the sole control of companies (heinonen 2011), it becomes even more important that marketing departments are tuned into consumer motives and perceptions. this study shows that the majority (88%) of wood products consumers have used some form of social media, and about 54% have used the platform to gather information about wood products. thus, this indicates that most wood products consumers are technology 60 bioproducts business 4(5) 2019 ready, in terms of social media. this, therefore, offers an opportunity for wood products companies to focus on social media marketing in addition to their traditional marketing practices. the study also shows that social media adoption is influenced by the perceived usefulness and the ease of use of social media, product characteristics, demographic characteristics (e.g., gender, age), and situational factors (e.g., community type, attractiveness of alternatives). understanding these factors is important in order to target what consumers need. for example, this study shows that the ease of use and perceived usefulness are strong predictors of social media adoption. thus, wood products companies should benefit from designing their social media sites so that they are easy to use and can provide useful information about their products (e.g., pictures, visual displays of products, videos). this study shows that the visual element of products/ads was the number one attribute that attracted consumers who were using social media. with regards to product types, manufacturers of the most commonly purchased consumer and industrial wood products can benefit from social media marketing, since consumers tend to use social media when gathering information about these products. other external factors for wood products marketing teams to be aware of when they design their social media campaigns include customer demographics and situational factors. for example, the study shows that younger consumers, male consumers, higher earners, and those who live in urban areas are more likely to rely on social media. by having these consumer groups in mind, a more targeted social media campaign can be developed. since most wood products consumers rely on social media to gather information about wood products, companies selling wood products may strive to become active participants in social media in order to remain competitive in the digital marketplace. 6 references abubakar, m.k., patricia, m.n., samuel, o.o., & totolo, a. 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industry is facing increasing challenges from global competition, and automation of manufacturing can greatly help companies in the industry to handle such challenges. investments in automation of manufacturing are more likely to succeed if they are the expression of informed and systematic decisions. this paper aims to increase the knowledge on the process leading to investment decisions on automation of manufacturing in the wood products industry, as well as on the aspects considered in such processes. a real-time case study was conducted at a large swedish wood manufacturing company to gain in-depth understanding of decisions related to automation investments. the findings demonstrate that mainly representatives from manufacturing and marketing functions were involved throughout the investment project's length. this could be a contributing factor to the narrow view on automation of manufacturing when decisions are made, where focus is placed on financial and technological aspects. the findings further show a limited knowledge regarding automation of manufacturing, which resulted in a tendency to heavily rely on the technical supplier’s recommendations. this paper identifies the weak points related to decisions on automation of manufacturing in the wood products industry and provides insights on how to support the decision process. keywords: development projects, manufacturing technology, decision-making, wood products industry, empirical research investment decisions on automation of manufacturing in the wood products industry: a case study 1 department of industrial product development, production and design, school of engineering, jönköping university, jönköping, sweden 2 economics, jönköping international business school, jönköping university, jönköping, sweden 3 global industrial development, scania cv ab, södertälje, sweden and department of engineering science, university west, trollhättan, sweden * corresponding author. email: roaa.salim@ju.se acknowledgement: this work is funded by the knowledge foundation and is part of the industrial research school prowood – a joint initiative between jönköping university, linnaeus university, and several research institutes and companies operating within the swedish wood industry. roaa salim 1*, agostino manduchi 2, anders johansson 3 bioproducts business 5(1), 2020, pp. 1–12. issn 2378-1394 https://doi.org/10.22382/bpb-2020-001 1. introduction companies are investing in automation to enhance manufacturing performance in terms of cost, quality and delivery, in an effort to stay competitive in the global market (machuca et al. 2011). automation is a wide term that covers the use of several technologies in different areas supporting manufacturing system, such as computer-aided manufacturing (cam), robotics, flexible manufacturing systems (fms), and computerized numerical control machines (cnc). automation is also connected to the initiative “industry 4.0”, which supports cost effective, agile and competitive manufacturing through digital technologies, such as the internet of things, cloud computing, simulations, and big data (gilchrist 2016). hence, automation of manufacturing can enable companies to make more efficient use of both cognitive and physical human labor (groover 2007, sheridan 2002). while investment in automation allows some manufacturing companies to realize substantial benefits, other companies have not been as successful, indicating that these investments remain a promising but potentially risky venture (almannai et al. 2008). studies show that investments in automation of manufacturing are more prone to succeed if they are the expression of informed and systematic decisions anchored in manufacturing strategy (ortega et al. 2012, machuca et al. 2011). the initiatives that aim to use automation to simply reduce 2 bioproducts business 5(1) 2020 manufacturing costs rarely achieve the expected outcome (winroth et al. 2007). by contrast, sinclair and cohen (1992) find a positive correlation between the adoption of incremental manufacturing innovations and performance among manufacturers in the wood building-products industry. in comparison with the incremental innovations, radical innovations such as automation thus appear to represent a more serious challenge for firms in the industry. decisions on automation of manufacturing in investment projects are mainly based on financial measures, such as net present value (npv), return on investment (roi), and return on assets (roa) (farooq & o'brien 2009). important aspects related to a company’s broad strategy can therefore be disregarded (machua et al. 2011, jiménez et al. 2011). a well-structured decision process requires the decision-maker (henceforth “dm”) to systematically consider the aspects of the project that have a strategic relevance, namely the aspects related to the company’s broad goals and plan of action. the dm should thus evaluate the consequences of the project for the whole organization and guarantee the availability of the resources necessary for an in-depth analysis of the project (cohen and graham 2001). studies that document and analyze actual investment projects and identify gaps between the projects’ outcomes and the stakeholders’ prior expectations and goals can play a critical role in the design of better decision schemes. in this paper, we explore investment decisions on manufacturing automation in the wood products industry, defined as the industry that refines wood as it passes through sawmills and transforms it into products such as furniture, joinery, and home-building materials (sandberg et al. 2014). automation plays an important role in connection with the competitiveness of the european industry. in 2015, the european wood products industry was estimated to include more than 290,000 companies and 1 million employees, with an annual turnover of 129 billion euros (cei-bois 2018). yet, wood products manufacturers are facing several challenges due to increased global competition, resulting both from the use of alternative materials and from the growing market shares of manufacturers located in low-wage economies (nra sweden 2012). productivity improvements aimed at preserving the economic viability of the industry are regarded as a high priority by the companies operating in the industry (sandberg et al. 2014). automation of manufacturing is generally emphasized as a key step in the pursuit of such improvements (nra sweden 2012, nord & widmark 2010). the aim of the paper is to increase the knowledge on the process leading to investment decisions on automation of manufacturing in the wood products industry, as well as on the aspects considered in such a process. the comparison between our findings and the theoretical literature allows us to identify opportunities to improve the decision process, which can be exploited by the firms operating in the industry. 2. literature review 2.1 the industry context wood products manufacturing work is characterized by manual tasks consisting of repetitive motions and heavy lifting in an environment with noise and dust. some operators are also exposed to chemicals, for example, due to the handling of glue and paint (michael & wiedenbeck 2004). the tough work conditions could be improved to some extent through an increased level of automation in manufacturing. in comparison to other industries, such as the metal industry, the wood products industry has lower levels of automation. according to karltun (2007), a reason for this is the heterogeneous character of the raw material used in the industry. there are several aspects regarding the raw material that can affect the manufacturing process, such as the origin and type of tree, the biological effects of wood (knots and other natural defects), and the moisture content (eliasson 2014). sorting and grading processes are relatively difficult to automate, since automation would entail tight acceptance tolerances and could therefore increase the rejection rate for raw materials, resulting in higher manufacturing costs. additionally, the cutting forces and processing speed of automation technologies are significantly lower in the wood products industry than in the metal industry due to the nature of the raw materials used (eliasson 2014, karltun 2007). another factor that challenges the implementation of automation in the wood products industry is its culture. the wood products industry is generally viewed as a traditional industry with a culture closely linked to a negative attitude toward automation and an unwillingness to change, which contribute to hindering the implementation of automation in manufacturing (makkonen 2018). salim et al. — investment decisions on automation of manufacturing in the wood products industry: a case study 3 moreover, automation of manufacturing in the wood products industry is also hampered by the rapid turnover and low education level of the labor force, which often lacks valuable certificates and operation licenses (karltun 2007, sowlati & vahid 2006). training and education are therefore emphasized as essential to support the implementation of new automation technologies (wiedenbeck & parsons 2010, pirraglia et al. 2009). however, competence development should not be limited to the shop floor level. grace et al. (2018) point out that skilled labor is considered as vital in the wood products industry; however, business management skill is often overlooked, although it has a vital role in company success. 2.2 decision theory investment decisions generally require the dm to collect and process several types of information (russo et al. 2002). using the information gathered to make decisions entails a significant challenge and a substantial investment of resources. if the ranking of the alternative options available differs across the possible scenarios, finalizing the decision may require the decision maker to assess the relative likelihood of the different possible scenarios. tools such as decision trees and influence diagrams can help the dm in this process (french et al. 2009). the ranking of the alternatives may also change, depending on the criterion used to evaluate them. in cases of this type, the dm must focus on his or her own preferences and aspirations and identify the criteria to which priority should be given. similarly, different stakeholders may have different preferences relative to the alternative options available, due either to different perceptions of the problem or to a misalignment of the respective interests. a cornerstone result on collective decisions is that no single rule can always lead to a decision satisfying some basic “desiderata” for a reasonable decision, taking into account the will of multiple parties (arrow 1963, arrow 1951). even in cases in which a consensus can in principle be reached, aggregating the stakeholders’ preferences may be a difficult task. tools such as the analytic hierarchy process (brunelli 2015), based on pairwise comparisons focused on specific aspects of the alternative options considered, can be used to facilitate preference aggregation. several models have been developed to provide analytically useful accounts of the decision processes followed by firms. these models can be classified into different categories, based on multiple criteria; classifications based on a given criterion may also be more or less refined. a first classification distinguishes between descriptive and normative models, respectively understood as models whose goal is to summarize and express the existing decision processes, for analytical purposes, and models that provide guidelines on how decisions should be made (badiru 2014, lehto et al. 2012, french et al. 2009, davis et al. 2005). some authors also consider a prescriptive approach to decision theory, whose goal is to develop models based on normative theories without losing sight of the prevalence of ill-defined problems and of the actual cognitive characteristics of dms (davis et al. 2005). a related distinction is that between rational, behavioral and naturalistic decision models (lehto et al. 2012). traditionally, normative decision models consider highly stylized representations of the dm and the decision problem, in which sharp conclusions with immediate normative implications can be drawn (gilboa 2010). by contrast, behavioral and natural decision models attempt to take into systematic account the cognitive limitations of human dms (gigerenzer et al. 1999, tversky & kahneman 1974, simon 1955). gigerenzer et al. (1999, p. vii) highlight the empirical relevance of fast and frugal heuristics, namely “inference mechanisms that can be simple and smart”. examples of heuristics are “educated guesses, rules of thumb, trial and error, and stereotyping and profiling” (hamilton 2016, p. 18). a few especially common heuristics are reported in table 1, based on tversky and kahneman (1974). inaccurate extensions of heuristics from settings in which they were developed and tested to new settings can lead to systematic biases, which may in turn cause systematic errors (gigerenzer et al. 1999, nisbett & ross 1980, tversky & kahneman 1974), both in the case of single individuals and in the case of committees and organizations (garicano & posner 2005, surowiecki 2004). analyses carried out by teams may be subject to “herding” or “groupthink,” whereby the reliability and/or the precision of pieces of information available to single team members are under appreciated, and valuable information is therefore lost (banerjee 1992, welch 1992). our main reference model in this paper is the integrative model of (human) decision making (henceforth “imdm” – (lehto et al. 2012), which builds on welford’s model of information processing (welford 1976) and provides a systematic illustration of the different steps of the decision process. this model, illustrated in figure 1, views the identification of the general features of 4 bioproducts business 5(1) 2020 figure 1. a diagrammatic representation of the integrative model of decision making. source: lehto et al. 2012. table 1. some commonly observed heuristics. name description example adjustment and anchoring conjectures on the unknown value of a variable – not necessarily numerical are formulated by adjusting values obtained from cues or prior experience. guesses about the value of a variable made by experimental subjects can reflect in a systematic way the different, random cues to which the subjects are exposed. availability the probability of an event in a specific, familiar type of situation is extended to situations that the dm regards as “similar”. occurrences of heart attacks among acquaintances may be used to assess the risk of a heart attack faced by a person in a given demographic group. representativeness the probability of some event is assessed by referring to some broader category or stereotype, of which the situation faced is viewed as an example. a person’s character and interests may be used as the basis for inferences about his/her occupation, based on stereotypes. salim et al. — investment decisions on automation of manufacturing in the wood products industry: a case study 5 the investment decision, from the point of view of the subjects involved, the time available to make it, and the perception and the relevance of the risks involved, as the first step of the process. the different aspects of the decision are then screened; if any areas of uncertainty and potential clashes between different priorities are identified, the dm can collect further information and/ or resort to procedures that may allow him or her to reconcile the views held by different subjects. if necessary, the process can be repeated, possibly taking into account the results of a first implementation of the outcome of the decision. the broad and comprehensive nature of the imdm facilitates the identification of the weak points of the decision process followed by the case company. we then refer to more specific and focused models—such as the models of heuristics in decision-making (gigerenzer et al. 1999, tversky and kahneman 1974) and the models on the choice between in-house and outsourced activities (besanko et al. 2015, williamson 1985)—for an in-depth discussion, aiming to provide operational recommendations. 3. research methods 3.1 case selection and description to examine investment decisions on automation of manufacturing in the wood products industry, an investment project was selected and analyzed. two selection criteria were applied: (1) the project must be related to automation investments that support the manufacturing system. (2) the project must be performed in the wood products industry. the selected investment project was conducted at a large swedish wood manufacturing company. the company manufactures primarily sawn timber, which is used in the construction industry. the selected investment project was part of a larger initiative that aimed to create a new business segment at the case company, expanding the company’s range of products. the new business segment would offer the construction industry products designed to add processing value to sawn timber. first, a certain product was chosen to be manufactured as the initial element of a product portfolio for the new business segment. to manufacture this product, the case company needed to invest in a manufacturing plant, including equipment. the initial project was later divided into two subprojects: plant 1 and plant 2. plant 1 was designed to serve as a pilot plant, providing deeper knowledge about both the raw material, finished product, and manufacturing process. afterwards, the project would continue with an investment in a full-scale manufacturing plant, plant 2. the research underlying this paper examined the subproject that dealt with plant 1, which was developed during the time period in which the study underlying this paper was conducted. the automation acquisition process for plant 1 was initiated in september 2017 and was completed in december 2018. 3.2 data collection the data presented in this paper was collected through a real-time case study. this type of study provides indepth information on the project examined and how it evolves over time (karlsson 2009). the data was collected between october 2017 and december 2018. participating in meetings concerned with the investment project served as the main tool for data collection. such meetings included a meeting with a technical supplier, as well as several project group and steering group meetings. the meetings ranged in duration from 1 to 3 hours. to collect data, notes were taken that included how decisions on automation of manufacturing were made, who made the decisions, and the aspects that were considered when these decisions were made. semi-structured interviews with open-ended questions were used as an additional tool to collect data. semi-structured interviews allow the investigations to be based on, but not limited to, predefined questions (yin 2014). this enables the flexibility to gain understanding on a complex topic such as decision-making. the interviews started with questions about the investment project’s purpose and the people involved in it. the interview continued with questions regarding decisions in the investment project. the interview was then narrowed down to questions related to automation decisions, with a focus on the challenges of such decisions, the aspects that influence them, and how they are supported. in total, 11 face-to-face interviews were conducted with a duration between 31 minutes and 68 minutes. the interviews were conducted with steering group and project group members. the same interview guide was used for all respondents. each interview was recorded and transcribed for analysis. the interviews brought forward the perception of the people involved in automation decisions in the investment project. further, the interviews helped to validate the data captured through participating in meetings related to the investment project. table 2 summarizes the type and 6 bioproducts business 5(1) 2020 number of meetings that were observed and their length, as well as the interview respondents that participated, the number of interviews conducted, and their length. in addition to the participation in meetings and conducting interviews, information was collected through project documentation to validate the data collected. the documents provided data regarding project descriptions and motivation, project group meeting protocols, project activity time plans, supplier quotations, and protocols from steering group meetings. the documents provided a basis for improving the understanding of the context of the investment project. taking part in email conversations related to the project was useful to get further insights into the phenomenon under study. the close collaboration between the investigator and case company made it possible to collect valuable data. to avoid bias that could arise in such situations, data was verified through several data collection tools. some participants in the study reviewed the findings to identify any possible errors and misunderstandings. moreover, the findings were reviewed by academic peers. 3.3 data analysis the data was analyzed following the three phases outlined by miles et al. (2014): (1) data reduction, (2) data display, and (3) conclusions drawing and verification. in the first phase, data reduction, the transcripts and notes from the interviews as well as the notes from the meetings and documents were reviewed. the data was then condensed to information related to automation decisions, with an emphasis on the process leading to investment decisions on automation and the aspects considered in this process. in the second phase, data display, the data was organized in a matrix, which made it easier to draw conclusions. the third phase was based on the patterns identified in the collected data, as well as relating the empirical findings to the literature. 4. findings and analysis 4.1 project organization the project organization involved a steering group and a project group. the steering group consisted of a project sponsor and representatives from the manufacturing and marketing functions at the case company. its role was to set the broad guidelines for the project and follow up on the project’s development. the steering group also had the power to modify its previous resolutions and to discontinue the project, had its potential revealed itself to be below expectations. the core project group consisted of a project manager, two marketing representatives, and a wood technology expert. the role of the project group was to analyze the alternative options considered, to report the results of the analysis to the steering group, and to finalize the project. the project group was responsible for the activities specifically related to automation, such as contacting the technical suppliers and recommending complete manufacturing technology solutions to the steering group. from the standpoint of the imdm, it thus appears that the decision was incorrectly framed, as the strategic relevance of automation was not taken into full consideration (lehto et al. 2012, russo et al. 2002). a small project organization can make it possible to use a flatter hierarchy and thereby enable fast communication and fast decision-making (hall 2008). however, the disadvantage is that some key competences might table 2. data collection. types of meetings number of meetings total length of meetings steering group meeting 9 20h 15 min project group meeting 5 12h technical supplier meeting 1 2h 30 min interview respondents number of interviews total length of interview steering group members 6 4h 48 min project manager 1 1h 06 min marketing and sales 2 2h 14 min purchasing 1 50 min production 1 55 min salim et al. — investment decisions on automation of manufacturing in the wood products industry: a case study 7 be missing. in this project, the manufacturing and marketing functions were involved for the entire length of the project. representatives from purchasing, human resources, and finance supported the project in later phases, when needed. cohen and graham (2001) suggest that the project team should include, for the entire length of the project, members from engineering and any functions directly connected with the design, use, and maintenance of the project outcome; marketing, technical support, quality assurance, and finance; and customer and other enduser groups. not including different perspectives limits the view on the aspects considered when investment decisions are being made, particularly in connection with the analysis of the decisions related to the company’s overall strategy. heterogeneous groups are also more likely to challenge conventional lines of thought and can limit the risk of information losses due to group-think (russo et al. 2002). 4.2 reliance on technical suppliers the dms within the company were only partly aware of the details and the complexities of the different alternatives available, especially in connection with the broader and more far-reaching aspects of automation. this situation appears to be partly driven by the wood product industry’s limited investment in the development of human and technological resources. the manager of the investment project contacted a small number of technical suppliers and asked each supplier to offer complete solutions and prices. the case company showed a tendency to rely on the technical suppliers. the limited involvement in the design of the manufacturing automation appears to reflect the traditional culture of the companies operating in the area, which is focused on the efficient manufacturing of relatively large batches, under routines that have been relatively stable over time. the full reliance on designs provided by the technical suppliers is at odds with the procedures typically used by companies whose core activity entails frequent innovative investments. such companies tend to be proactive and to directly engage in the analysis of the technical specifications to which the machinery and equipment should be built. the technical suppliers must then only make decisions related to relatively minor details and set the price. with a large number of technical suppliers potentially involved, competition on price can limit the cost of a solution of this type (besanko et al. 2015, williamson 1985). each one of these strategies presents its typical advantages and disadvantages. putting the technical suppliers effectively in charge of the design of the manufacturing would allow them to rely on standardized solutions and would therefore not require them to bear the costs associated with the development of substantially new designs. these costs would include the costs related to the certification of the manufacturing. the procedures for the certification of standardized solutions are in fact typically carried out by the technical suppliers, who can realize economies of scale. by contrast, customized solutions limit the extent to which scale economies are possible and may impose an additional administrative burden on the manufacturer, especially if different subsuppliers are in charge for different pieces of the automation technology (besanko et al. 2015, williamson 1985). the low cost of solutions based on the technical suppliers’ standard designs can however have a counterpart in the limited opportunities to adapt the solutions to the company’s specific needs. also, the solutions proposed by the technical suppliers may not allow the company to take advantage of specific opportunities faced. one of the project members did point out that a “copy-paste” solution would limit the company’s benefits from automation, as the technical suppliers would probably offer similar solutions to the company’s competitors. by contrast, asking the technical suppliers to offer customized solutions to a higher extent in order to increase competitive manufacturing advantages would require the company to invest human resources with the skills necessary to perform such tasks. a summary of the advantages of the latter type of procedures is provided in table 3; a related table, focused on the standard ̀ `make or buy’’ decision, can be found in besanko et al. (2015). the overall stance adopted by the company in connection with the design of the project and the interactions with the technical suppliers generally appears to be a further expression of the framing problem that we already pointed out in 4.1 above (lehto et al. 2012, russo et al. 2002). 4.3 project objectives and project format the preliminary objective of the investment project for plant 1 was to serve as a pilot, aimed to increase the knowledge regarding the raw material, finished product, and manufacturing process before the company continued with an investment in full-scale manufacturing (plant 2). this objective was set by the steering group before appointing the project manager and project 8 bioproducts business 5(1) 2020 group members. from the point of view of the imdm, the company was faced with a problem that we could label as one of conflicting objectives. one objective was the development of refined and fully suitable equipment and procedures, which could have benefitted from the experience gained from the pilot plant. the other objective was a short completion time for the project, which would have been shorter if the main project had been started immediately. with the benefit of hindsight, it is possible to say that the wrong decision was made regarding time. accelerating the development of the main project turned out to be so important that the company chose to proceed with it even before the pilot plant was fully developed and while its mechanics were being explored. the reason for rushing the process was that a competitor was starting up a manufacturing plant to produce the same product in sweden. thus, the case company was reactive rather than proactive in their decision-making. the choice of a pilot plant was motivated by the benefit that the company could have received in terms of the development of the skills of the labor force already in place. although this was a laudable intent, the outcome of the project raises the question of whether finding alternative ways to train and educate the employees or hiring new employees would have been a better solution. 4.4 aspects considered in automation decisions the discussions regarding automation were mainly carried out between the project manager, the wood technology expert, and the technical suppliers. these discussions involved the type of technological solutions needed, the number of operators required and, later, the compliance of the suppliers’ offers with swedish work environment regulations. another aspect that was taken into consideration was the manufacturing layout, which was predetermined. the steering group had decided that plant 1 would be located in an existing building, already owned by the case company, to reduce the costs of the project. moreover, the steering group had decided upon the capacity to be manufactured, which was an additional aspect that was considered. above that, the technical suppliers were offered information regarding the product specifications. further, the technical suppliers were informed that for plant 1, the level of automation was not expected to be high. the reason for this was to decrease the investment costs and increase operator knowledge about the process and product through learning by doing. the outcome of the discussion with the technical suppliers was reported to the steering group. however, the steering group trusted the project group regarding other aspects of automation and tended to focus on the financial aspects solely. another aspect that was considered by the project group was the number of sub-suppliers to work with. working with multiple technical suppliers was considered a challenge, since it could create problems regarding the compatibility of the equipment, as well as challenges with manufacturing certifications, which had to essentially be taken care of by the company. this would require the need for additional resources, time, and specific competences. by contrast, involving multiple technical suppliers could offer customization to a greater extent. table 4 provides a summary of the aspects influencing investment decisions on automation of manufacturing in the examined investment project. the node of the imdm-decision graph to which these problems can be linked is the one related to the comparison of alternatives (lehto et al. 2012). the findings demonstrate that the investment decisions on automation of manufacturing were mainly based on financial and technological aspects. automation decisions should not be based only on that, however, since such decitable 3. advantages and disadvantages of reliance on technical suppliers. advantages • economies of scale can make the solution proposed by specialized suppliers less expensive than in-house solutions. • market competition can force specialized suppliers to achieve higher levels of efficiency than those achievable with in-house production, and thereby enhance the cost advantage of outsourced solutions. these advantages may also involve the cost related to the certification of the equipment. disadvantages • general purpose-solutions can be ill-suited to the specific needs of a company and may thus not allow the company to take advantage of any specific opportunities faced. • sharing information may be leaked when an activity is performed by an independent market firm. • if drastically different solutions are available in the market, the seller of each solution can have an effective monopoly position in connection with the development and maintenance of the equipment. the supplier could exploit this position to renegotiate any previous contractual agreement, i.e., to "hold-up" the company. salim et al. — investment decisions on automation of manufacturing in the wood products industry: a case study 9 table 4. aspects influencing decisions on automation of manufacturing. • number of operators required • swedish work environment regulations • manufacturing layout • manufacturing capacity • product specifications • levels of automation • investment costs • previous experience and knowledge of the technical suppliers • time to delivery • number of sub-suppliers involved sions can influence several organisational decision areas in manufacturing (winroth et al. 2007). for instance, gouvea da costa and pinheiro de lima (2008) state that “the adoption of material requirements planning (mrp) affects the ‘production planning and control’, and equally demands specific abilities (human resources) and an organisational and management processes revision (organisation)”. thus, automation decisions can be linked to various decision areas in manufacturing. to utilize the competitive advantages of automation, these decision areas need to be considered and compatible (gouvea da costa & pinheiro de lima 2008). one type of benefits from automation that appears to have been neglected, also in connection with the use of the feedbacks from plant 1, is related to additional flexibility and the possibility to plan small batches. this would increase the opportunities for value creation through offering more customized products. customized wood products are a growing market segment, and the fraction of the producers who can offer products with a high degree of customization could be as small as 10%, according to the case company’s estimates. 5. recommendations the findings presented in this paper do suggest a number of priorities that companies in the wood products industry should consider when structuring their investment decisions. one major factor behind our findings is the critical importance of human resources for the companies in the wood products industry, with specific regard to their investment process and investment decisions. highly qualified human resources and appropriate hiring and training routines are generally necessary to enable the firms to provide adequate inputs to the suppliers of the designs and the technical equipment, and to assume a proactive role in the implementation of their strategic plans (hollenstein 2004). our findings are thus in line with those of stendahl and roos (2008), who show that product innovation and development activities of the firms in the wood industry are frequently hampered by inadequate staffing and by the low educational level of white-collar workers. our analysis can thus support their recommendation to promote increased educational levels, albeit our focus is on automation investments rather than product innovation and development. in the case at hand, greater in-house automation expertise could be helpful to deal with future investment in automation. lack of specialized competences is indeed a problem that has been recognized in previous studies on automation technologies, such as those presented by hameed et al. (2012) and hollenstein (2004). from a broader point of view, the availability of qualified personnel is a critical requirement for the adoption of automation technologies in many developed economies. europe is currently not at par with the u.s. and the more developed asian countries in this respect, on average (gruber 2017). the problems experienced by the wood products industry therefore appear to be an expression of a broader problem, whose solution requires specific educational policies. on a related note, companies should recognize that the strategic relevance of automation justifies a comprehensive approach to its implementation. an important element of this approach is a proactive stance in the design of the manufacturing automation, which takes into consideration the general benefits of the projects, as opposed to cost reductions and other benefits of a more immediate relevance. an example from our case company is given by the increased opportunities to produce small batches and to thereby gain access to a profitable market segment. one issue that companies would in any case be bound to face is the weight of the established routines and heuristics in their decisional processes. recognizing the presence and the relevance of such factors is however a necessary step to make in order to improve the structure of the processes. essentially, improvements can be implemented by broadening the range of competences 10 bioproducts business 5(1) 2020 of the members of the decision group and by creating opportunities for the members to identify critical assumptions—either explicit or hidden—and to question and challenge them (russo et al. 2002). a further point that deserves special attention is the large bargaining power that the suppliers who develop highly company-specific solutions, in strict cooperation with the company, could enjoy (williamson 1985). these problems could be mitigated by the size of the company and by the opportunities that the suppliers could face in connection with future projects, which could induce a reputational concern on the suppliers’ part. 6. conclusions the aim of this paper has been to gain knowledge on the process leading to investment decisions on automation of manufacturing in the wood products industry and the aspects considered in this process. an investment project related to automation of manufacturing was followed up closely at a large swedish wood manufacturing company. participation in project meetings and email conversations regarding the project, along with having access to project documents and conducting interviews with projectand steering-group members allowed us to gain in-depth knowledge on the topic of interest. the findings of this paper show that when the competence on automation of manufacturing in a company is limited, it results in uncertain preferences. the dms tend to heavily rely on the technical suppliers, rather than developing their internal competence portfolio. putting the technical suppliers effectively in charge leads to a limited involvement of the dms in developing specifications regarding automation, and a limited awareness of the opportunities offered by automation. the limited involvement in the development of the automation specifications and the narrow view on automation reduces the potential gain of business wide competitive advantages. the dms focus on the immediate cost reductions made possible by the automation investment, and not much attention is paid to other potential benefits. moreover, when companies put the technical suppliers effectively in charge, they are often offered standardized solutions, referred to as “copy-paste” solutions. these offers are generally also available to the competitors, and the competitive advantages of automation would therefore be relatively small. these findings are in line with the tendency of human dms—both individuals and teams—to follow established mental patterns and use familiar heuristics, even in cases in which their use is unwarranted and untested (gigerenzer et al. 1999, tversky & kahneman 1974). in particular, the emphasis on financial measures and the limited involvement in the design of the manufacturing automation appear to reflect the traditional culture of the companies operating in the area, focused on the efficient manufacturing of relatively large batches, under routines that have been relatively stable over time. 7. limitations and future research the study underlying this paper is based on a real-time case study, which was carried out to gain rich and indepth data on investment decisions on automation of manufacturing in the wood products industry. as for all case studies, further studies would be required to verify whether the patterns identified and the conclusions drawn can be regarded as typical for the wood products industry, as opposed to reflecting the specific features of the case studies and/or the authors’ biases. understanding investment decisions on automation 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at. 1976. skilled performance: perceptual and motor skills. scott & foresman, oxford, england. wiedenbeck, j, & parsons, j. 2010. digital technology use by companies in the furniture, cabinet, architectural millwork, and related industries. forest products journal 60(1), 78–85. williamson, oe. 1985. the economic institution of capitalism. the free press, new york. winroth, m, säfsten, k, & stahre, j. 2007. automation strategies: existing theories or ad hoc decisions? international journal of manufactruing technology and management 11(1), 98–114. yin, rk. 2014. case study research: design and methods. sage publications, london. abstract accepted paradigms concerning the built environment are shifting. sustainability practices now consider the potential impact on human health and well-being in addition to the resultant impact on the natural environment. this changing paradigm is reflected in new sustainable building certification and sustainability assessment tools. in light of these evolving priorities, wood has become an increasingly advantageous construction material. it presents more positive attributes in comparison to other construction materials, such as steel and concrete, including: renewability, a smaller carbon footprint, and human health benefits. within an increasingly health and environmentally-conscious field, wood is positioned to meet sustainability demands on multiple levels. because architects are one of the key decision-makers for building material selection, both their perceptions of the sustainability of wood products and their familiarity with sustainability certification and assessment tools were investigated, along with their knowledge of the relationship between the two. architects certified by the american institute of architects (aia) practicing on the united states west coast, a prominent market for the forest product industry and green building, were contacted to complete a questionnaire. the responding architects indicated that they hold an overall positive perception of the environmental and health impacts of using wood products in the built environment, with some concerns about the impacts building with wood can have on forests. it appears that the environmental and health impacts building materials have is important to the responding architects. however, these attributes are currently not as important when compared to aesthetics, codes, and cost in making material decisions for a building. keywords: architect perceptions, sustainability, wood construction industry perceptions of the environmental and health impacts of wood product use in buildings: a survey among architects on the united states west coast 1 masters student, department of wood science and engineering, college of forestry, oregon state university, 119 richardson hall, corvallis, or 97331 kendall.conroy@oregonstate.edu 2 assistant professor of wood design and architecture, department of wood science and engineering, college of forestry, oregon state university, 236 richardson hall, corvallis, or 97331 3 associate professor of forest products marketing, department of wood science and engineering, college of forestry, oregon state university, 118 richardson hall, corvallis, or 97331 chris.knowles@oregonstate.edu * corresponding author. email: mariapaola.riggio@oregonstate.edu acknowledgements: the authors thank noura alhariri for her help in the editorial process of this article, and ariel muldoon for her assistance in the statistical analysis of the data. kendall conroy1, mariapaola riggio2*, chris knowles3 bioproducts business 4(9), 2019, pp. 109–124. issn 2378-1394. https://doi.org/10.22382/bpb-2019-009 1. introduction our built enviroment plays a fundamental role in our societal goals for sustainable development. buildings— and the manner in which we design, construct, operate, and maintain them—can have a huge environmental impact. unfortunately, building construction and operation are currently the largest overall contributors of co2 emissions in the united states (usgbc 2010). as a result, the construction sector has a larger greenhouse gas reduction potential than other sectors (ürge-vorsatz et al. 2007). the sustainability of construction practices is also associated with material sourcing, renewability, and recyclability in the perspective of circular economy (korhonen et al. 2018).the language of sustainability within the built environment and its implications for designers and other architecture, engineering and construction (aec) stakeholders is evolving. we are experiencing a paradigm shift in how we conceptualize 110 bioproducts business 4(9) 2019 our built environment: sustainability is no longer only considered in terms of energy and resources, but now also includes human-centric factors driven by rapidly changing global conditions (brown et al. 2018). among these considerations is population growth; estimates suggest the world population will be at 9 billion people by the year 2050 (roberts 2011), with approximately 80% of the global population residing in urban areas (kellert 2004) and spending most of their time indoors (ott 1988). these projections reinforce the significance of how our built environment impacts human health. this is already recognized in current research (e.g., kellert 2004), and sustainable building certifications (e.g., living building challenge). beyond the various sustainability benefits of wood, such as renewability (forest products lab 2010), relatively low embodied energy (petersen & solberg 2002), lower carbon emissions (buchannan & levine 1999, gustavsson et al. 2006, lippke et al. 2010), and overall lower global warming potential (cole & kernan 1996, gerilla et al. 2007, perez-garcia et al. 2005), it is also shown to benefit human health in indoor environments (burnard & kutnar 2015, fell 2010, nyrud et al. 2010, rice et al. 2006). this could become an especially valuable function of the built environment as people spend more time indoors. currently, in north america, the utilization of wood products in low-rise residential construction is high; however, the utilization of wood products in non-residential buildings is much lower (gaston 2014, kozak & cohen 1999, o’connor et al. 2004) making up roughly 10% of market share, with steel accounting for 60%, and concrete accounting for 30% (robichaud et al. 2009, softwood lumber council 2018). currently, wood construction in the u.s. is largely feasible in buildings five to six stories or less. however, with the adoption of the new building codes (american wood council 2018), mass timber buildings will be allowed up to 18 stories, if fully protected with non-combustible materials, and up to 12 stories with a limited amount of allowed exposed wood. notably, studies conducted in the last 30 years show that there is potential for an increase in the use of wood products to create more sustainable buildings in the united states: according to spelter & anderson (1985) estimates have shown that roughly 90% of nonresidential construction in the united states could utilize wood products. more recent findings indicate the potential for an increase in annual wood consumption of up 5.7 billion board feet (13.5 m3) (bowyer et al., 2016). the implementation of wood within the built environment depends also on its cultural and industrial perception. architects are one of the key decision makers for the selection of materials being used in the construction sector (gaston et al. 2001, laguarda mallo & espinoza 2015, o’connor et al. 2003, o’connor et al. 2004). the perception or understanding that architects hold about building materials can differ, resulting in different materials being specified in building design. an architect’s perception of wood products and how they perceive the sustainability of wood as a building material are therefore of high importance for stakeholders in the wood products industry or for any persons desiring the replacement of non-renewable construction materials with wood. in past studies, it has been found that architects perceive wood as a more environmentally-friendly building material than other materials, largely as a result of lifecycle analysis (knowles et al. 2011, o’connor et al. 2004, robichaud et al. 2009, roos et al. 2010). however, in 2015, architects on the us west coast were found to have lower-than-average knowledge in areas of interest that deal with the environmental impact of wood (roth 2015). in comparison with other contexts, such as in the united kingdom, experts identified changes in the use of wood in “green building” from 2006 to 2012 (wang et al. 2013). of these changes, they noted that the development and public awareness of green building has increased. stakeholders involved in the construction of green buildings have increased their preference for wood, and there has been a rise in acceptance towards new technologies involving wood in green building. this is evidenced by the emergence of mass timber construction applications in the united kingdom. one area that did not improve from 2006 to 2012 was wood promotion and communication. healthy construction has also been a topic of interest in canada, with experts predicting a movement towards occupant desire for healthier home and living spaces (spetic et al. 2005, shaw et al. 2002). while there are differences between the uk or canada and the us, these findings, combined with recent building code changes discussed earlier, justify further exploration of stakeholder (i.e., architects) perceptions of wood products in the united states. the research presented in this study provides a current overview of the perceptions of the environmental and health impacts of wood products, as well as the familiarity and use of sustainable building certifications and sustainability assessment tools, among the architects surveyed on the us west coast. the west conroy et al. — perceptions of the environmental and health impacts of wood product use in buildings 111 coast was chosen as it is home to many forest product companies and sustainable building programs, including the living building challenge, created by the cascadia green building council, and the first statewide sustainable building code created by california, the california green building standards code. while the concept of sustainability is complex and continuously evolving—entailing multiple dimensions and definitions—this study focuses on categories that correspond to the seminal elements of sustainability. these elements are used to elicit views of sustainability in the built environment and in the context of forest products. using information obtained in this study, members of the forest products industry can identify and address the material needs of architects and develop effective communication/educational initiatives to be used with the aim of increasing architects’ specification of wood products in the built environment over non-renewable alternatives. 1.1 research objectives 1. investigate the current perceptions held by architects from the three target states about the sustainability of wood products. 2. investigate the current perceptions held by architects from the three target states about the impact wood products have in creating a healthy living environment. 3. investigate what sustainable building certifications and sustainability assessment tools architects are currently using, and if there is a possible relationship between familiarity with these tools, use of these tools, and their perception of sustainable attributes of wood. 2. literature review 2.1 environmental impact wood products have been shown to have small carbon footprints (sinha et al. 2013). as a result, it has been suggested that multi-story wood buildings could be more environmentally friendly than their non-wood equivalents (hammond & jones 2008, john et al. 2009, robertson et al. 2012). hammond & jones (2008) looked into cross-laminated timber (clt) buildings and found that they have about half as much embodied co2 as equivalent steel or concrete buildings. robertson et al. (2012) found that a wood-based clt mid-rise office building consumed 15% less energy than an equivalent concrete building in a comparative cradle-to-gate lifecycle analysis. another potential environmental advantage of wood is the carbon credit that can be assigned to wood products (howe & fernholz 2015), as they sequester the carbon absorbed during the tree’s lifespan in the processed material. some research suggests that wooden buildings have the potential to be carbon sinks (lehmann 2012, salazar & meil 2009, wang et al. 2013); however, other research suggests that carbon storage is miniscule and cannot be used to offset emissions long term (buchanan & levine 1999). some environmental benefits can be outweighed by energy consumption during transportation of materials, depending on the distances from forest, to production, to site (cuadrado et al. 2015). considering the different variables at play, it is important to base communication on factual evidence, as there is a risk of “green washing,” real or perceived, in many sustainability communication campaigns (lähtinen et al. 2017). 2.2 perceptions of wood as a sustainable material: related studies existing literature on specifiers’ perceptions of wood products include studies focusing on architects in sweden (hemström et al. 2010, roos et al. 2010) and in north america (kozak and cohen 1999, knowles et al. 2011, o’connor et. al. 2004, robichaud et al. 2009). more recent perceptions research focuses on end users (hammon 2016, larasatie et al. 2018). many of the past studies have found that architects perceive wood products to be environmentally friendly (hemström et al. 2010, kozak & cohen 1999, o’connor et al. 2004, robichaud et al. 2009, roos et al. 2010). work by knowles et al. (2011), in particular, focuses on design professionals’ perceptions of wood as a structural material in “green buildings.” the researchers found that design professionals viewed wood—as long as it was forest stewardship council (fsc) certified—as having the least amount of impact on the environment, compared to alternative structural materials (knowles et al. 2011). conversely, they found that indoor air quality was a concern associated with using wood products because of formaldehyde emissions from glues used in producing the final product (knowles et al. 2011). recent results of a parallel study aimed to provide current familiarity, use, and perceptions of wood products among the same group of respondents (conroy et al. 2018). these results showed that responding architects ranked “environmental impact” as the fourth-most 112 bioproducts business 4(9) 2019 important advantage of wood products from a list of eight attributes, following ease of use, aesthetics, and cost. however, when asked about weaknesses of wood products, 16% of respondents said “environmental concern” was a weakness of wood products (conroy et al. 2018). when broken down by state, respondents from washington (11%) and california (15%) were less likely to report “environmental concern” than were those from oregon (22%). additionally, 4% of responding architects listed “glues/vocs” as a weakness of wood products and as a human health concern. while this percentage is small, health was also ranked as least important in a list of advantages to using wood products (conroy et al. 2018). interestingly, responses to other items in the questionnaire indicate that the responding architects believe the use of wood contributes somewhat positively to reducing human stress, improving indoor air quality, and occupant comfort, which are factors of human health. this could mean environmental impact and health are currently not topics of high concern to architects on the west coast when making material decisions, although 88% of respondents did respond that material choice is “important” for sustainable design. 2.3 healthy living environment creation some sustainable building certifications incorporate human health aspects into their point categories, such as indoor air, lighting, and acoustics. additional factors that influence human health in indoor environments can include material choice, the shape of the space, and perceptions of the space (bysheim et al. 2016). the way humans perceive their environments can affect their physical and psychological health (wade and tavris 2000). the public has a perception that wood used in building interiors creates a natural, healthy, warm, and relaxing environment (nyrud & bringslimark 2010, rice et al. 2006). although the use of too much wood has shown to be associated with a “claustrophobic” feeling (nyrud & bringslimark 2010), the presence of exposed wood in indoor environments has been shown to have positive impacts on an occupant’s health and stress responses (burnard & kutnar 2015, fell 2010, nyrud et al. 2010, rice 2006). additionally, wood may be beneficial for use in health care facilities because bacteria’s ability to survive on the material decreases over time (kotradoyová et al. 2015). few studies measure factors that impact indoor environmental quality (ieq) of occupied timber buildings. stenson et al. (2019) present a monitoring study analyzing indoor air quality, bacterial community composition, and floor vibration of a mass timber building. while the building as whole was found to perform well, the study highlights limitation of using currently available ieq evaluating criteria, as for instance, the lack of univocal formaldehyde exposure limits (stenton et al. 2019). 2.4 sustainable building certifications sustainable building certifications, sometimes referred to as “green building certifications,” are one tool designers can use to create, in theory, a more environmentallyresponsible building. these certifications have benchmarks achieved through a credit system, where different credits address specific sustainability concerns. achieving the benchmark of credits earns a building a certification or rating. the credits typically revolve around minimizing energy and resource use, maximizing occupant comfort and health, reducing waste, and using more environmentally-friendly materials. some examples of credits pertinent to wood are using fsc-certified wood, sourcing materials locally, and using materials with recycled content. the overarching goal of these green-building rating systems is to reduce the impact a building has throughout its lifecycle. three prominent sustainable building certification programs in the united states are leadership in energy and environmental design (leed), green globes, and the living building challenge. of these three programs, leed is the most widely used and recognized in the united states. the living building challenge has a “red list” of materials not allowed in certified buildings. some of the “red list” materials are common to find in wood products (added formaldehyde) or in wood treatments (creosote, arsenic, etc.). these programs apply to both residential and nonresidential construction, but award credits differently in different types of construction. both leed and the living building challenge assign credits to categories which are related to building occupant well-being and indoor environmental comfort. in particular, the second certification system includes some “intangible” qualities, such as beauty, health, and happiness, among the criteria for the assignment of credits. comparisons of the role of wood in these green-building systems have been performed by other researchers (i.e., smith et al. 2006, bowyer et al. 2008). 2.5 sustainability assessment tools material selection in sustainable construction projects is a task that can come with uncertainty. architects often have incomplete information available to them regarding conroy et al. — perceptions of the environmental and health impacts of wood product use in buildings 113 material choice implications for a building’s environmental, economic, and societal impact (attallah et al. 2017). two tools for assessing the impact a material can have on the sustainability of a building are environmental product declarations (epds), and life cycle assessments (lcas). an epd is similar to a nutrition label, but for a material. an epd is a document that discloses quantified information about a product’s environmental impact, including contents of materials and chemical substances; how raw materials are acquired; energy use in production; emissions to air, soil, and water; and waste generated. epds are standardized by the international organization for standardization (iso) (iso 2006:14025). epds are created by using lcas. lcas are evaluations of all the inputs, outputs, and potential environmental impacts of a product or process during its lifetime (iso, 2006: 14040). lcas can consider the whole system from raw material aquisition (cradle), through production (gate), use (site), and disposal (grave), or some subsect of the whole system (e.g., “cradle to gate” vs. “cradle to grave”). sustainable building certifications, including leed and green globes, have credits achievable by performing an lca showing the proposed building to have reduced environmental impacts. this is a credit category that has high incentives for wood use, as wood performs well in lcas when compared to alternative construction materials (gerilla et al. 2007, john et al. 2009, lippke et al. 2010, perez-garcia et al. 2005, robertson et al. 2012). building certifications can also have credits achievable for providing epds, of which many are readily available for wood products through the american wood council. 3. methods 3.1 target population the focus of this study was on architects on the us west coast (california, oregon and washington) who are certified by the american institute of architects (aia). this target population was chosen because aia-certified architects are required to meet minimum continuing education criteria in order to maintain their certification, and the aia served as an accessible sample frame. a list of contacts was generated from membership lists available on the websites for aia chapters in washington, oregon, and california. only one architect per architecture firm was contacted, with priority on the principal or main contact for the firm. some architects in this region may not have been included if they were not listed on their aia chapter’s website or did not have an available email. a total of 3,469 architects were identified: 297 from washington, 172 from oregon, and 3,000 from california. the three states examined in this study have different laws regulating both forest management and building codes. for example, california has the calgreen building code resulting in differing legal requirements for california when compared to oregon and washington. the differences in these legal requirements provide a natural platform to investigate the impact of these differencs on the adoption and perception of sustainable building tools. 3.2 data collection data was collected using an online questionnaire administered through the platform qualtrics. participation was solicited via email utilizing the mailchimp email distribution software. prior to distribution, approval was obtained from the institutional review board (irb) at oregon state university. distribution of questionnaires through mailchimp began in june and ended in november of 2017. following an adaption of the tailored design method (dillman et al. 2014), three rounds of emails were sent to each architect, with each round two to three weeks apart. emails were sent to one contact per firm requesting that they complete the questionnaire. 3.3 questionnaire the questionnaire utilized in the study was developed for use in a broader international study with regional focuses on the us west coast, central and eastern europe, and sweden (markström et al. 2018). prior to use in this study, a focus group was held with regional experts in wood science, forest products marketing, civil engineering, and architecture, to further refine the questionnaire for the context of the us west coast. the questionnaire included two major sections: (1) familiarity with and perceptions of wood products and (2) perceptions of the sustainability of wood products. questionnaire items were generated by researchers across these regions, incorporating and building upon questions from previous wood product perception studies (kozak & cohen 1999, o’connor 2004, robichaud et al. 2009). different intertwining concepts related to wood’s ability to meet the environmental aspects of being a sustainable material, as well as to contribute to creating a healthy living environment were included in the questionnaire (figure 1 and figure 2, respectively). questionnaire items were worded equally in positive and negative formats as a means of minimizing any bias. 114 bioproducts business 4(9) 2019 figure 1. conceptual model illustrating questions to investigate architects’ perceptions of the impact wood products have on the environment. figure 2. conceptual model illustrating questionnaire items to investigate architects’ perceptions wood products’ ability to create a healthy living environment. items in the questionnaire utilized 5-point likert-type scales, multiple choice, and short answer options. all questions had an “unsure” answer option to prevent respondents from providing incorrect information on questions, as well as to be able to differentiate on likerttype scale questions between respondents who were unsure about a question versus respondents who were sure but had a neutral response. a pretest of the questionnaire was conducted with four architects within the target audience (dillman et al. 2014). the respondents to the pretest provided feedback helping to improve clarity and validity (vaske 2008) to better align with the terminology architects use. the responses from the pre-test were not included in the final results. the present study analyzed 8 of the 22 total questionnaire items, focusing on four sections: environmental impact, healthy living environment creation, sustainable building tools, and respondent demographics (table 1). 3.4 data analysis descriptive data analysis of questionnaire items was conducted with microsoft excel (2013 edition). statistical analysis was conducted by using the software spss (version 24.0, 2016). all statistical analysis used α = 0.05 for significance levels. one-way anova was used on items comparing groups of architects by state, as well as examining the contribution of materials to occupant comfort, human stress, and other variables. equal variance was tested between groups; items with equal variance used scheffe’s post-hoc test, and items with unequal variance used tamhane’s t2 post-hoc test. unsure responses for all items were not included in the statistical analysis because their values disrupt the means. however, items with high percentages of unsure responses were identified and reported where appropriate. 3.5 response rate the adjusted response rate was calculated as the number of completed responses divided by the remainder of architects emailed minus the bounced emails. out of the 3,469 architects emailed, 263 emails bounced and 533 architects completed the questionnaire, resulting in an adjusted response rate of 16.6%. this is comparable to response rates in similar studies that reported response rates from architects ranging from 3.7% to 21.4% (kozak conroy et al. — perceptions of the environmental and health impacts of wood product use in buildings 115 and cohen 1999, o’connor et al. 2004, robichaud et al. 2009). washington and oregon had higher response rates (25% and 42%, respectively) than california (14%). the questionnaire did not require respondents to answer every question, resulting in sample sizes per question varying from 533 to 353. in general, the sample sizes per item trended higher to lower, from the beginning of the questionnaire to the end. there did not appear to be one particular item at which the architects stopped. 3.6 non-response bias a common concern with surveys is that non-respondents would have answered the questions differently than would those who did respond, resulting in non-response bias (dillman et al. 2014). to check if there were differences in responses from architects who filled out the questionnaire compared with those who did not, a shortened questionnaire containing 4 of the original 22 items was sent to the architects who did not respond to the first questionnaire; 48 architects responded to the shortened questionnaire. statistically significant differences were found for the respondents’ locations: the proportion of architects from california was lower in the non-respondent group (p = 0.037) than in the initial respondent group. for another questionnaire item, there was a higher familiarity/use of three out of five sustainability tools by the non-respondent group (epd, p = 0.002; leed, p = 0.015; lca, p = 0.039) than the initial respondent group. t-tests revealed no statistically significant differences between the groups of respondents for the rest of the non-response bias test, which included architect’s years of experience, architect’s opinions on whether material choice is important for sustainable design, and the familiarity/use of two other sustainability tools. the results of the non-response bias test should be interpreted with the understanding that california may be underrepresented (due to the lower response rate from californian architects in the full questionnaire). furthermore, it is possible that californian architects may be more familiar with sustainable building certifications and sustainability assessment tools than were the respondents in this study. table 1. list of questionnaire items. topic question type1 demographic where is your practice located?2 (mc) what percent of your projects are located in [selected location]? (mc) what is your position at your company? (sa) how many years of professional experiences do you have? (mc) environmental impact please indicate the degree to which you agree with the statements: 3 wood can be a renewable material trees can store carbon wood products can store carbon we are using more wood than we can grow building with wood can cause forest degradation relatively low energy can be used for processing wood (ls) do you think that material choice is important for sustainable design? (ls) healthy living environment creation please indicate the degree to which you feel that the use of wood in a building contributes to: aesthetics; connection with nature; indoor thermal comfort; indoor air quality; acoustic comfort (ls) please indicate the degree to which you agree with the statement: “wood can emit dangerous volatile organic compounds (vocs)”3 (ls) please indicate the degree to which each of the following materials (concrete, steel, wood) contributes to: human stress; indoor air quality; occupant productivity; occupant comfort; aesthetics (ls) please indicate how important the use of wood in construction is to creating a healthy living environment for the following types of buildings [list of 11 building types see table 3.2] (ls) sustainable building tools please indicate if you are familiar with and the approximate number of projects where you have utilized the following: life cycle assessment (lca); environmental product declarations (epds); green globes; leadership in energy and environmental design (leed); living building challenge; other (ls) 1 questionnaire item types: mc = multiple choice, ls = likert-type scales, sa = short answer. 2 this item was used for screening at the beginning of the questionnaire, to make sure the sample only included the target population. 3 same item in questionnaire, results separated for flow. 116 bioproducts business 4(9) 2019 4. results and discussion 4.1 respondent demographics of the 533 completed questionnaires, 13% were from washington, 12% were from oregon, and 75% were from california (figure 3). seventy-eight percent of respondents indicated that 76%-100% of their projects are located in the state in which their firm is based (n = 533). this means some of the responses could be based on projects in states outside our region of focus, but that a majority of the respondents mainly work within the us west coast region. sixty-two percent of respondents held a principal or other management role at their firm; other respondents included designers (17%), designer/managers (18%), technical roles (3%), and just under 1% happened to focus on sustainable design specifically (figure 4). the number of years of experience respondents had was, overall, very high, which aligns with most of them being the principal of their firm. of the 398 respondents 62% had more than 25 years of experience, 23% had 16-25 years of experience, 12% had 5-15 years of experience, and 3% had less than 5 years of experience. 4.2 environmental impact when asked if respondents thought material choice is important for sustainable design, 88% indicated that it was important, 10% indicated that it was somewhat important, and 2% were neutral (n = 399). knowles et al. (2011) had similar findings, but with the caveat that building codes and cost take precedence in material decisions. figure 5 illustrates levels of respondent agreement to a series of statements related to the environmental impact of wood products, and in particular the impact of raw material sourcing, as described in the conceptual model in figure 1. ninety-one percent of responding architects agreed that “wood can be a renewable material.” the high level of agreement to this statement is probably due to the possibilistic formulation (can) of the question, which implies that wood renewability is recognized as a fact, if other preconditions are respected. with sustainably managed forests, wood is a renewable material (forest products lab 2010). however, wood’s attribute of renewability might not be appropriate if a steady-state balance between consumption and replenishment is not achieved world-wide (hammond and jones 2008). it is interesting to compare the almost unanimity of this response with the varying opinions about the statements “we are using more wood than we can grow” and “building with wood can cause forest degradation.” forest area in the united states has remained stable, with the volume of wood in the forests increasing (usda 2011). conversely, worldwide annual forest growth has a net decrease (mayo 2015), which may indicate that other countries’ forests are less sustainable. it is important to keep location in mind when discussing the sustainability of wood products or the potential contribution these products may have to deforestation. inconsistencies in the results for these questions could be due to respondents having different geographical locations in mind when responding. it is worth mentionining that in a one-way anova analysis of respondent answers when grouped by state, the statement about forest degradation was the only statement from this section that showed a statistically significant difference in means (p < 0.05), using scheffee’s post-hoc test for equal variance. in particular, respondents from oregon (m = 3.76) were statistically significantly (f = 3.59, p = 0.028) more likely to agree with the statement “building with wood can cause forest degradation” than were respondents from washington (m = 3.11),where means were taken from a 5-point likert-type scale with 1 = “disagree,” and 5 = “agree.” effect size (eta = 0.12) was between small and medium (cohen 1988). this result may be due to the fact that laws governing forest management are more stringent in washington than in oregon (bernstein et al. 2013). despite the location an architect had in mind, the questionnaire used the phrase “forest degradation” when the intent was to address deforestation. forest degradation could have been interpreted differently by different respondents; thus, the associated results should be interpreted with caution. levels of respondant agreement to statements addressing carbon storage and energy use in processing are illustrated in figure 6. these statements reflect criteria used for the assessments of embodied energy of products. it is worth mentioning, however, that in most cases lca does not assign timber products a carbon credit, since only the emissions from fossil fuel combustion are accounted for in terms of embodied carbon (hammond and jones 2008). eighty-five percent of responding architects agreed with the supposedly obvious statement “trees can store carbon,” and 67% agreed to the statement “wood products can store carbon.” this latter statement, which is not necessarily self-evident for a non-expert audience, is a message the wood product industry actively promotes. how this message has been conroy et al. — perceptions of the environmental and health impacts of wood product use in buildings 117 communicated to the architecture community could be an example case to follow for messages not well communicated as of yet. as for the statement “relatively low energy can be used for processing wood,” respondents had varying opinions (figure 6), reflecting current ambiguities in the calculation of the embodied energy depending on the applied method (crawford and stephan 2013). even though wood processing typically requires less energy than that required to manufacture other building materials, such as steel and concrete (buchanan & levine 1999, attallah et al. 2017), some processing techniques such as kiln drying and hot pressing of wood composites are energy-intensive processes. wood treatments and use of adhesives futher increase the embodied energy of wood (bejo 2017). these controversial elements are reflected in the results, where 10% of respondents disagreed or somewhat disagreed, and 13% of respondents were unsure about energy use in processing wood products. if this statement is true, this is an area the forest product figure 3. respondent’s location by state. (percent and frequency). figure 4. respondent’s role at their firm (frequency, percent; n = 392). principal, 244, 62% principal/ designer, 70, 18% designer, 66, 17% technical, 10, 3% sustainability, 2, 0% 71 64 398 figure 5. levels of respondent agreement to statements related to the environmental impact of wood sourcing (renewability of wood). figure 6. levels of respondent agreement to statements related to the carbon footprint of wood products (carbon storage and embedded energy). 118 bioproducts business 4(9) 2019 industry could potentially improve perceptions within the architect community by effectively communicating how they operate. 4.3 role of materials in creating a healthy living environment respondents indicated that the importance of wood use to creating a healthy living environment in different types of construction was “somewhat important” in six types of construction. wood was considered “somewhat not important” in industrial buildings. interestingly, respondents indicated wood as “neutral” in creating a healthy living environment for health facilities (e.g., hospitals, care facilities, etc.) (figure 7). the responding architects reported that wood “contributes positively” or “contributes somewhat positively” to all six of building attributes related to human health: aesthetics, connection with nature, indoor thermal comfort, indoor air quality, and acoustic comfort (figure 8). aesthetics and connection with nature had the highest means, and indoor air quality and acoustic comfort had the lowest. some of these attributes have been reported in past studies. aesthetics has been reported as a top attribute of wood products by architects (kozak & cohen 1999, o’connor et al. 2004). indoor air quality has been reported as a concern about using wood products (knowles et al. 2011). however, responses in the present study indicate that responding architects’ perceptions aesthetics connection with nature indoor thermal comfort indoor air quality acoustic comfort neutral contributes somewhat positively contributes positively contributes somewhat negatively contributes negatively figure 7. how important the use of wood in different types of construction is to creating a healthy living environment. figure 8. respondent opinions on how the use of wood products in a building contributes to various attributes. chart shows respondents’ mean opinions of how wood usage impacts various building attributes. conroy et al. — perceptions of the environmental and health impacts of wood product use in buildings 119 occupant comfort human stress occupant productivity aesthetics indoor air quality concrete steel wood positive somewhat positive neutral somewhat negative negative c a a a a a a b b b b a a a b might be changing towards the idea that wood contributes somewhat positively to indoor air quality. when comparing materials, the responding architects indicated that wood had a significantly more positive contribution than did steel or concrete to human stress, indoor air quality, occupant productivity, occupant comfort, and aesthetics (figure 9). the results for “aesthetics” coincide with past studies (kozak & cohen 1999, o’connor et al. 2004, roos et al. 2010). the results for indoor air quality however, have changed since past studies. in 2011, a study reported architects expressing high levels of concern about the impact wood products have on indoor air quality, referencing the commonly used formaldehyde-based adhesives in composite wood products (knowles et al. 2011). however, the present study, seven years later, shows that the responding architects perceive using wood products in a building as being between “contributing somewhat positively” and “neutral” in impacting indoor air quality. wood was perceived as significantly better than both steel and concrete. this could be due to regulations for formaldehyde emissions from wood products being introduced or revised since the past study (e.g., california’s airborne toxic control measure to reduce formaldehyde emissions from composite wood products). a common consideration for indoor air quality is the emission of volatile organic compounds (vocs). respondents had mixed perceptions regarding whether wood products can emit dangerous vocs: 42% disagreed, which was the majority response, followed by 19% somewhat disagreeing (figure 10). other responses were scattered, including 12% of respondents being figure 9. respondent opinions on how the use of different materials in a building contribute to various attributes. chart shows respondents mean opinions of how concrete, steel, and wood usage contributes to various building attributes (n=358 to 378; sd=0.60 to 1.16). bars with different letters indicate significant differences. figure 10. levels of respondent agreement to the statement “wood can emit dangerous volatile organic compounds (vocs)”. (n=469). 41 40 49 88 196 55 0 100 200 300 400 agree somewhat agree neutral somewhat disagree disagree unsure fr eq ue nc y "wood can emit dangerous volatile organic compounds (vocs)" 120 bioproducts business 4(9) 2019 unsure. a study in 2015, surveying architects in the same locations as in the present study, found that responding architects had an “average” knowledge of vocs (roth 2015). wood itself can emit vocs. as the processing increases, and if glues or binders are added to the product, the voc levels increase as well (roffael 2006). levels of formaldehyde released from composite wood products have been declining as new binders and technologies are developed; this is potentially why the results here show a more positive perception of this topic. for all variables, concrete and steel were viewed as similar by respondents, with the exception of occupant productivity, where respondents found steel to have a more positive contribution than concrete. 4.4 sustainable building tools the responding architects were generally familiar with and had used leed: 96% of respondents were at least familiar with it, and 69% of respondents had used the certification on at least one project (figures 11 and 12). respondents were much less familiar with the living building challenge and green globes. sixty-three percent of respondents were at least familiar with the living building challenge, but only 13% had used the certification on at least one project. green globes was the least known and utilized, with 60% of respondents being at least familiar with green globes, and only 8% of respondents having used it on at least one project. figure 11. respondent familiarity of different sustainable building rating systems. top left n=376, top right n=370, and bottom n=374. (logos from: http://leed.usgbc.org/leed.html, https://living-future.org/lbc/, and http://www.greenglobes.com/home.asp) figure 12. respondent utilization of different sustainable building rating systems. from left to right, higher number of projects where a tool has been utilized, to fewer, (n=256, 46, and 28). 0 50 100 150 200 250 used on 1-3 projects used on 11-20 projects used on 4-10 projects used on 20+ projects green globes living building challenge leed http://leed.usgbc.org/leed.html https://living-future.org/lbc/ http://www.greenglobes.com/home.asp conroy et al. — perceptions of the environmental and health impacts of wood product use in buildings 121 figure 13. respondent familiarity of different sustainability assessment tools (n = 374 and 373). figure 14. respondent utilization of different sustainability assessment tools. from left to right, higher number of projects where a tool has been utilized, to fewer, (n=123 and 90). 0 50 100 150 200 250 used on 1-3 projects used on 4-10 projects used on 11-20 projects used on 20+ projects life cycle assessment (lca) environmental product declarations (epds) there was an option to specify other sustainable building rating systems the respondents had used. responses for “other” that were specified more than twice included calgreen (occurred 8 times), passive house (7), well building standard (7), green point rating (5), build it green (4) collaborative for high performance schools (4), and earth advantage (4). these results show increased awareness of sustainable building certifications compared with those of another study, which found that responding architects from the same region had an average knowledge of leed (roth 2015). however, regarding green globes, awareness has not changed since 2015, when it was found that responding architects had low knowledge of the certification (roth 2015). the roth (2015) study did not inquire about the living building challenge. the living building challenge was introduced after green globes, and has fewer certified projects. it is interesting that responding architects were more familiar with and have used the living building challenge certification more than green globes. this could be an indicator that the living building challenge is quickly gaining a strong presence in this region. the forest product industry could thus benefit from ensuring their products can be incorporated into living building challenge buildings by ensuring they are free of “red list” substances. additionally, the industry could benefit from improving communication regarding how their products can be used in leed and living building challenge buildings. the responding architects were generally at least familiar with lcas and epds, but did not use them extensively (figures 13 and 14). eighty-two percent of respondents were at least familiar with lcas, and 34% of respondents had used lcas on at least one project. sixty-three percent of respondents were at least familiar with epds, but only 25% of respondents had used epds on at least one project. these results were surprising because many respondents had used leed on multiple projects which can utilize lcas and epds for attaining credits. utilizing lcas and epds with wood products to achieve sustainable building rating system credits may be an area in which the wood product industry could communicate further to the architecture community. no relationship was found between responding architects’ familiarity and use of these tools and their percep122 bioproducts business 4(9) 2019 tions of wood as an environmentally friendly material or wood’s ability to create a heathy built environment. 5. conclusion responding aia-certified architects on the us west coast have an overall positive perception of the environmental and health impacts of using wood products in the built environment. there were concerns about the impacts that building with wood can have on forests. it has also been found that forest depletion was one of the top three concerns that the general public from the pacific coast had about increasing the use of wood in construction (hammon 2016). this concern is consistent across different stakeholders in the wood products industry. responding architects indicated that lcas or epds are not widely utilized. a majority of respondents were familiar with and use the sustainability rating system leed, but not many use the living building challenge or green globes. because lcas and epds of wood products can be used to achieve credits in these rating systems, the wood products industry could further communicate this opportunity to architects. however, while it appears that the environmental and health impacts building materials have is important to the responding architects, they are not as important attributes when making material decisions for a building as aesthetics, codes, and cost. this is confirmed by past studies in other regions, showing that sustainability is not the main quality attribute driving customers in their choice of building materials (toivonen and hansen 2003). it is recommended that the forest product industry focus its communication and education efforts on other attributes of wood products until environmental and health impacts of materials are a higher priority to architects on the us west coast. alternatively, effective communication or improved technologies regarding the areas responding architects are currently wary of could further improve the perceptions architects hold regarding the environmental and health impacts of using wood. since one of the main environmental concerns of respondents is related to the sustainability of forestry practices, targeted and bidirectional campaigns communicating forest sector sustainability are recommended, as also suggested by lähtinen et al. (2017). 5.1 recommendations for future research as sustainability concerns of society increase, the information in this study should be reinvestigated while incorporating any new concerns to ensure that communication addresses relevant issues. sustainability rating systems focusing on human health could be incorporated (e.g., well building standard). future research could be conducted to address where architects get their information about the sustainability of different materials, how effective the communication is, and how it impacts their perceptions of the environmental and health impacts of wood use in the built environment. 5.2 limitations because of a smaller response rate in california, and statistically significant differences in questions about sustainable building tools in the non-response bias test, the results from california should be interpreted with caution. additionally, a survey pretest was conducted to help reduce the probability of differing interpretations on items in this questionnaire, but it is possible this still occurred. it is also possible that architects with a more positive perception of wood, or with a connection to the university conducting the research, were more likely to complete the questionnaire. this could explain the higher response rate in the state of oregon. in the interpretation of the survey results, it should be noted that some results could have been different if questions were worded slightly differently (i.e., using a more peremptory tone, rather than the adopted possibilistic). some questions may be considered self-evident statements (i.e., “wood can be a renewable material,” “trees store carbon,” and “wood products store carbon”). however, they were a useful “litmus test” to evaluate the respondent awareness of some of the most exploited promotional messages of the wood industry. 6. literature cited american wood council (2018). awc: tall mass timber code proposals approved at icc public comment hearings. retrieved from https://www.awc.org/codes-standards/nationalforestproductsweek/2018/10/25/awc-tall-mass-timber-code-proposals-approved-at-icc-public-comment-hearings attallah, s., kandil, a., senouci, a., & al-derham, h. 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(2013). use of wood in green building: a study of expert perspectives from the uk. journal of cleaner production 65, 350–361. abstract an examination of hardwood lumber prices in the eastern united states adjusted for inflation and regional differences in forest composition found declines in aggregate (combined species) prices across all regions. still, the movements of the three aggregate prices examined were highly correlated among regions. the greatest declines in lumber price occurred in the northeast and lake states regions, with smaller declines occurring in the central, southern, and mid-atlantic regions. with the exception of white oak and walnut, prices of high-value species declined more than prices of low-value species. for most of this century, the northeast region has had the highest aggregate prices for lumber products. however, the central region had the highest price for highquality lumber since 2017. while lumber prices have declined, prices for industrial hardwood products have increased, and these increases were consistent among regions. in 2020, the price of pallet cants exceeded the price of lower quality hardwood lumber for most species, and crosstie prices exceeded that of aggregate midquality lumber. the declines in hardwood lumber prices were the result of reduced domestic demand and insufficient increases in exports to offset this decrease. while increased domestic and export demand will result in increased prices, the prolonged period of low lumber prices may reduce the expected returns to timber management. keywords: hardwood lumber, lumber prices, pallet prices, crosstie prices, forest composition. regional analysis of u.s. sawn hardwood product prices from 2000 to 2020 1 economist, usda forest service, northern research station, 301 hardwood lane, princeton, wv 24740; email: william.luppold@usda.gov; 304.431.2730 (v) 2 forest products technologist, usda forest service, northern research station, 359 main road, delaware, oh 43015; email: matthew.bumgardner@usda.gov; 740.368.0059 (v) * corresponding author. email: william.luppold@usda.gov; tel.: 304.431.2730 (v) william g. luppold1* and matthew s. bumgardner2 bioproducts business 6(1), 2021, pp. 1–12. issn 2378-1394 https://doi.org/10.22382/bpb-2021-001 1 introduction since the beginning of the 21st century, the hardwood lumber price reported by the u.s. department of labor, bureau of labor statistics (bls), has trended downward in real (inflation adjusted) terms (figure 1). this trend contrasts with the upward trend in this series in the last 19 years of the 20th century. but what does the downward trend in hardwood lumber price since 2000 actually indicate? this question is especially relevant for longterm timber management and investment decisions since hardwood lumber price influences the value of higher quality hardwood timber. a prolonged period of declining lumber price could reduce expected returns to timber management. the term “hardwood lumber” embodies a large number of sawn products that can be separated by species, quality (grade), and end use (appearance, industrial, and other applications) (luppold & bumgardner 2016). lumber prices for different species can vary considerably and do not follow similar paths over time (luppold & prestemon 2003, luppold & bumgardner 2007). hardwood composition (mix of species) also differs among five discernable regions of the eastern united states as defined in luppold and bumgardner (2021) (figure 2). given these considerations, we ask the question: is the overall decline in lumber prices similar among species and regions? hardwood lumber used in appearance applications is primarily graded and sold under national hardwood mailto:william.luppold@usda.gov mailto:matthew.bumgardner@usda.gov 2 bioproducts business 6(1) 2021 figure 1. deflated* hardwood lumber price index 1980 to 2020 (usdl bls 2020). * hardwood lumber price index wpu0812 (1982 = 100) divided by wholesale price index wpu00000000 (1982 = 100) times 100 and then adjusted to represent 2019 dollars (2019 = 100). figure 2. states included in the northeast, lake states, central, mid-atlantic, and southern regions. 80 90 100 110 120 130 140 de fla te d ha rd w oo d lu m be r p ric e 20 19 = 1 00 luppold and bumgardner — regional analysis of u.s. sawn hardwood product prices from 2000 to 2020 3 lumber association (nhla 2019) rules. lumber of differing grades can trade at considerably different price ranges (luppold & bumgardner 2007). pallet cants and crosstie (industrial products) prices also have varied over time, but historically have traded well below the levels of most graded lumber products (hmr 2000–2020). this raises a second question: have the prices of hardwood lumber and industrial products moved in a similar manner between 2000 and 2020? to address the first question, regional aggregate (combined species) prices are developed for different grades of hardwood lumber based on regional differences in forest composition. we then analyze these price series to determine the influences of forest composition and species price on aggregate regional prices. to examine the second question, we compare changes in midand lower grades of aggregated hardwood lumber prices to changes in pallet cant and crosstie prices throughout the eastern united states (hereafter referred to as “eastwide”). 2 methods and study data 2.1 lumber, pallet cant, and crosstie prices all lumber prices used in this study were obtained from the hardwood market report (hmr). luppold (1996) found that this publication emphasized the reporting of long-term contractual prices, which are appropriate prices to use for the problem being analyzed. the specific lumber products being examined are nhla graded 4/4 (2.54 cm), random length and width, green (not airor kiln-dried) lumber sold in truckload lots (hmr 2000–2020). the lumber grades examined are fas (highquality), 1c (mid-quality), and 2a (lower quality used in appearance applications). pallet cants are mixed-species green-log centers normally sawn to 10.16 by 10.16 cm or 12.7 by 12.7 cm dimensions. lumber and pallet cant prices are reported by hmr in u.s. dollars per thousand board feet for three geographic areas of the eastern united states: southern hardwoods, appalachian hardwoods, and northern hardwoods. all prices were transformed to 2019 dollars using the wholesale price index for industrial commodities (usdl bls 2020). prices per cubic meter (m3) were developed by dividing thousand board foot price by 2.36 (howard 2003). any discussions of price in the remainder of this paper are in inflation adjusted or real (2019) terms per m3. green crosstie prices are the mid-points of the ranges reported for their respective areas. crosstie prices are multiplied by 9.494 (assumed 0.1054 cubic meters per tie using a board foot estimate per tie developed by johnson 2020) to convert to price per m3. annual prices for lumber, pallet cants, and crossties were developed from the average prices reported in the first weekly issues for january, april, july, and october for the 2000 to 2020 period (hmr 2000–2020). 2.2 regional and eastwide price formulation we used data on species composition of the timber resources in the five regions collected and compiled by the usda forest service, northern and southern forest inventory analysis (fia) units, and accessed through the evalidator web application (usda fs 2020a). we developed species “weighting” factors from data for inventory panels ending in 2010, which was the approximate midpoint of the study period. the variable from which weights were developed was net cubic-foot volume in the sawlog portion of sawtimber trees. the sawlog portion is the volume of sound wood in the central stem of a timber species tree of sawtimber size (27.9 cm d.b.h. minimum for hardwoods), from a 30.5 cm stump to a minimum top diameter, (20.9 cm for hardwoods) or to the point where the central stem breaks into limbs (usda fs 2020b). while industrial sawn products can be manufactured from portions of trees above the sawlog top diameter, sawlog volume is the most appropriate weighting factor for nhla-graded lumber products. the regional net sawlog volumes (cubic meters) of sawtimber trees and proportional regional volumes are presented in table 1. table 2 presents the proportional distribution of species or species groups that accounted for at least 2% of sawtimber volume for species for which hmr reported prices. the prices used for species/groups from the northeast and lake states regions were reported prices for the northern hardwoods area with the exception of black cherry “cherry” (prunus serotina) where appalachian hardwoods price was used. the prices used for the central region were appalachian hardwoods; and the prices used for the southern region were southern hardwoods. most of the prices used for the mid-atlantic region were appalachian hardwoods, with the exception of sweetgum (liquidambar styraciflua), where the southern hardwoods price was used. https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/prunus/serotina.htm https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/liquidambar/styraciflua.htm 4 bioproducts business 6(1) 2021 table 1. volume and percent of net sawlog volume of sawtimber trees on timberland trees in the five eastern regions of the united states, 2010 (source: usda fs 2020a). region volume (million cubic meters) percent northeast 1,308 20.9 lake states 592 9.5 central 2,026 32.4 mid-atlantic 885 14.2 southern 1,436 23.0 table 2. percent distribution of species, by region, used to develop regional weighted estimates for high quality (fas), mid-quality (1c), and lower quality (2c) hardwood lumber prices based on net sawlog volume (measured in cubic feet) of sawtimber trees. no values listed for some species in some regions indicates insufficient (less than 2%) relative volume. species group northeast lake states central mid-atlantic southern —percent— white oak 8 8 26 23 19 red oak 18 20 23 20 35 hickory 2 — 10 5 7 yellow birch 4 2 — — — hard maple 16 17 6 — — soft maple 21 15 7 7 3 beech 4 — 3 2 — sweet/black gum — — — 12 24 ash 7 8 5 3 3 aspen/cottonwood 6 20 — — — basswood 2 8 2 — — yellow-poplar 3 — 14 28 9 walnut — — 2 — — cherry 9 2 2 — — regional resource weighted aggregate prices (aggregate price) of fas, 1c, and 2a lumber for region (i) in year (j), were developed using the following formulae: pfasij = ∑(pfasijk) * (wik) p1cij = ∑(p1cijk) * (wik) p2aij = ∑(p2aijk) * (wik) where pfasij = aggregate resource volume-weighted fas lumber price in region (i) year (j) pfasijk = fas lumber price in region (i) year (j) for species (k) wik = proportional weighting factor in region (i) for species (k), shown in table 2 p1cij = aggregate resource volume-weighted 1c lumber price in region (i) year (j) p1cijk = 1c lumber price in region (i) year (j) for species (k) p2aij = aggregate resource volume-weighted 2a lumber price in region (i) year (j) p2aijk = 2a lumber price in region (i) year (j) for species (k) any discussion of fas, 1c, or 2a price in this paper refers to the resource volume-weighted aggregate real price, unless stated otherwise. pallet cant and crosstie prices are not reported by species; therefore, we examined prices for the northern, appalachian, and southern geographic areas reported in luppold and bumgardner — regional analysis of u.s. sawn hardwood product prices from 2000 to 2020 5 the hmr. eastwide price series were developed for the three lumber grades, crossties, and pallet cants using regional price estimates weighted by relative regional net sawlog volume of sawtimber trees (percent column in table 1). in this weighting structure, crosstie and pallet prices reported for northern hardwoods are used for fia data reported for northeast and lake states regions, appalachian hardwoods are used for the central and mid-atlantic regions, and southern hardwoods are used for the southern region. 2.3 development of correlation coefficients price movements between regions and products were analyzed using correlation coefficients (r) developed with sas enterprise guide vers. 7.1. for lumber grades fas, 1c, and 2a, the central region’s price vectors were used as the base to examine price movements between regions. the central region has the largest volume of timber, as well as being centrally located. correlation coefficients for pallet cant and crosstie prices are examined between hmr’s designated southern, appalachian, and northern hardwood regions, with the centrally located appalachian region being the base. 2.4 species examined the species groups examined were based on fia categories as follows: select white oak, primarily white oak quercus alba, bur oak (q. macrocarpa), and chinkapin oak (q. muehlenbergii); select red oak, primarily northern red oak (q. rubra) and cherrybark oak (q falcata var. pagodifolia.); other white oak, primarily chestnut oak (q. prinus), post oak (q. stellate), and overcup oak (q. lyrata); other red oaks, primarily black oak (q. velutina), water oak (q. nigra l.), scarlet oak (q. coccinea), southern red oak (q. falcata michx. var. falcata), laurel oak (q. laurifolia), willow oak (q. phellos l.), and pin oak (q. palustris); yellow birch (betula alleghaniensis); hard maple, primarily sugar maple (acer saccharum); soft maple, primarily red maple (a. rubrum) and silver maple (a. saccharinum); ash, primarily white ash (fraxinus americana), green ash (f. pennsylvanica), and black ash (f. nigra); tupelo blackgum; primarily swamp tupelo (nyssa sylvatica var biflora), blackgum (n. sylvatica marsh. var. sylvatica), and water tupelo (n. aquatica); aspen/cottonwood, primarily quaking aspen (populus tremuloides), bigtooth aspen (p. grandidentata), and eastern cottonwood (p.deltoides ); hickory (carya spp.), basswood (tilia americana), beech (fagus grandifolia), sweetgum, yellow-poplar (liriodendron tulipifera), black walnut “walnut” (juglans nigra), and cherry. red oak prices were weighted by the combined volume of select red and other red oaks, and white oak prices were weighted by the combined totals of select white and other white oaks. blackgum/tupelo is an important species group in the mid-atlantic and southern regions for which no price was reported during the study period. in the absence of a reported price for this species group, the proportional volumes of blackgum/tupelo were combined with sweetgum to develop a weight for a grouping termed sweet/black gum. 3 results 3.1 changes in aggregate fas prices regional aggregate fas lumber prices from 2000 to 2020 are presented in figure 3. while the levels of regional fas aggregate prices differ, they are highly correlated. the correlations between the central and the mid-atlantic and southern regions were r = 0.99. the lowest coefficient value (r = 0.94) for fas lumber was between the central and northeast regions. in 2000, regional aggregate fas price estimates ranged from $515 per m3 in the southern region to $757 per m3 in the northeast region (figure 3). this 47% range in price is the result of differences in forest composition as represented in the weighting factors in table 2 and corresponding fas lumber prices (hmr 2000). sixtyeight percent of the sawtimber in the northeast region is composed of red oak, hard and soft maple, birch, and cherry. in 2000, the fas prices for these species in the northeast exceeded $600 per m3 (table 3). the southern region contains higher proportional volumes of lower priced yellow-poplar and sweetgum, which reduced aggregate fas price in that region. the high proportion of yellow-poplar in the mid-atlantic region also resulted in a relatively low aggregate fas price. the large proportion of higher priced maple species and red oak in the lake states region was partially offset by high volumes of low-priced aspen (tables 2 and 3), causing fas price in this region to be lower than the northeast (figure 3). the central region contains the greatest variety of species that meet the criteria to be included in the price estimate (table 2). just 40% of the species in the central region exceeded $600 per m3 in 2000 (hmr 2000), but relatively large volumes of species https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/betula/alleghaniensis.htm https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/betula/alleghaniensis.htm https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/nyssa/silvatica.htm https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/nyssa/aquatica.htm https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/fagus/grandifolia.htm https://www.srs.fs.usda.gov/pubs/misc/ag_654/volume_2/juglans/nigra.htm 6 bioproducts business 6(1) 2021 table 3. real (2019) prices of high-quality (fas) green lumber for major hardwood species in selected years (source: hmr 2000–2020). 2000 2004 2009 2012 2014 2016 2020 —2019 u.s. dollars per cubic meter— fas white oak1 598 657 449 423 564 705 760 fas red oak2 860 809 412 357 582 514 371 fas hickory1 546 489 309 294 387 378 341 fas yellow birch2 640 711 620 545 535 595 481 fas hard maple2 1,032 902 608 514 655 664 546 fas soft maple2 610 699 507 446 533 619 556 fas beech2 449 406 347 293 288 318 293 fas sweetgum3, 4 237 215 182 155 156 174 173 fas ash2 514 396 318 355 404 469 349 fas basswood2 559 460 337 299 358 399 336 fas aspen2 374 366 335 288 271 366 326 fas yellow-poplar1 548 401 302 280 334 380 332 fas walnut1 909 1,109 918 813 1,095 1,140 988 fas cherry1 1,422 1,499 820 558 541 498 424 1 appalachian hardwoods reporting area. 2 northern hardwoods reporting area. 3 southern hardwoods reporting area. 4 reported as sap gum in the hardwood market report. figure 3. resource volume-weighted aggregate regional price for high-quality (fas) green hardwood lumber, 2000 to 2020. correlation coefficients: central and northeast (r = 0.94); central and lake states (r = 0.95); central and mid-atlantic (r = 0.99); central and southern (r = 0.99) 200 300 400 500 600 700 800 co ns ta nt 2 01 9 do lla rs p er m 3 northeast lake states central mid-atlan�c southern luppold and bumgardner — regional analysis of u.s. sawn hardwood product prices from 2000 to 2020 7 with prices that exceeded $750 per m3 (cherry, walnut, hard maple, and red oak) resulted in the aggregate fas price in this region to be similar to the lake states price. while differences in composition explain much of the regional differences in aggregate fas price in 2000, there also are aesthetic and availability factors that influence price. slower tree growth in the northern portion of the eastern u.s. results in lumber with higher per inch ring counts than in the southern portion. the northern trees also have lower average diameters (usda fs 2020a). smaller diameter trees result in fewer boards that meet the width requirement of fas grade, but the associated higher ring count results in lumber with a finer texture. while not all users of fas lumber are willing to pay for this aesthetic property provided by slower growth, the combined impact of ring count and lower availability due to diameter causes a regional gradient in fas prices. an example is with red oak: in 2000, the reported hmr price of fas red oak was $860 m3 for northern hardwoods (used for the northeast and lake states regions), $760 m3 for appalachian hardwoods (used for the central and mid-atlantic regions), and $665 m3 for southern hardwoods (used for the southern region). aggregate fas lumber prices started to decline in all regions after 2004, and this trend continued through 2009. the small increase in central, mid-atlantic, and southern region fas price in 2010 primarily was the result of increased red and white oak prices (hmr 2010). prices of fas lumber declined after 2010, with northeast, lake states, and mid-atlantic region prices hitting their study period low points in 2011 and the two remaining regions having their lowest prices in 2012. as prices declined, regional differences contracted to under $110 m3 (34%) in 2011. this contraction occurred as the prices of most higher value species decreased at greater rates than lower valued species. prices in all regions increased between 2012 and 2016, and this increase was accompanied by an increase in regional price divergence. after 2016, aggregate fas prices declined and regional price differences again contracted to 2011 levels in 2019 and 2020. the declines in the central, mid-atlantic, and southern regions were smaller than the declines in the northeast and lake states regions. these smaller declines in the central, mid-atlantic, and southern regions were primarily the result of the higher proportion of white oak (table 2), the only major species group that had a higher fas price in 2020 than in 2016 (table 3). the contraction between regional prices was influenced by smaller regional difference in fas red oak prices, which in 2020 ranged from $371 m3 for northern hardwoods to $324 m3 for southern hardwoods (hmr 2020). 3.2 changes in aggregate 1c prices the movement of aggregate 1c prices in the five regions was similar to that of fas, but the relative difference of these prices among regions in 2000 was smaller (figure 4). in the early 2000s, aggregate 1c price in the northeast region was 33% higher than in the southern and mid-atlantic regions. over 75% of the sawtimber in the northeast region is red oak, hickory, birch, hard and soft maple, ash, and cherry. in 2000, the 1c prices for these species exceeded $350 m3 (table 4). while mid-atlantic and southern 1c red oak prices were slightly lower than in the northeast region, higher proportional volumes of lower priced yellow-poplar and sweetgum were the primary reason for the lower 1c price in these regions. lake state aggregate 1c price in 2000 was noticeably higher than that of the central region. this is in contrast to aggregate fas price which was similar in the lake states and central regions. regional 1c prices reached their highest levels in 2004, then declined in a similar manner as regional fas prices. aggregate 1c prices reached their lowest levels in the northeast and lake states regions in 2011; the low points for the central, mid-atlantic, and southern regions occurred in 2012. similar to fas prices, the decline in 1c prices was accompanied by regional price convergences. prices in all regions increased between 2012 and 2014, as did the difference between southern and northeast region prices. this divergence was again the result of the prices of higher value species increasing more than the prices of lower value species. since 2014, aggregate 1c prices in all regions have trended downward, but prices in the southern regions declined the least, while prices in the central region declined the most. prices in the southern region had the smallest decline, as sweetgum price remained relatively constant. the combined declines in 1c red oak, yellowpoplar, and white oak prices were the primary reason for the 22% decline in the central region. 3.3 changes in aggregate 2a prices regional price movements of 2a lumber followed similar paths as grades fas and 1c, but with some important differences (figure 5). the range of the highest and 8 bioproducts business 6(1) 2021 table 4. real (2019) prices of mid-quality (1c) green lumber for major hardwood species, crossties, and pallet cants in selected years (source: hmr 2000–2020). 2000 2004 2009 2012 2014 2016 2020 —2019 u.s. dollars per cubic meter— 1c white oak1 342 418 242 233 374 357 316 1c red oak2 582 575 261 245 396 309 241 1c hickory1 386 360 244 244 325 246 223 1c yellow birch2 383 439 319 300 306 343 299 1c hard maple2 617 629 337 344 467 381 355 1c soft maple2 394 374 250 272 355 397 359 1c beech2 318 287 243 201 197 217 195 1c sweetgum3, 4 234 200 170 145 146 162 162 1c ash2 383 315 216 258 268 281 210 1c basswood2 278 251 169 165 225 246 181 1c aspen2 242 221 190 168 160 215 194 1c yellow-poplar1 285 229 178 178 218 222 163 1c walnut1 499 549 419 410 586 581 521 1c cherry1 725 897 332 273 363 327 219 crossties1 220 261 246 199 241 286 313 pallet cants1 163 183 154 143 172 170 174 1 appalachian hardwoods reporting area. 2 northern hardwoods reporting area. 3 southern hardwoods reporting area. 4 reported as sap gum in the hardwood market report. figure 4. resource volume-weighted aggregate regional price for mid-quality (1c) green hardwood lumber, 2000 to 2020. correlation coefficients: central and northeast (r = 0.95); central and lake states (r = 0.96); central and mid-atlantic (r = 0.99); central and southern (r = 0.98). 150 200 250 300 350 400 450 500 co ns ta nt 2 01 9 do lla rs p er m 3 northeast lake states central mid-atlan�c southern luppold and bumgardner — regional analysis of u.s. sawn hardwood product prices from 2000 to 2020 9 figure 5. resource volume-weighted aggregate regional price for lower quality (2a) green hardwood lumber, 2000 to 2020. correlation coefficients: central and northeast (r = 0.93); central and lake states (r = 0.92); central and mid-atlantic (r = 0.99); central and southern (r = 0.96). lowest regional aggregate 2a prices was considerably smaller than ranges recorded for the higher lumber grades. these ranges declined from 27% (northeast region versus mid-atlantic region) in 2000 to 14% in 2020. in general, interspecies price differences between 2a lumber are considerably smaller when compared to fas and 1c lumber (hmr 2000 to 2020). another major difference is the cause of the peaks in 2a price in 2004 and 2014, which are attributed to large increases in 2a red oak prices in those years. 3.4 changes in crosstie and pallet cant prices crosstie prices for the three geographic areas reported in the hmr were highly correlated with one another, but southern crosstie prices were normally higher than appalachian and northern prices (figure 6). the largest variation in crosstie price was in 2019, with southern prices 16% greater than northern prices. appalachian crosstie prices have been the most variable and were 6% less than southern prices in 2020. pallet cant prices were highly correlated across the three areas, with no area having a continual “higher” price (figure 6). in the years examined, the largest variation between regions for cant prices was 10% in 2000; in most years, the difference was less than 5%. one reason for the lack of regional variation in pallet cant prices is that pallets can be produced using nearly any species. 3.5 eastwide aggregate lumber, crosstie, and pallet cant prices eastwide price of crossties was 11% lower than the price of 2a lumber in 2000 (figure 7). accompanying correlation coefficients are presented in table 5. while the ranges of eastwide aggregate fas, 1c, and 2a differed, the three series were highly correlated. the strongest correlation was between fas and 1c price (r = 0.98) but the r = 0.91 correlation between fas and 2a price also was relatively high. crosstie prices trended with 2a prices between 2000 and 2004. as both price series started to decline after 2004, the reduction in crosstie price was considerably less than that of 2a price through 2008. while 2a price approached crosstie price in 2014, since that year, crosstie price has trended upward, while 2a price has trended downward. in 2020, the eastwide price of crossties was 73% higher than the price of 2a lumber. as a result, these two similarly priced products were highly uncorrelated (r = 0.18) during the study period. 100 150 200 250 300 co ns ta nt 2 01 9 do lla rs p er m 3 northeast lake states central mid-atlan�c southern 10 bioproducts business 6(1) 2021 figure 6. crosstie and pallet cant prices for the northern, appalachian, and southern reporting areas, 2000 to 2020. correlation coefficients: appalachian and northern pallet cants (r = 0.89); appalachian and southern pallet cants (r = 0.95); appalachian and northern crossties (r = 0.96); appalachian and southern crossties (r = 0.97). figure 7. resource volume-weighted aggregate eastwide fas, 1c and 2a green lumber prices compared to pallet cant and crossties prices, 2000 to 2020. table 5. correlation coefficients (r) for eastwide prices of fas lumber, 1c lumber, 2a lumber, pallet cants, and crossties. fas price 1c price 2a price crosstie price fas price — 0.15 1c price 0.98 — 0.13 2a price 0.91 0.96 — 0.18 cant price 0.54 0.55 0.62 0.80 100 150 200 250 300 350 co ns ta nt 2 01 9 do lla rs p er m 3 southern cross�es appalachian cross�es northern cross�es southern pallet cants appalachian pallet cants northern pallet cants 100 200 300 400 500 600 co ns ta nt 2 01 9 do lla rs p er m 3 fas 1c 2a pallets cross�es luppold and bumgardner — regional analysis of u.s. sawn hardwood product prices from 2000 to 2020 11 while pallet cants had a higher correlation with 2a lumber (r = 0.62) the price paths of these products differed. eastwide pallet cant price was 34% below that of 2a lumber in 2000. while both 2a lumber and pallet cant prices trended downward between 2004 and 2012, the difference between the two price series declined to 13% in 2012. between 2012 and 2018, aggregate eastwide 2a price remained above the pallet cant price. in 2020, eastwide pallet cant prices and aggregate 2a lumber prices were nearly identical. when examining the individual species used to develop the aggregate 2a price, pallet cant prices exceeded 2a lumber prices for most species in 2020, with the exception of red oak, white oak, hard maple, and walnut (hmr 2020). in 2000, the aggregate price of 1c lumber exceeded crosstie price by 43%. between 2004 and 2009, 1c prices declined by 41%, while crosstie prices declined by 4%. in 2009 and 2016, crosstie prices were similar to 1c prices, but were below 1c prices for the years between these two points. crosstie prices remained below 1c prices in 2017 and 2018, but exceeded 1c price by 21% in 2020. these divergent paths for 1c and crosstie prices resulted in low correlation (r = 0.13). 4 discussion the differences in the relative levels of aggregate regional fas, 1c, and 2a lumber prices are the result of differences in species composition. the fact that these series also were highly correlated indicates that the overall impact of changes in domestic and international markets for hardwood lumber have been similar across regions. four patterns are consistent across figures 3, 4, and 5: the declines between 2004 and 2009, the continued low relative prices until 2012, the rapid upward movement in 2013 and 2014, and the flat to downward-trending prices since 2014. in these respects, aggregate regional prices of the different lumber grades have moved in a similar manner; however, the size of the decline varied among regions. as discussed in luppold et al. (2014), the decline in lumber prices between 2004 and 2009 was the result of declines in domestic and international demand for lumber used in appearance applications. the downward trend between 2009 and 2012 also was influenced by the liquidation of lumber inventories by primary and secondary manufactures being forced out of business due to poor market conditions. the increase in prices after 2012 was the result of relatively low domestic production (luppold & bumgardner 2017) and increased exports, with most of the increase in exports going to china and vietnam (luppold & bumgardner 2016). quesada et al. (2019) also noted that exports have become a dominant market for hardwood lumber. the declines in fas and 1c prices that began in 2018 also were associated with large declines in exports to china (usda fas 2020). these changes also seem to have influenced 2a prices, as eastwide 2a prices were highly correlated with 1c and fas prices (table 5). another pattern exhibited in figures 3, 4, and 5 was the increasing relative position of aggregate prices in the central region from 2017 to 2020, compared to the other regions. in the lumber market, white oak and walnut were the only species to have higher prices for grades fas in 2020 than in 2000 (hmr 2000 to 2020). the 1c price of white oak has also declined by a considerably lower amount than the 1c price of red oak (table 4). the central region had the largest compositional weights associated with white oak and is the only region with significant volumes of walnut (table 2). high quality white oak lumber prices have increased as demand for logs by the stave industry has increased (relative to supply) in conjunction with increased demand for aged whiskeys (schweitzer et al. 2019). walnut prices have increased as a result of a tenfold increase in walnut lumber exports since 2000 (usda fas 2020). the differences between aggregate regional lumber prices have become smaller (converged) for the three lumber grades examined. the convergence of lumber prices among regions is the result of the declines in prices of higher value species being larger than the declines in prices of lower value species. the three species with the highest 1c lumber prices in 2000 (table 4) — black cherry, red oak, and hard maple — had price declines of $506, $341, and $262 per m3, respectively, between 2000 and 2020. the three compositionally important but lower value species —yellow poplar, sweetgum, and aspen — had 1c price declines of $122, $72, and $48 per m3, respectively, during the same period. regional prices of 2a lumber differed from fas and 1c lumber in the magnitude of the 2004 and 2014 price spikes, and the magnitude of the decline in 2a price after 2014. both price peaks primarily were the result of 2a red oak prices, and to a lesser extent 2a white oak price. these increases were influenced by increased 2a 12 bioproducts business 6(1) 2021 oak lumber purchases by the wood flooring industry (johnson 2020). the decline in 2a price after 2014 was influenced by increased use of wood substitutes in flooring products. the demand for residential oak flooring and hard maple basketball court flooring appear to be the principle factors that have caused 2a oak and hard maple prices to remain higher than pallet cants prices. the relationship between crosstie and 1c lumber prices, and between 2a lumber and pallet cants prices (figure 7) is indicative of the domestic markets for these products. with the possible exception of staves, crossties have been the only sawn hardwood product with stable domestic consumption over the past 20 years (luppold & bumgardner 2016). while consumption of hardwood lumber by the pallet industry has declined since 2000, its proportion of total sawn product demand has increased, resulting in higher pallet cant prices (luppold & bumgardner 2016). the price of crossties seems to have put a lower limit on how far 1c lumber price can decline, while the price of pallet cants has put a lower limit on aggregate 2a lumber price. what was not examined in this paper was the potential influence hardwood lumber prices have on log and stumpage prices. log and stumpage price series often are developed at the state level, but are inconsistent among states and across regions, requiring additional research to resolve these inconsistencies. another factor that can influence log and stumpage prices are the primary processing industries present in a region. industry data will become more widely available with the implementation of an eastwide timber product output program currently under development by the usda forest service, northern and southern forest inventory and analysis units. changes in hardwood prices over the next decade primarily will be a function of market activity, as timber composition and quality are slow to change. the potential impact of improved u.s. and china trade relations on lumber prices cannot be overstated as exports have become a major portion of the overall market (luppold & bumgardner 2016). increased u.s. housing starts also point to greater domestic demand for lumber. the trends examined in this paper indicate that it will take continual increases in total demand (domestic plus international) to enable lumber prices to recover to 2000 levels. however, the largest impact of low lumber prices over the last two decades may be the effect prolonged low prices might have on expected returns to timber management, as well as the money available for such investments. 5 literature cited hmr. (various issues, 2000–2020). hardwood market report, memphis, tn. howard, jl. (2003). u.s. timber production, trade, consumption, and price statistics 1965-2002. res. pap. fpl-rp-615. usda forest service, forest products laboratory, madison, wi. johnson, j. (ed.). (2020). hardwood market report, memphis, tn. personal communications with w luppold on 14 feb. 2020. luppold, w. (1996). an examination of hardwood lumber pricing. forest products journal 46(5):52–55. luppold, wg, & bumgardner, ms. (2007). examination of lumber price trends for major hardwood species. wood and fiber science 39(3):404–413. luppold, wg, & bumgardner, ms. (2016). us hardwood lumber consumption and international trade from 1991 to 2014. wood and fiber science 48(3):162–170. luppold, w, bumgardner, m, & mcconnell, te. (2014). impacts of changing hardwood lumber consumption and price on stumpage and sawlog prices in ohio. forest science 60(5):994–999. luppold, wg, & bumgardner, ms. (2017). changes in eastern us sawmill employment and estimated hardwood lumber production from 2001 to 2015. forest products journal 67(7/8):408–415. luppold, wg, & bumgardner, ms. (2021). changes in hardwood sawtimber growth, mortality, and removals in the eastern united states. bioresources 16(1):62–76. luppold, w, & prestemon, jp. (2003). tests for long run relationships in hardwood lumber prices. forest science 49(6):918–927. nhla (2019). rules for measurement and inspection of hardwood and cypress. national hardwood lumber association, memphis, tn. https://www.nhla.com/2019-rulebook_web.pdf. quesada, h, adhikari, s, bond, b, & grushecky, st. (2019). analysis of hardwood lumber grade yields using monte carlo simulation. bioresources 14(1):2029–2050. schweitzer, cj, dey, dc, & wang y. (2019). white oak (quercus alba) response to thinning and prescribed fire in northcentral alabama mixed pine-hardwood forests. forest science 65(6):758–766. usda fas. (2020). u.s. trade exports – fas commodity aggregations. usda foreign agricultural service, washington, dc. http://www.fas.usda.gov/gats/default.aspx. usda fs. (2020a). forest inventory evalidator web-application version 1.8.0.01. usda forest service, forest inventory and analysis program, st. paul, mn. https://apps.fs.usda.gov/evalidator/evalidator.jsp. usda fs. (2020b). the forest inventory and analysis database: database description and user guide for phase 2 (version 8.0) usda forest service, forest inventory and analysis program, washington, dc. https://www.fia.fs.fed.us/library/databasedocumentation/current/ver80/fiadb%20user%20guide%20 p2_8-0.pdf. usdl bls. (2020). databases, tables & calculators by subject. ppi commodity data. usdl bureau of labor statistics, washington, dc. https://data.bls.gov/pdqweb/wp. https://www.nrs.fs.fed.us/pubs/52323 https://www.nrs.fs.fed.us/pubs/52323 https://www.nrs.fs.fed.us/pubs/47090 https://www.nrs.fs.fed.us/pubs/47090 https://www.nrs.fs.fed.us/pubs/47090 https://www.nhla.com/2019-rulebook_web.pdf http://www.fas.usda.gov/gats/default.aspx https://apps.fs.usda.gov/evalidator/evalidator.jsp https://apps.fs.usda.gov/evalidator/evalidator.jsp https://www.fia.fs.fed.us/library/database-documentation/current/ver80/fiadb%20user%20guide%20p2_8-0.pdf https://www.fia.fs.fed.us/library/database-documentation/current/ver80/fiadb%20user%20guide%20p2_8-0.pdf https://www.fia.fs.fed.us/library/database-documentation/current/ver80/fiadb%20user%20guide%20p2_8-0.pdf https://data.bls.gov/pdqweb/wp abstract the expansion of wood utilization directly contributes to mitigating climate change, owing to the characteristics of wood as a material. some environmental, social and governance (esg) investors place high value on the wood industry, especially firms that demonstrate transparency regarding its challenges to environmental issues. there is a hypothesis that robust esg propositions can generate additional value for businesses, and this study aims to clarify whether this hypothesis is supported in the case of pulp and paper industry. this study surveyed pulp and paper firms in japan from 2008 to 2017, covering the emergence and growth of esg investment, as recommended by the principles for responsible investment (pri) established in 2006 and sustainable development goals declared by the united nations in 2015. additionally, this study determined the current condition of environmental information disclosure using the global reporting initiative (gri) standards and investigated the relationship between environmental information disclosure patterns and the corporate values among six japanese pulp and paper firms. the findings indicate that these firms attached importance to environmental information disclosure during this period, although the detailed disclosure strategies differed among firms. furthermore, this study finds that the gri standards are useful for clarifying the environmental information strategies presented in non-financial reports. our findings follow the premise of esg investing that refers to the consideration of environmental, social, governance, and financial factors in investment decision-making processes: that a strong esg proposition can generate additional corporate value and support the concept of esg ebit (earnings before interest and taxes) that includes not only operating profits, but also investments and labor costs as indicators of stakeholder value. keywords: corporate value, environmental information disclosure, wood industry, esg investing, case in japan information disclosure on environmental activities and corporate values of pulp and paper firms in japan 1 graduate school of agricultural and life sciences, the university of tokyo, japan * corresponding author. email: masafumi@g.ecc.u-tokyo.ac.jp bioproducts business 10(2), 2025, pp. 20–28. issn 2378-1394 https://doi.org/10.22382/bpb-2025-002 kenji nagasaka 1, masafumi inoue 1 * 1. introduction environmental, social, and governance (esg) investing refers to the consideration of environmental, social, governance, and financial factors in investment decision-making processes (oecd 2020). the number of listed companies that have active efforts on esg issues has increased in recent years as esg investing has grown rapidly worldwide. total esg investment by institutional investors in japan reached jpy 514 trillion1 by march 2021, an increase of 66% over the previous year (japan sustainable investment forum 2022). thus, efforts to disclose esg information have become important business strategies for firms. the increase in esg investment supports the hypothesis that a robust esg proposition can generate additional value for businesses (koller et al. 2019). this concept is similar to that of the creating shared 1 for reference, the current approximate conversion rate is: usd 1 = jpy 140. nagasaka and inoue — information disclosure on environmental activities and corporate values of pulp and paper firms in japan 21 values (csv) strategy proposed by porter and kramer (2011), who emphasized the importance of investments in long-term business competitiveness that simultaneously address social and environmental objectives (bockstette et al. 2011). however, empirical evidence supporting this hypothesis remains limited. regarding the environmental issues that comprise esg issues, the expansion of wood utilization directly contributes to mitigating climate change, owing to the characteristics of wood as a material, although sustainable forest management remains an important prerequisite for achieving positive outcomes by utilizing wood products. therefore, the business models of wood product firms can be considered to have the potential to be positively evaluated by esg investors particularly concerned with environmental issues. therefore, this study aimed to clarify whether the hypothesis, robust esg proposition can generate additional value for businesses, would support the case of the pulp and paper industry. this study examines the potential of wood product manufacturers by specifying the challenges of environmental information consisting of esg issues of pulp and paper firms in japan and then measuring the changes in their corporate values in response to the trend of environmental information disclosure. 2. theoretical background the rise in esg investment may provide additional value for enterprises (koller et al. 2019), which is parallel with the csv strategy (porter and kramer 2011). however, additional evidence corroborating this hypothesis is needed. halbritter and dorfleitner (2015) analyzed us market financial data from 1991 to 2012 and concluded that investors should not expect additional returns from trading portfolios of highand low-rated firms based on esg aspects. similar findings were reported by bauer et al. (2005) for german, uk, and us ethical mutual funds, and by renneboog et al. (2008) for socially responsible investment funds worldwide, including japan. conversely, nishitani (2014) demonstrated consistency with the hypothesis that environmental efforts positively influence their corporate value through active information disclosure on environmental issues (hereafter, environmental information) by conducting an empirical analysis of financial and non-financial data of 505 japanese manufacturers between 2008 and 2011. additionally, ghoul et al. (2011) found that firms in the us with better corporate social responsibility (csr) scores exhibit cheaper equity financing, resulting in higher corporate value. in japan, the signing of the united nations principles for responsible investment by the government pension investment fund in september 2015 precipitated the expansion of esg investment. the environment for the promotion of esg investment has been steadily improving, with firms being required to formulate their corporate governance codes and stewardship code. institutional investors are now under an obligation to engage with the firms in which they have invested, taking esg issues into account, and to disclose information for the exercise of voting rights. nagasaka et al. (2022) analyzed the disclosure of information on social issues by pulp and paper firms in japan. the findings indicated that the impacts of the sdgs were few, however, a pronounced surge was observed around 2016 pertaining to gender and diversity (concerning sdg5). furthermore, the disclosure of initiatives pertaining to job creation (concerning sdg8), inequality and human rights (concerning sdg8 and 10), and workplace environment (concerning sdg 8) was prevalent. 3. method this study focuses on pulp and paper firms in japan, which represent the largest consumers of wood materials. most wood product manufacturers in japan have recently begun disclosing environmental information, except for pulp and paper firms, which have long been challenged to actively disclose their environmental information after having addressed air and water pollution through their business operations in the past (kuninaka 1980). the six firms surveyed were oji holdings (oji), nippon paper industries (nippon paper), rengo co., ltd. (rengo), daio paper corporation (daio), hokuetsu corporation (hokuetsu), and mitsubishi paper mills limited (mitsubishi). these firms belong to the “pulp and paper” division listed in the first section of the tokyo stock exchange market. their combined sales represented 69% of 29 major pulp and paper firms in 2020. oji was mitsubishi’s top shareholder, accounting for 33% of its total stock in 2020. hokuetsu was also daio’s top shareholder, holding 24% of its total 22 bioproducts business 10(2) 2025 stock at the same time. oji, nippon paper, and daio produced paperboards made of recycled paper and printing paper made from wood pulp and recycled paper. rengo primarily produces paperboard. the other firms primarily produce printing papers. non-financial reports showing the firms’ countermeasures taken to address environmental issues published between 2008 and 2017 from the six firms were analyzed to determine the conditions of environmental information during the period. this period covers the emergence and growth of esg investment, as recommended by the principles for responsible investment (pri) established in 2006. in addition, the sustainable development goals (sdgs) declared by the united nations in 2015 were covered by the targeted period in this study. to determine the tendency of environmental information disclosure during this period, we conducted a quantitative content analysis to extract words concerning the environmental information of the six firms using the kh coder (higuchi 2016). all sentences in the 60 non-financial reports were used as the dataset for analysis. this study defines the environmental information of the six firms based on the gri standards provided by the global reporting initiative, an independent international organization that helps businesses and other organizations take responsibility for their impacts (global reporting initiative 2021). as all the surveyed reports were written in japanese, the official japanese translation of the gri standards was employed. this study utilized gri 301 on “materials” published in 2016 (global reporting initiative 2016), gri 302 on “energy” published in 2016 (global reporting initiative 2016), gri 303 on “water and effluents” published in 2018 (global reporting initiative 2018), gri 304 on “biodiversity” published in 2016 (global reporting initiative 2016), and gri 305 on “emissions” published in 2016 (global reporting initiative 2016) as the standards concerning environmental issues. table 1 presents the coding rules developed for the kh coder analysis, highlighting keywords concerning environmental issues based on the five gri standards. sentences that included more than one keyword selected according to the coding rules were counted and divided by the total number of sentences in each report. this ratio is called the appearance rate of environmental information. this shows the target firms’ tendency to disclose environmental information. to measure the impact of the appearance rate on corporate value, the following multiple regression model was employed: cvij = β0 + β1grikj + β2cj + β3yearj + ε where cv represents corporate value derived from financial reports; gri means the appearance rate of environmental information (hereafter the gri rate); c indicates corporate dummy variable; year indicates year dummy variable; ε represents the error term; β0,1,2,3 denote coefficients; k denotes the publication, which varies from 1 to 10; j represents individual firms that vary from 1 to 6; and i indicates temporal variables (k, k+1, k+2) examining the cv-gri time lag. when i was equal to k, we considered that the gri would give positive or negative impact to the cv in the same year. similarly, k+1 considered that the gri would give positive or negative impact to cv after one year, and k+2 would do so after two years. three different types of corporate values (cvs) were established in this study for the explained variables. first, return on equity (roe), is calculated as operating profit divided by shareholder equity. operating profit was selected as the numerator because it reflects the firm’s regular annual earnings capability, which is the basis of long-term corporate value, compared to ordinary profit and bottom-line profit. additionally, this study also defines esgroer, esgroeh, and esgroerh as the explained variables. to calculate esgroer, we divide operating profits and investments (r&d) by shareholder equity. similarly, esgroeh is calculated as operating profits plus labor costs divided by shareholder equity. for esgroerh, the numerator includes operating profit, labor costs, and r&d investment divided by shareholder equity. these definitions are based on the esg ebit concept developed by eisai co., ltd. and abeam consulting ltd. (eisai 2020). regarding these explained variables, this study considers r&d and human capital investment as critical sources of future profits for firms and society. additionally, this study specifies whether there is a time lag between the published year of nonfinancial reports and the trend of corporate values by introducing i, which indicates the simultaneous nagasaka and inoue — information disclosure on environmental activities and corporate values of pulp and paper firms in japan 23 effects of information disclosure on corporate value, a one-year time lag, and a two-year time lag. 4. results and discussion the dataset, based on 60 non-financial reports of the six firms, was divided into 55,110 sentences. this study clarified 2,314 sentences that included more than one keyword for the defined environmental information. the total number of sentences concerning “materials (gri301)” was 961, “water and effluents (gri303)” was 407, “biodiversity (gri304) was 803, and “emissions (gri305)” was 143. no sentences concerning “energy (gri302)” appeared during the period. the number of sentences concerning “materials” was the highest because pulp and paper firms focused on using recycled paper for production. japan paper association, which is formed by major pulp and paper firms, including the target six firm, published the recovered paper utilization rate of 66.8% in 2023, which was one of the highest in the world (japan paper association 2024a). this statistical data provides the background for the target six pulp and paper firms to be particularly proactive in disclosing information about material recycling. the number of sentences concerning “biodiversity” was also high, because all firms claimed that they procured wood chips from sustainably managed forests that were closely related to biodiversity conservation. additionally, oji and nippon paper operated large areas of forests themselves, and these forests were certified by the forest stewardship council (fsc) or the programme for the endorsement of forest certification (pefc), which place great importance on biodiversity-related issues. biodiversity has been a key issue for sustainable management that is closely related to natural capital including resources such as water and trees, which are essential resources for the pulp and paper industry. the results suggested that these firms were conducting their businesses with an emphasis on biodiversity and natural capital as core competencies. “water and effluents” and “emissions” have also been critical issues for all targeted firms because their business operations had caused air pollution and water contamination that had environmental impacts in the 1960s and 1970s in japan (kuninaka 1980); pulp and paper firms in japan have been challenged to take countermeasures to address these issues over the years. for example, the japanese pulp and paper industry achieved 91.5% reduction of volatile organic compounds (vocs) emissions in 2022 compared to emissions in 2000, according to the 2023 sustainability published by the japan paper association (japan paper association 2024b). table 1. selected keywords from the gri standards in japanese as the coding rule concerning environmental issues. gri standards coding rules in japanese coding rules in english (for reference) gri301 materials (原材料 and 重量) or (原材料 and 体積) or リサイクル or 再生利用 (‘materials’ and ‘weight’) or (‘materials’ and ‘volume’) or ‘recycle’ or ‘reclaimed’ gri302 energy エネルギー消費量 or エネルギー原単位 or エネルギー必要量 ‘energy consumption’ or ‘energy intensity’ or ‘energy requirements’ gri303 water and effluents (共有資源 and 水) or 取水 or 排水 or 水消費 (‘shared resources’ and ‘water’) or ‘ water discharge’ or ‘water withdrawal’ or ‘water consumption’ gri304 biodiversity 保護地域 or 生物多様性 or (生息地 and 保護) or (生息地 and 復元) or iucnレッドリスト or 国内保全種リスト or 生物種 ‘protected areas’ or ‘biodiversity’ or (‘habitat’ and ‘protected’) or (‘habitat’ and ‘restored’) or ‘iucn redlist’ or ‘national conservation list’ or ‘species’ gri305 emissions 温室効果ガス or ghg or スコープ1 or スコープ2 or スコープ3 or 温室効果ガス排出原単位 or オゾン層破壊物質 or ods or 窒素酸化物 or nox or 硫黄酸化物 or sox ‘greenhouse gas’ or ‘ghg’ or ‘scope 1’ or ‘scope 2’ or ‘scope 3’ or ‘ghg emissions intensity’ or ‘ozonedepleting substances’ or ‘ods’ or ‘nitrogen oxides’ or ‘nox’ or ‘sulfur oxides’ or ‘sox’ 24 bioproducts business 10(2) 2025 conversely, none of the firms had sentences that mentioned “energy” (gri302) from 2008 to 2017. the category gri302 covers energy consumption, energy intensity, and reduction in energy requirements; these topics are critical in connection with climate change issues. they are likely to appear in the non-financial reports of pulp and paper firms as well as in other industries after 2018, however, which is beyond our research period. table 2 shows the gri scores of pulp and paper firms. this study found that trends in environmental information disclosure differed among the six firms. the total gri scores of the oji and nippon paper companies increased during this period. for example, oji continues its activities concerning environmental conservation and environmental information disclosure. oji announced the results of an estimate that the multifaceted functions supplied by the approximately 190,000 ha of company owned forests in japan amount to approximately 550 billion yen per year (oji holdings corporation 2024). this fact implies that environmental information disclosure has become a crucial factor for the corporate management. the total gri rates of the other four firms decreased during the same period, however. for example, rengo showed the highest mean value of the total gri rate in 10 years, but the gri rate decreased during the same period. rengo mainly disclosed “materials” issues because rengo’s main product was paperboard. the second highest mean value of the total gri rate was shown by daio; however, daio disclosed not only “materials” issues but also other gri-related words because daio produces not only paperboard but also other paper products. hokuetsu was an equity method affiliate of daio, and mitsubishi was an affiliate of oji in 2020. however, the gri rates differed. this indicates that the financial power of parent firms did not affect comtable 2. appearance rate of environmental information (gri rate) by six pulp and paper firms in japan. company name year total gri301 (materials) gri303 (water and effluents) gri304 (biodiversity) gri305 (emissions) oji holdings 2008 2.43% 1.26% 1.17% 0.00% 0.00% oji holdings 2009 3.49% 2.15% 0.54% 0.67% 0.13% oji holdings 2010 3.43% 2.53% 0.30% 0.15% 0.45% oji holdings 2011 3.33% 1.95% 0.49% 0.65% 0.24% oji holdings 2012 3.15% 1.80% 0.09% 1.17% 0.09% oji holdings 2013 3.32% 1.28% 0.83% 0.98% 0.23% oji holdings 2014 5.02% 2.38% 1.32% 0.53% 0.79% oji holdings 2015 2.94% 0.98% 0.98% 0.59% 0.39% oji holdings 2016 3.74% 0.83% 1.46% 0.62% 0.83% oji holdings 2017 4.20% 1.40% 1.63% 0.47% 0.70% nippon paper industries 2008 4.26% 1.53% 0.80% 1.70% 0.23% nippon paper industries 2009 3.24% 1.24% 0.33% 1.57% 0.10% nippon paper industries 2010 5.54% 1.59% 0.71% 2.89% 0.35% nippon paper industries 2011 5.67% 1.62% 0.58% 3.24% 0.23% nippon paper industries 2012 5.03% 2.12% 0.39% 2.32% 0.20% nippon paper industries 2013 6.53% 2.42% 0.65% 3.20% 0.26% nippon paper industries 2014 6.66% 2.17% 0.72% 3.48% 0.29% nippon paper industries 2015 7.50% 1.80% 1.08% 4.40% 0.22% nippon paper industries 2016 7.48% 2.07% 1.35% 3.90% 0.16% nippon paper industries 2017 6.79% 2.09% 0.61% 4.00% 0.09% rengo co. ltd. 2008 14.05% 10.32% 2.58% 0.29% 0.86% rengo co. ltd. 2009 11.30% 6.78% 2.26% 1.41% 0.85% rengo co. ltd. 2010 8.25% 5.41% 1.71% 0.85% 0.28% rengo co. ltd. 2011 11.26% 7.36% 1.73% 1.52% 0.65% rengo co. ltd. 2012 8.10% 4.66% 1.72% 1.23% 0.49% rengo co. ltd. 2013 5.48% 3.02% 1.51% 0.76% 0.19% rengo co. ltd. 2014 4.26% 2.41% 0.74% 0.74% 0.37% rengo co. ltd. 2015 4.82% 2.93% 0.86% 0.69% 0.34% rengo co. ltd. 2016 5.17% 3.10% 0.69% 1.21% 0.17% rengo co. ltd. 2017 4.89% 3.06% 0.61% 1.07% 0.15% daio paper cooperation 2008 2.68% 1.48% 0.88% 0.16% 0.16% daio paper cooperation 2009 11.72% 7.42% 2.93% 0.78% 0.59% daio paper cooperation 2010 12.47% 7.05% 3.25% 1.36% 0.81% daio paper cooperation 2011 12.11% 7.96% 2.08% 1.38% 0.69% daio paper cooperation 2012 7.94% 4.11% 2.74% 0.27% 0.82% daio paper cooperation 2013 7.28% 3.64% 2.34% 0.52% 0.78% daio paper cooperation 2014 5.22% 2.80% 1.49% 0.37% 0.56% daio paper cooperation 2015 4.94% 2.84% 1.20% 0.45% 0.45% daio paper cooperation 2016 6.71% 3.56% 1.47% 0.84% 0.84% daio paper cooperation 2017 2.08% 0.52% 1.30% 0.26% 0.00% hokuetsu cooperation 2008 2.89% 0.28% 0.74% 1.40% 0.47% hokuetsu cooperation 2009 3.71% 2.23% 0.37% 0.74% 0.37% hokuetsu cooperation 2010 1.72% 0.60% 0.26% 0.52% 0.34% hokuetsu cooperation 2011 1.40% 0.60% 0.30% 0.50% 0.00% hokuetsu cooperation 2012 5.80% 3.25% 1.39% 0.93% 0.23% hokuetsu cooperation 2013 2.66% 0.83% 0.66% 1.00% 0.17% hokuetsu cooperation 2014 0.37% 0.11% 0.15% 0.11% 0.00% hokuetsu cooperation 2015 0.55% 0.13% 0.21% 0.21% 0.00% hokuetsu cooperation 2016 0.44% 0.12% 0.16% 0.16% 0.00% hokuetsu cooperation 2017 1.21% 0.27% 0.54% 0.40% 0.00% mitsubishi paper mills ltd. 2008 3.73% 1.87% 0.41% 1.04% 0.41% mitsubishi paper mills ltd. 2009 6.62% 0.33% 0.33% 5.63% 0.33% mitsubishi paper mills ltd. 2010 3.22% 0.40% 0.20% 2.62% 0.00% mitsubishi paper mills ltd. 2011 3.43% 0.14% 0.29% 2.57% 0.43% mitsubishi paper mills ltd. 2012 4.60% 1.06% 0.53% 2.30% 0.71% mitsubishi paper mills ltd. 2013 4.85% 0.75% 0.37% 3.17% 0.56% mitsubishi paper mills ltd. 2014 3.78% 0.22% 0.22% 2.67% 0.67% mitsubishi paper mills ltd. 2015 3.51% 0.32% 0.32% 2.39% 0.48% mitsubishi paper mills ltd. 2016 3.02% 0.40% 0.20% 2.22% 0.20% mitsubishi paper mills ltd. 2017 2.32% 0.19% 0.39% 1.55% 0.19% nagasaka and inoue — information disclosure on environmental activities and corporate values of pulp and paper firms in japan 25 munication strategies on environmental issues during this period. focusing on the trend of each gri score, this study finds that communication strategies for environmental information differ among firms. for instance, nippon paper and mitsubishi have shown great interest in disclosing information on biodiversity. conversely, oji displayed all four types of environmental information with a balance. the sdgs launched in 2015 did not affect the tendency of the gri rates of all firms until 2017, although all six firms mentioned the sdgs and their business activities in their non-financial reports published in 2017. this is a critical point to determine whether sdg-related issues would influence the future reports of wood product firms in japan. as a result, a table of descriptive statistics was set up in table 3. table 4 shows the coefficient β that indicates the impacts on the corporate values as explained variables in response to the changes of the total gri rates as an explanatory variable. the results indicate that all the coefficients have positive impacts with sufficient significance. this clarifies that the gri rate plays a key role in the environmental information disclosure strategies of pulp and paper firms in japan. regarding the time lag of the explained variables, there was little gap between the three pairs: the same year, the next year, and two years later. this result indicates that, at a certain point, corporate value would have already expected future increases or decreases of at least two years. when analyzing the next year, explanatory variables in 2016, as the last year, would be affected by an explained variable in 2017. when conducting an analysis two years later, the explanatory variable in 2015, the last year, would be an explained variable in 2017. focusing on the case of individual firms in table 5, oji, rengo, and daio showed significantly positive coefficient β for all types of explained variables. these table 3. descriptive statistics. sample size average standard deviation min. max. corporate value 60 20.604 7.361 5.371 35.696 gri appearance rate in total 60 0.051 0.031 0.004 0.141 corporate dummy oji holdings 60 0.167 0.376 0 1 nippon paper industries 60 0.167 0.376 0 1 rengo co. ltd. 60 0.167 0.376 0 1 daio paper cooperation 60 0.167 0.376 0 1 hokuetsu cooperation 60 0.167 0.376 0 1 mitsubishi paper mills ltd. 60 0.167 0.376 0 1 year dummy 2008 60 0.100 0.303 0 1 2009 60 0.100 0.303 0 1 2010 60 0.100 0.303 0 1 2011 60 0.100 0.303 0 1 2012 60 0.100 0.303 0 1 2013 60 0.100 0.303 0 1 2014 60 0.100 0.303 0 1 2015 60 0.100 0.303 0 1 2016 60 0.100 0.303 0 1 2017 60 0.100 0.303 0 1 note: the corporate value is esgroerh, which includes operating profit, labor costs, and r&d investment divided by shareholder equity. 26 bioproducts business 10(2) 2025 table 5. impacts of corporate values on the tendency of environmental information disclosure based on the 60 non-financial reports from individual firms in the same year. explained variables esgroerh esgroer esgroeh roe gri appearance rate in total oji holdings 199.383 *** 144.025 ** 176.941 ** 121.583 ** nippon paper industries 16.723 -14.831 11.123 -20.431 rengo co. ltd. 104.778 *** 63.401 ** 106.712 *** 65.335 *** daio paper cooperation 148.181 *** 94.082 *** 137.415 *** 83.317 *** hokuetsu cooperation -221.825 ** -91.560 -208.445 ** -78.179 mitsubishi paper mills ltd. 177.740 *** -7.412 139.359 ** -45.793 adj r2 0.649 0.507 0.652 0.528 note: ** and *** indicate significance at the 1% and 0.1% levels, respectively. explained variables applied the same year of explanatory variables. table 4. impacts of corporate values by the tendency of environmental information disclosure based on all the 60 non-financial reports. explained variables: the same year explained variables esgroerh esgroer esgroeh roe gri appearance rate in total 125.493 *** 77.274 *** 123.689 *** 75.470 *** adj r2 0.260 0.194 0.288 0.200 explained variables: the next year explained variables esgroerh esgroer esgroeh roe gri appearance rate in total 122.402 *** 72.322 *** 119.605 *** 69.525 ** adj r2 0.253 0.160 0.274 0.157 explained variables: two years later explained variables esgroerh esgroer esgroeh roe gri appearance rate in total 105.446 *** 57.398 ** 102.239 *** 54.191 ** adj r2 0.212 0.113 0.228 0.107 note: ** and *** indicate significance at the 1% and 0.1% levels, respectively. firms’ performances follow the hypothesis that active environmental information disclosure positively affects corporate value, which is the fundamental premise for esg investing. mitsubishi also showed significantly positive coefficient β for esgroerh and esgroeh. these facts indicate that labor costs, which could be translated into human capital investment in the context of esg issues, strongly affected mitsubishi’s corporate values. subsequently, the coefficient β showed negative in the case of hokuetsu’s esgroerh and esgroeh both of which were affected by labor cost changes. since the merger of the former hokuetsu corporation and former kishu paper co., ltd. was conducted in 2011, the accumulation of human capital may have been negatively affected by the process of merging. none of the four explained variables in for nippon paper showed any significant negative or positive impacts during the period. nippon paper has long been published in csr reports, but the gri appearance rate has never affected corporate value. further research is necessary to determine the reasons for these findings. focusing on the case of year in table 6, significantly positive coefficient β for all explained variables were shown from 2009 to 2011, because it had been announced that 17 member companies of the japan paper association had falsified recycled pulp content nagasaka and inoue — information disclosure on environmental activities and corporate values of pulp and paper firms in japan 27 ratios in a wide range of recycled paper products, including notebooks and copy paper in january 2008, and the pulp and paper firms in japan then had to announce the countermeasures to this issue (research bureau of the house of representatives 2008). other year dummy variables did not show any significance, and this indicated that there was no annual impact from 2013 to 2017. 5. conclusion this study focuses on the non-financial reports of six pulp and paper firms as advanced cases of environmental information disclosure by wood product firms in japan. this study determined that these firms placed importance on environmental information disclosure from 2008 to 2017, although their detailed disclosure strategies differed. in addition, this study found that the gri ratio can be a useful tool for clarifying the environmental information strategies shown in non-financial reports. our findings follow the premise of esg investment in the case of pulp and paper firms in that firms can increase their corporate values. in addition, our findings support the concept of esg ebit developed by eisai co., ltd. and abeam consulting ltd. (eisai 2020) that evaluating esg investing can evaluate not only the income of firms but also the r&d and labor costs that would lead to long-term corporate values. concerning the pulp and paper firms in japan, esgroerh and esgroeh showed higher coefficient β than roe, as table 3 showed. this finding implies that human capital investment is a critical factor. the potential of pulp and paper firms is high when considering esg issues. wood utilization can contribute to the global environmental and social issues that esg investors perceive as important. future studies may clarify whether japanese pulp and paper firms will use their advantages to increase their long-term corporate value by dealing with suitable environmental and social information disclosure based on the gri framework. acknowledgments this study was supported by jsps kakenhi (grant number: jp21k14887). references bauer, r., koedijk, k., ottten, r. (2005). international evidence on ethical mutual fund performance and investment style. journal of banking & finance 29, 1751–1767. bockstette, v., stamp, m. (2011). creating shared value: a how-to guide for the new corporate (r)evolution. fsg, accessed at, http://www.fsg.org/tabid/191/articleid/351/default.aspx?srpush=true eisai (2020). cfo dialogue: challenge for esg, making invisible value visible. eisai integrated report 2020, 51–58. ghoul, s., guedhami, o., kwok, c., mishra, d. (2011). does corporate social responsibility affect the cost of capital? journal of banking & finance 35, 2388–2406. table 6. impacts of corporate values on the tendency of environmental information disclosure based on the 60 non-financial reports annually in the same year. explained variables esgroerh esgroer esgroeh roe gri appearance rate in total 2008 77.263 38.449 76.262 37.448 2009 163.998 *** 120.322 *** 160.447 *** 116.770 *** 2010 144.105 ** 91.788 ** 140.723 ** 88.407 ** 2011 114.118 ** 61.504 * 114.228 ** 61.613 * 2012 103.485 48.087 103.069 * 47.670 2013 102.135 32.652 99.388 29.905 2014 76.708 15.906 77.110 16.308 2015 84.635 40.507 89.097 44.969 2016 92.011 54.487 95.302 57.777 2017 33.574 -7.172 39.946 -0.800 adj r2 0.211 0.224 0.245 0.226 note: ** and *** indicate significance at the 1% and 0.1% levels, respectively. explained variables applied the same year of explanatory variables. 28 bioproducts business 10(2) 2025 global reporting initiative (2021). about gri, https://www. globalreporting.org/about-gri/ global reporting initiative (2018). gri303: water and effluents (in japanese). global reporting initiative (2016). gri301: materials, gri302: energy, gri304: biodiversity, gri305: emissions (in japanese). halbritter, g., dorfleitner, g. (2015). the wages of social responsibility – where are they? a critical review of esg investing. review of financial economics 26, 25–35. higuchi, k. (2016). kh coder reference manual. https:// khcoder.net/en/manual_en_v3.pdf japan paper association (2024a). 65% of recovered paper utilization rate is the new target for “japan, a paper recycling country.” https://www.jpa.gr.jp/en/env/recycle/aim/ japan paper association (2024b). japan paper association sustainability report 2023, https://www.jpa.gr.jp/sustainability/report/pdf/en_report2023.pdf japan sustainable investment forum (2022). sustainable investment survey in japan 2021. https://japansif.com/ wp-content/uploads/2022/03/2022survey-jp.pdf koller, t., nuttall, r. henisz, w. (2019). five ways that esg creates value. mckinsey insights, november 4, 2019. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-ways-thatesg-creates-value# kuninaka, y. (1980). the state-of-art review and perspectives on the environmental problem of the japanese pulp & paper industry (in japanese with english abstract). japan tappi journal 34(3), 211–221. nagasaka, k., inoue, m. (2022) disclosure strategy of sustainability information by japanese paper and pulp industry, 2022 autumn academic meetings of the japanese forest economic society, dec 3. kyoto, japan. nishitani, k. (2014). an empirical analysis of how a firm’s environmental management activities and environmental disclosures influence its stockholder value (in japanese). kankyo keizai seisaku kenkyu 7(1), 10–22. oecd (2020). oecd business and finance outlook 2020. https://www.oecd-ilibrary.org/sites/b854a453-en/index. html?itemid=/content/component/b854a453-en oji holdings corporation (2024). results of economic value assessment of company owned forests in japan and quantification projects. https://www.ojiholdings.co.jp/portals/0/resources/content/files/english/ ir/news/2024/results%20of%20economic%20value%20 assessment%20of%20company%20owned%20forests. pdf?tabmodule1281=0 porter, m., kramer, m. (2011). creating shared value. harvard business review, jan–feb., 2011. https://hbr. org/2011/01/the-big-idea-creating-shared-value. renneboog, l., horst, j., zhang, c. (2008). the price of ethics and stakeholder governance: the performance of socially responsible mutual funds. journal of corporate finance 14, 302–322. research bureau of the house of representatives (2008). the problem of mislabeled recovered paper pulp content ratio~background and future efforts required (in japanese). https://www.shugiin.go.jp/internet/itdb_ rchome.nsf/html/rchome/shiryo/kankyo_200807_koshi. pdf/$file/kankyo_200807_koshi.pdf abstract with the rise of the internet and electronic media, the first two decades of the 21st century have seen a rapid decline in demand for graphic paper. this study examines the strategic actions pulp and paper companies have been taking to adapt to such changes in their business environment, with the aim of providing a comprehensive description of both the leading firms and the smaller players in the industry. public documents of 40 public and privately owned pulp and paper manufacturers in north america and nordic europe were examined for a range of change-related activities, such as repositioning efforts and changes to leadership, financing, and/or firm structure. companies have been gradually reducing their production of graphic paper and increasing production of other products, thereby illustrating the twin turnaround concepts of retrenchment and recovery. due to the capital outlay required to switch from one product to another, larger, integrated companies have generally been more successful at adapting than smaller companies that make mostly graphic paper. an unexpected observation was that declining demand was just one of many pressures on the pulp and paper industry; company documents also frequently mentioned fiber supply shortages and government regulations as drivers of change. keywords: turnaround, forest industry, transformational change, abductive content analysis, forest-based bioeconomy adapting to the digital age: strategic change in the pulp and paper sector 1 department of wood science, faculty of forestry, university of british columbia, 2424 main mall, vancouver, bc v6t 1z4 * corresponding author. email: alice.palmer@alumni.ubc.ca; tel: 604-833-3596 acknowledgements: this research was funded by mitacs in partnership with catalyst paper. the research design, implementation, analysis and results are the authors’ own. however, catalyst representatives stew gibson and brian boland provided much insight into the industry and its structure and provided feedback as the work progressed. the authors are grateful for their time and insight. the authors would also like to thank four anonymous reviewers at bioproducts business for graciously sharing their expertise and enthusiasm. alice m. j. palmer1* and david h. cohen1 bioproducts business 5(7), 2020, pp. 69–86. issn 2378-1394 https://doi.org/10.22382/bpb-2020-007 1. introduction since the year 2000, pulp and paper companies have experienced an unprecedented shift in market demand for their products (bogdanski 2014, jonsson 2011, hetemäki & hurmekoski 2016, zhang et al. 2014). for north american producers, the rise of e-mail, electronic media, and mobile computing has cut demand for graphic paper grades (defined as newsprint plus higher-value printing and writing grades) by roughly 60% (fao 2019) (figure 1). the second largest traditional producing region, northern europe, has also seen sharp declines, decreasing nearly 40% since its peak production year in 2006 (fao 2019). the consequences of this decline have rippled through the supply chain, forcing producers of market pulp to find new markets for their product. for example, whereas in 2003 about 60% of northern bleached softwood kraft (nbsk) pulp went into printing and writing paper, by 2013 this figure had shrunk to 30% (quinn & patel 2014). paper manufacturers have been forced to systematically reduce their production of graphic paper products and investigate new processes, products, and markets to maintain sales and profitability. in addition to declining demand for graphic paper, pulp and paper companies in north america and nordic europe have also been adjusting to increasing global competition, particularly in pulp (fao 2019). rising global demand for pulp and paper products in the 1980s and 1990s attracted investment in forest plantations in warmer regions such as south america, southeast asia, and oceania, where fast-growing species such as euca70 bioproducts business 5(7) 2020 lyptus and radiata pine can reach maturity much more quickly than in the northern hemisphere (bogdanski 2014). large, state-of-the-art pulp mills were built to use this rapid-grown fiber, and production has risen quickly from the 1990s. with lower costs than those of the older mills in the northern hemisphere, mills in these emerging regions have contributed to the pressure on pulp and paper companies in north america and europe. with the pulp and paper sector in the throes of change, manufacturers, industry associations, government agencies, and scholarly researchers alike have begun to discuss a need to transform the pulp and paper industry and broader forestry sector in general (madero et al. 2019). the recent interest from industry and government has prompted an increase in research into how forestry companies (including those that make pulp and paper) can adapt to ongoing market shifts. an expedient way to think about the burgeoning body of literature on the topic of transformational change within the pulp and paper industry is to categorize it according to subject emphasis and methodology (figure 2). regarding subject emphasis, the most common approach to the topic has been to investigate the opportunity to produce a greater variety of products from the pulping process, or in other words, to shift to a “biorefinery” operating model. methodologically, authors have done so either through discussing the topic with expert respondents (e.g., brunnhofer et al. 2020; hämäläinen et al. 2011; hurmekoski et al. 2018; karltorp & sandén 2012; näyhä 2019, 2020; näyhä & pesonen 2012, 2014; patari et al. 2016; toppinen et al. 2017) or by examining company actions and financial records (novotny & laestadius 2014; pätäri et al. 2011). alternatively, a smaller group of studies examine the subject more broadly. for example, cohen and nikolakis (2013) and madero et al. (2019) asked industry to define transformation in their own words, resulting in a much broader range of activities that could be transformational, including not only product diversification and biorefinery technology but also operational improvements. on a similar thematic note, but by examining financial records and case studies, ghosal (2015) highlighted the importance of making continuous improvements to manufacturing and supply chain facilities in order to remain competitive. lamberg and peltoniemi (2019) examine the topic on an even broader scale, examining entries, exits, and investments of finnish pulp and paper companies over a 200-year period. while the literature portrays a relatively consistent picture of what the ideal pulp and paper industry would look like, it also hints that some solutions may not be appropriate for all companies. for example, although all but two of the cited papers highlighted the opportunity to expand into emerging biomaterials such as nanocellulose or biofuels, novotny and laestadius (2014) point out that only chemical pulp mills are well suited to producing such products and that not all pulp and paper companies have this type of mill. moreover, the four studies that use companies as a unit of analysis either consider a broad range of actions for a small group of figure 1. decline of graphic paper production in north america and europe. 0 5 10 15 20 25 30 35 40 45 50 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 sennot fo snoillim na & europe graphic paper production usa & canada n. & w. europe first public internet access data source: fao, 2019 palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 71 figure 2. topical and methodological approaches to examining pulp and paper industry change. su bj ec t e m ph as is pulp and paper industry change: themes and methods* at a glance emphasis on bioproducts 10 studies common themes: new product opportunities factors driving interest in bioproducts role of wood-based bioproducts within the bioeconomy 2 studies p&p companies with specific dynamic capabilities perform better; bio-refineries could become the next dynamic capability chemical pulp mills can make many different products; mechanical mills are more limited gaps: financial info available for large, public companies only detailed actions only available for 3 nordic companies other changes examined 2 studies many activities can be transformational, i.e. not just product diversification and bioeconomy (as above) but also operational improvement leadership, access to capital, & employee engagement are important enablers 2 studies the careful selection of technology investments is vital to financial health & longevity p&p companies need to continuously improve manufacturing and logistics processes to stay competitive gaps: studies either examined a narrow range of actions for a large group of companies, or examined a wide range of actions for a small group of companies participant responses observations of company actions and financial records source of study data * excluding literature reviews and conceptual papers. for authors and titles, please refer to appendix 1. 72 bioproducts business 5(7) 2020 companies (i.e., case studies) (novotny & laestadius 2014, ghosal 2015) or consider a relatively narrow range of activities or statistics for a larger group of companies (pätäri et al. 2011, lamberg & peltoniemi 2019). in sum, it is possible that the literature has overemphasized the opportunities available to some categories of pulp and paper companies (e.g., those that are publicly traded or that have chemical pulp mills) while underemphasizing solutions that might be well suited to others. this study seeks to fill in such potential blind spots in our understanding, through an examination of the types of actions pulp and paper companies have been taking to adapt to their business environment, including both large, publicly traded firms and small, privately owned firms in north america and northern europe. through a content analysis of corporate publications as a methodology and using business turnaround as a theoretical lens, we consider a wide range of different change-related actions, including not only product focus and investments/divestments, but also such topics as leadership, financing, and company structure. the study begins with a brief overview of business turnaround concepts, followed by a detailed explanation of its two-part methodology. next, the results section details the themes and trends emerging from the content analysis. finally, the discussion and conclusion sections examine the results within their theoretical context and highlight emerging questions for future study. 1.1 theoretical lens: business turnaround madero et al. (2019) propose business turnaround as a theoretical lens for discussing transformative change in the forest industry. business turnaround has been defined variously as “a decline and recovery in performance” (schendel et al. 1976, p. 3), “appropriate business responses to financial decline” (pearce & robbins 1993, p. 613), and “how firms reverse firm-threatening performance declines” (barker & duhaime 1997, p. 13). the recent struggles of the pulp and paper industry, as indicated by bankruptcies and mill closures, and the industry’s efforts to reinvent itself suggest the term “turnaround” would indeed be appropriate. while this study does not specifically assume that all pulp and paper companies have experienced a period of poor performance (as per the above definitions of “turnaround”), it draws heavily on the ideas present in the turnaround literature. a simplified turnaround model based on that of pearce and robbins (1993) provides a foundational overview of the concept (figure 3). according to the model, a company undertaking a turnaround generally does so in two steps: a cost-reducing retrenchment1 phase followed by a recovery phase. the retrenchment, defined as a period of cost reduction, frees up the resources a company needs to get started on the road to recovery. deep cost cutting may also involve “asset reduction” – the sale or closure of operations. the rapid decline in graphic paper demand does indeed appear to be triggering asset reduction activities, including widespread mill closures. madero et al. (2019) suggest the rising popularity of the term “transformation” among forest industry practitioners could reflect a phenomenon observed by pearce & robbins (2008): the term “turnaround” has become used in a pejorative sense, in that it is often associated with the retrenchment phase of a turnaround. “transformation” is a more palatable way to describe the second, recovery phase of a turnaround. what constitutes the best response to a given company’s turnaround situation depends largely on the nature of the decline. while turnaround situations caused mostly by internal factors can generally be solved with operational remedies, declining performance caused by changes in a firm’s business environment may require strategic actions such as a change in business model. in accordance with the model, the recent global reduction in demand for graphic paper could be considered an external turnaround cause, necessitating strategic changes. the following section describes a variety of different strategic and operational actions firms may take to effect an improvement in their business. 1.2 business turnaround activities the business turnaround literature offers insight into the types of steps companies may use as part of a turnaround initiative. for example, barker and duhaime (1997) observed 28 different management actions among firms that experienced performance recoveries between 1974 and 1988. corporate-level activities (defined as “domain-changing activities” or changes to a firm’s business model) included acquisitions and divestments, joint ventures, start-ups, geographic expansion or contraction, and changing priorities among the firms’ existing businesses. at the business (or “product-market”) level, 1 scholars are not unanimous in their viewpoints about retrenchment. this concept will be discussed further in section 4.2. palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 73 figure 3. basic business turnaround model. table 1. actions used to effect business turnaround. category of change action adaptive actions trends to watch for business unit whole-firm or business unit acquisitions or divestments do the changes show a pattern over time? eg., • growing importance or one business/product line over another • shifts along the supply chain (i.e., more raw materials, or more finished products) • growing importance of on geographic area over another mill facilities mill acquisitions or divestments, mill closures, new mill construction, major (i.e., publicly-announced) upgrades, conversions to different products geography announced plans to enter or exit production or sales in a geographic region products enter or exit a product or business line (announcement would likely be in conjunction with a ventureor facility-related decision) leadership changes to ceo, senior management team, or board • what precipitated the change? • where was the background of the new leaders? financing major steps to reduce debt or shore up financing, such as debt recapitalization or bankruptcy restructuring company structure sale of the company, merger, change between public or private ownership, change between business structure (i.e., corporation vs. reit*), joint ventures * real estate investment trust. source: adapted from barker and duhaime (1997), harrigan (1980), and schoenberg et al. (2013). changes could be applied to product lines, marketing, prices, manufacturing (including facility modernizations or closures) research and development expenditures, and/or financial policy changes (e.g., asset liquidations or bankruptcy protection). other turnaround literature cites similar types of actions. for example, harrigan (1980) stresses acquisitions, divestments, facility closures, and mergers (activities which would fit into barker and duhaime’s 1997 corporate-level change category). pretorius (2008) mentions activities that fit into several of barker and duhaime’s (1997) categories, but groups them according to motivation. for example, “last resort” activities include financial policy changes such as bankruptcy protection and emergency financing as well as corporate-level activities such as a sale of the company. a literature review by schoenberg et al. (2013) groups company activities into six turnaround themes, four of 74 bioproducts business 5(7) 2020 which are content-oriented, that is, they suggest which actions to take; and two that are process-oriented, meaning they suggest ways to achieve them. content-oriented themes include cost efficiencies, asset retrenchment, a focus on the firm’s core activities, and building for the future; among the process-oriented themes are reinvigoration of firm leadership and culture change. table 1 summarizes the actions and thematic trends discussed above. 2. methods 2.1 overview of methodological approach this study asks, “what actions have pulp and paper firms in north america and northern (nordic) europe been taking to adapt to their changing business environment?” to answer this question, the authors conducted a careful examination of publicly available information sources to inventory the adaptive actions these companies have taken. this content analysis approach takes advantage of the abundance of publicly available information about company activities, including websites, annual reports, news releases, and (to a lesser extent) analyst commentary, to paint a picture of the initiatives pulp and paper producers have explored for adaptation to this new market reality. furthermore, examining the companies’ actions over a 14-year period enabled the authors to observe how company strategies played out over time. this study primarily uses a problem-oriented or abductive approach (krippendorff 2013)2 to the abovedescribed content analysis. abductive reasoning seeks to identify the best explanation for a given set of observations, but recognizes that there may be other possibilities. for example, a physician may contemplate a patient’s symptoms and then make a diagnosis, or a detective may gather clues and solve a murder. in a similar fashion, the “clues” this study sought from the chosen texts were mentions of business activities such as divestments or leadership changes. in doing so, the authors aimed to piece together an overall image of company strategies. while many companies may be reticent about their strategies, even the most secretive firms take publicly observable actions, such as advertising new products or informing their employees of mill closures. for additional insight, following the abductive information-gathering step, the study incorporates an inductive examination of the accumulated text to identify the prominent accompanying themes. for example, if annual reports state why companies are making specific strategic changes, commonly cited reasons are identified in this second, inductive step. the use of content analysis provides a contrasting approach to much of the recent literature in the field of forest products business management, in which the majority of studies have used respondent-dependent methods such as surveys, interviews or delphi procedures. one potential shortcoming of respondentdependent research is the potential for respondent bias (krippendorff 2013). for instance, participants may alter their response to meet what they perceive as the expectations of the researcher, attempt to manipulate the researcher, or (conversely) be influenced by the researcher. while content analysis itself is not necessarily bias-free, its potential “blind spots” are different from those of other research methods, therefore providing an opportunity for triangulation. 2.2 sampling method and units of analysis this study used purposive sampling, with the goal of having as large and robust a sample as possible. the criteria for choosing companies were as follows: • companies had manufactured pulp and/or paper products at some time within the initial 2004-2016 study window.3 • companies had operations in canada, us, and/or northern europe (finland, sweden, norway). • companies had at least one primary pulping facility (groundwood or chemical). the third criterion (primary production) excluded many consumer products or specialty firms such as kimberley clark, neenah paper, etc., that operate further along the supply chain and have not been subject to the same market decline as the primary producers. also excluded were peripherally relevant firms which may have a pulping facility, but which earn most of their revenue from specialty or value-added products such as chemicals or packaging such as borregard and graphic packaging. 2 this contrasts with a content-driven (inductive) approach, in which combining specific observations leads to the development of a general theory; and a deductive approach, in which a general theory is used to develop specific, testable hypotheses. 3 the study period was later updated to include the years 2017 and 2018. data collection began with the year 2004 because this was the earliest year in which consistent financial information was available. palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 75 sample companies were drawn from the following sources: • pricewaterhousecoopers, global forest, paper & packaging industry survey top 100 companies list (2016 and previous editions) • rbc capital markets, north america paper, packaging & forest products coverage list (quinn & and patel 2014) and global paper comparables list (quinn & swanson 2016) • risi, pulp and paper international ppi top 100 list (2016). in addition, the study included companies that, over the 14-year study period, merged into, sold mills to, bought mills from, or were spun off the companies on the above lists. finally, the researcher added two additional small companies suggested by industry experts. in most instances, the unit of analysis was the company, as this is the level at which strategic decisions are made. in a few exceptions, the authors grouped a pair or small group of companies if one company makes strategic decisions for its subsidiary (i.e., canfor and canfor pulp) or if a new company resulted from a spinoff (i.e., rayonier with rayonier advanced materials). 2.3 data collection process 2.3.1 quantitative overview data was collected in two steps. step one was to create an annual overview of each company, including information about its location, ownership, products and total revenue (as an indicator of company size) (table 2). wherever possible, total revenue was compiled using the morningstar investment website as a single source to ensure uniformity of data among companies (morningstar research inc. 2019). remaining information was gathered from company websites and annual reports. firm production was also tracked over time, with the goal of identifying when each entered or exited product lines. an important dimension of the variables is how they change over time. while some amount of change is to be expected (such as the retirement of a senior leader in the firm, or a new brand launch), an unusual or unexpected change (such as the replacement of a majority of the board of directors with executives from outside the firm, or the acquisition of another firm’s entire productive capacity of a new product) is indicative of a change in strategy. 2.3.2 examining the text(s) for change indications step two involved a careful reading of available business documents from the initial 2004-2016 study period,4 searching for mentions of adaptive actions such as those noted in table 1. in other words, for each company under study, the text was examined in light of these questions: • what corporate-level acquisitions or divestments did the company make, (if any)? • what mill-level changes did the company make, such as acquisitions, divestments, upgrades, conversions etc.? • did the company announce plans to enter or exit specific geographic regions (e.g., asia)? • did the company officially announce that it was entering or exiting a product line? ◦ alternatively, did the firm sell off its last production unit of a category of product, thereby exiting the business line? • what changes were made to the company’s senior leadership team and board (if any)? • did the company announce major changes to its financing, and if so, what? • did the company make any major structural changes, and if so, what? each change indicator or “answer” was recorded in a microsoft word (microsoft office 2016) document (referred to hereafter as the “compendium”). shorter sections were copied and pasted in their entirety; longer sections were paraphrased. table 2. quantitative variables: company characteristics and financial information variable indicator(s) ownership public, private, or public with a significant shareholder geographic location north america (canada + us) or europe products manufactured forest land management, lumber, panels, engineered wood products, market pulp, specialty pulp, newsprint & magazine paper, fine & specialty paper, containerboard, packaging, tissue products, chemicals, bioenergy, and other firm size firm revenue 4 the research period was later extended to include the years 2017 and 2018, to be discussed in section 2.5. 76 bioproducts business 5(7) 2020 the literature sources were examined in the order below, with the search continuing until either all of the above questions were addressed, or all sources were exhausted. 1. company websites, including historic and current press releases. 2. company annual reports (sampling the earliest available report, the most recent report, and reports at 3-4 year intervals in between, depending on how many years of detail each report provided). for the majority of companies, steps 1 and 2 were adequate for finding the answers to the questions above. however, for some small, privately owned firms (all of which were north american), additional searching was needed: 3. if unanswered questions remained after the websites and annual reports were examined, the authors then searched (via google) the company name with a keyword phrase, such as “canfor closure” or “canfor acquires” (or its french-language equivalent5). such searches often uncovered articles in the online editions of local newspapers or broadcast media. if the literature offered specific motivations for the adaptive activities (such as closing a mill to save costs) this information was also noted. 2.4 analysis of text extracts the compendium of company change activities was manually coded sentence by sentence using the logic of open coding (coffey & atkinson 1996) and with the aid of nvivo professional 11 (qsr international pty ltd. 2015) software. because the compendium included text references to both measurable actions (i.e., a change in ceo) and surrounding context (i.e., the new ceo’s background, alluding to intentional succession planning), codes were classified as to whether they represented actions or contextual themes such as motives for change, external drivers, or influential actors. the nvivo results were then exported to microsoft excel (microsoft office 2016) for further analysis. the number of companies mentioning each action as coded was tallied to gain insight into the relative rate of incidence of each action. 2.5 company activities updated to 2018 the original coding was done in 2017. prior to the publication of this paper, the authors re-examined each of the 40 companies’ activities to identify any additional strategic changes in direction. the compendium was not re-coded or re-tabulated after the addition of this new information; therefore, percentage tallies in the results section represent information from the initial 2004–2016 study period. however, the narrative considers the full range of data and not just that which was used for coding. 3. results as discussed in section 2.2, purposive sampling was used to create as large and robust a sample as possible. forty companies (or company groupings, in the case of spinoffs or subsidiaries) were examined in detail (table 3). thirty-one companies were headquartered in north america, eight were headquartered in europe, and one (sappi) was headquartered in south africa, but had approximately 50% of its operations in europe and an additional 25% in north america. the coding exercise highlighted adaptive actions (as per table 1) as well as company motivations for change, external drivers of change, and people involved in change. 3.1 major trends 3.1.1 gradual withdrawal from graphic paper products by far the most prevalent trend was reduced production, particularly in graphic paper6 grades. sixty-five percent of the companies indicated that they had closed at least one pulp and/or paper mill or machine.7 thirty percent of firms specifically mentioned declining demand as a driver. for example: our white papers compete with electronic data transmission, e-readers, electronic document storage alternatives, and paper grades we do not produce. increasing shifts to these alternatives have had, and are likely to continue to have, an adverse effect on traditional print media and paper usage. (packaging corporation of america) in addition to mill closures, mill divestments (and corresponding purchases) have also been common, and were mentioned by over half of the companies. most common among the wide range of motives for divesting, mentioned 5 canada has two official languages: english and french. 6 “graphic paper” is defined as newsprint plus printing and writing grades of paper. 7 paper mills often have more than one “machine” or production line. palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 77 by 40% of companies, was a desire to concentrate on a smaller number of core businesses. several north american firms sold off not just individual paper mills, but their entire line(s) of different paper products. this could be done either by a sale or by “spinning off” the product line into a newly formed company. examples include meadwestvaco spinning off its graphic paper mills to form newpage in 2005, international paper spinning off its supercalendared paper mills to form verso in 2006, weyerhaeuser’s sale of its fine papers division to domtar in 2007, domtar spinning off its lumber mills to form eacom in 2010, and cascades spinning off its fine papers facilities as rolland enterprises in 2014. among european companies, the sale of one or two mills at a time has been more common. manufacturers of products other than graphic papers have also needed to close or divest poorly performing mills. for example, cascades, domtar, södra, and westrock have closed nbsk8 pulp mills; tolko was planning to shut its kraft paper mill, but instead found a buyer; paper excellence closed its bctmp9 mill; and holmen and pca have both closed paperboard mills. mill closures accelerated during and immediately after the 2009 recession. while non-graphic pulp and paper products such as nbsk, bctmp, and paperboard do not appear to be in permanent decline, they have nonetheless still been subject to market pressure and global competition. the companies that (as of the end of 2018) were still heavily weighted to printing and writing paper, including those companies that were formed as spinoffs of other companies’ printing and writing paper businesses, have been more likely to mention financial challenges than those that have exited or reduced their exposure. catalyst paper, verso, and norske skog are examples. 3.1.2 costs, prices, and margins are a prime concern declining demand (either structural or cyclical) and high operating costs combined to create tight or even negative margins for pulp and paper companies. a desire to cut costs and/or improve efficiencies was the most commonly highlighted motivator for change, mentioned by 45% of the companies. costs were also mentioned by 28% of companies as an important driver of change. in the words of one company: table 3. list of companies / decision units. companies headquartered in north america alberta pacific* fortress paper* mercer* tolko** boise cascade and boise inc.** georgia-pacific*** newpage* twin rivers* (formerly fraser papers) canfor and canfor pulp** p h glatfelter** paper excellence** verso* cascades** international paper*** pca** wausau paper* catalyst* j d irving** rayonier and rayonier advanced materials** west fraser** clearwater paper** kapstone paper and packaging** resolute** weyerhaeuser** domtar** kruger** stern partners’ companies* white birch paper* expera specialty solutions* meadwestvaco** (*** after 2015) tembec** companies headquartered in europe billerudkorsnäs** metsä group** sca*** stora enso*** holmen** norske skog** södra** upm kymmene*** company headquartered in south africa but operating in europe and north america sappi** stars (*) indicate the approximate size of the company. * = annual sales of < us$ 1 billion or fewer than five pulp mills ** = annual sales between us$ 1 billion and $ us 10 billion *** = annual sales over $us 10 billion; integrated company with global reach 8 northern bleached softwood kraft pulp, a chemical pulp with strong fibers. 9 bleached thermo-mechanical pulp. 78 bioproducts business 5(7) 2020 paper supply has exceeded demand despite the consolidation and capacity rationalization which has occurred across the industry. these factors have led to highly competitive market conditions and eroding industry margins with pricing leverage insufficient to offset the impact of increased manufacturing costs — most notably fiber and energy. (wausau paper, owned by sca since january 2016) 3.1.3 many firms have lacked sufficient financial resources several companies, especially those that are heavily invested in printing and writing paper, have had to restructure financially. nine firms, including catalyst paper, expera specialty solutions, newpage, norske skog, resolute, stern partners, twin rivers, verso, and white birch paper have been through either debt recapitalization, chapter 11 bankruptcy (in the us), or an equivalent procedure. the most common trigger was excess debt; indeed, a third (33%) of companies studied explicitly mentioned this as a motive for making changes. liquidity improvement was an additional financial motive. 3.1.4 private equity firms have played an active role in restructuring companies in financial difficulty have also merged with or been purchased by other firms, sometimes in leveraged buyouts. an unexpected trend was the frequency in which struggling firms or individual operations were purchased by private equity firms. over a quarter of the companies in the study10 were owned by various private equity firms at some point in the past 20 years. all but one of these were north american. 3.1.5 firms that can afford it have grown in other business lines pulp and paper companies have needed to replace their dwindling graphic paper operations with other business lines. popular areas of growth have included forest land management; packaging materials such as boxboard, linerboard, and corrugating medium; tissue and hygiene products; pulp products; and pulp by-products such as lignin and energy. these areas were selected because many of the skills needed for success were similar to those previously applied to successful graphic paper firms. for example, weyerhaeuser gradually sold off its paper divisions over the past decade, investing instead in forestlands. in 2016, it merged with plum creek timber, becoming one of the world’s largest private timberland owners. international paper restructured in 2005, and over the next two years, sold many of its operations in forestlands, wood products, beverage packaging, kraft paper, coated paper, and chemical businesses. it used the revenue to invest in its core businesses: packaging, printing papers, and distribution. domtar hired a new ceo from personal care product manufacturer sca in 2009. in 2012, it purchased adult incontinence product manufacturer attends, establishing a personal care products division. it has since purchased additional manufacturers and distributers of adult incontinence products, which supplied 19% of its annual revenue by 2015 and 24% by 2017. upm kymmene has rebranded itself “the biofore company,” commercializing various products from the chemical pulping process and further refining others to create new products, such as biodiesel and biochemicals. west fraser timber has done this on a smaller scale, by isolating lignin during the pulping process and working to commercialize it as a chemical in various markets. strategies for entering other business lines varied. the most common way to expand into new product lines was by acquisition, with acquisitions ranging from single-mill purchases (38% of companies examined) to mergers with an equal-sized firm (33%). alternatively, some firms (33%) converted existing mills into other, similar products, and others built new mills (38%). purchasing existing mills, either singly or as a group, can be less expensive than building new facilities. for example, in the summer of 2018, china-based nine dragons purchased catalyst paper’s graphic paper mills in rumford, maine and byron, wisconsin for just us$175 million (nd paper 2018). in contrast, billerudkorsnäs is investing sek 5.7 billion (approx. us$ 640 million) to build a new paperboard machine at its gruvön mill site and rebuild the existing kraft pulp mill (billerudkorsnäs 2016). moreover, the construction of metsa’s new sulphate (kraft) pulp mill in äänekoski, finland was budgeted to cost €1.2 billion (us$1.4 billion) (metsa group 2015). mill conversions can also be technically complicated. for example, fortress paper’s conversion of its thurso, qc mill, originally scheduled for september, 2011, did not occur until december of that year, and production delays continued well into 2013 (kuitenbrouwer 2015). 10 boise cascade, boise inc., canadian kraft paper industries (former tolko mill), catalyst paper, expera specialty solutions, mercer international, newpage, norske skog, pca, rolland paper, stern partners, twin rivers, verso, and white birch paper have been either fully or partially owned by private equity firms. in addition, stora enso had its own private equity investment arm. palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 79 mill conversions are also a way to avoid closing efficient mills that have dwindling markets. mills making newsprint, one of the earliest products to suffer continuous market decline, have been converted to a range of alternative products. for example, jd irving, sappi, norske skog, and holmen have converted newsprint mills to higher-value paper products including supercalendared and lightweight coated paper used for magazines and newspaper inserts. converting newsprint (or other graphic papers) to containerboard or linerboard is another option, undertaken by pca, stora enso, upm kymmene, and international paper. norske skog partnered with italian company rotocard to convert a paper mill to tissue. pulp mills have also been converted. for example, fortress paper converted a kraft pulp (nbsk) mill to dissolving pulp, and stora enso converted a paper pulp mill to make fluff pulp for tissue applications. 3.1.6 leadership transitions ranged from stable to chaotic depending on the company the majority of changes to corporate leadership (including ceos, senior managers such as executive vice presidents, and board members) have been due to retirements, with the majority of replacements being internal. however, there have been a number of exceptions: 48% of companies brought in at least one external ceo or c-suite executive. changes of ownership, changes of company direction, and activist boards were the most common drivers of such changes. firms that have had financial difficulties have been more likely to have changes in leadership. for example, as of spring 2020, norske skog has undergone five ceo transitions since 2005, including three transitions since 2017. 3.1.7 energy production for cost reduction and revenue generation energy production (including cogeneration, hydroelectric and wind production, and wood pellets) began as a means of cost reduction and is now becoming a source of supplemental income. the pulp production process (particularly the drying phase) is energy-intensive and subject to fluctuating fossil fuel and electricity costs. government incentives have also encouraged energy conversions, such as the one announced here: in 2010, [our company] introduced the first phase of its energy strategy, a multi-year initiative that will allow the company to reduce fossil fuel use, increase renewable biomass use and further leverage the high-efficiency combined heat and power (chp) technology at its paper mills. (verso, a us-based paper manufacturer, upon announcing a us $100 million, 4-phase energy initiative using both federal and state-level grant money) over the past decade, new opportunities to sell bioand wind-based power to regional electrical grids, and the development of the wood pellet export industry, have provided opportunities for companies to improve revenues and reduce greenhouse gases while improving their environmental credentials: [our company’s] three pulp mills are largely fossilfuel free, and generate surplus energy. this energy is sold as bio-based products, such as green electricity and district heating. (södra, a european integrated pulp and solid wood manufacturer) twenty-three percent of the firms in the study indicated they were increasing their production of bio-derived energy, 10% indicated they were selling electricity derived from cogeneration, and 8% indicated they were generating electricity by other means, such as wind or hydropower. 3.1.8 emerging fiber and biofuel technologies firms have also increasingly been exploring high-tech fiber and biofuel technologies such as cellulose nanofibers, lignin, hemicellulose, and biodiesel. such products are limited to firms that are already producing pulp through chemical (as opposed to mechanical) means. the majority of pulp and paper companies’ investments in these new technologies have been joint ventures or involved partnership agreements. examples of technology partnerships include resolute and mercer’s joint venture, performance biofillaments; domtar and fpinnovations’s joint venture, celluforce (with investors shlumberger and fibria); canfor’s joint venture with licella fibre fuels pty ltd.; alberta pacific’s cooperation with innotech alberta and alberta innovates to develop a cellulose nanocrystals pilot plant; and stora enso’s joint venture with chemical company rennovia. upm kymmene has also created short-term (i.e., 2-year) partnerships with several landand ocean-based transportation companies to pilot its biodiesel products. european companies have been more likely to rebrand themselves as manufacturers of “biomaterials”; however, the adoption of new fiber and biofuel technologies appears relatively similar on both continents. european annual reports now typically refer to kraft and dissolving pulp mills as “biorefineries”; north americans 80 bioproducts business 5(7) 2020 firms tend to refer to the mills by their technical product names (nbsk mill, sulfate pulp mill, etc.). in summary, pulp and paper firms are gradually reducing their production of graphic paper grades and growing in other product areas, including packaging materials, tissue products, new cellulose or by-product-based technologies, and energy. financial issues, including costs and margins, finding adequate investment capital, and financial restructuring, were of paramount importance. finally, the relative stability of the top leadership teams and boards varied by company, with financially and structurally stable companies less likely to make major changes. figure 4 briefly summarizes these results; the following discussion will examine these results in the context of the extant literature and suggest topics for future study. 4. discussion from this study’s examination of corporate documents, it is evident that the pulp and paper industry recognizes that its situation is not just “business as usual” and that firms need to alter the way they do business in order to survive and thrive. each firm in this study made significant changes to its business. furthermore, most (93%) of the firms appear to have expanded their actions beyond such “everyday” changes as operational improvements or changes to production volumes. the following discussion will highlight how the study’s results advance our understanding of what pulp and paper companies are doing and can do to adapt to their changing market environment. 4.1 unexpected observations since a major premise of this research was that pulp and paper companies are transforming their businesses to adapt to the severe decline in demand for graphic paper, one might have anticipated “declining demand” to be by far the most prevalent change driver mentioned in the company documents. in fact, this was not the case. in addition to the driver “declining demand” (mentioned by 30% of the companies), the drivers “chip and raw material supply” (38%) and “subsidy or tax credit” (33%) were also mentioned frequently. this result suggests that the relative importance of declining demand as a change driver is worthy of further study. while it is possible that company literature (which has potential investors among its target audience) intentionally de-emphasized the issue of declining demand, it is also possible that other topics are emerging as more important to the industry. the role of government incentives is worth noting. as one-third (33%) of the companies mentioned investments that were stimulated by a government subsidy or tax credit, it would appear that government policymakers have been actively, and successfully, seeking to influence company actions within the pulp and paper industry. given that this study focused specifically on firms in regions in which the forest industry played a figure 4. summary of themes and trends. trends: • reduction in graphic paper production • costs remain paramount • many firms are short of investment funds • private equity helps firms restructure • wealthier firms grow other business lines • varied success with leadership transitions • increased energy production • exploration of new technologies actionsmotivationsdrivers palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 81 historically important economic role, such government interest is perhaps not surprising. the prevalence (33%) of companies owned or influenced by private equity firms, hedge firms, and special purpose acquisition corporations was also a surprise. neither the business management nor the forest products literatures stress private equity’s role in business transformation. indeed, within the forest products literature there is little mention of the issue driving the need for private equity involvement: firms’ difficulty obtaining the funds they need to carry out recovery activities such as mill upgrades or product conversions. this gap is worthy of deeper examination. the companies that were most likely to need financial restructuring tended to have a number of characteristics in common: they produced mostly (or in several cases, exclusively) graphic paper grades, they tended to be smaller on average and several were privately owned for at least part of the study period. these characteristics have tended to make them more difficult to include in research samples. as mentioned in the introduction section, three of the four studies that examined companies as the unit of analysis either looked at financial information from publicly traded firms (ghosal 2015, pätäri et al. 2011), or examined a small number of large, integrated companies in detail (ghosal 2015, novotny and laestadius 2014). one more characteristic of this study’s cohort of struggling companies was that all but one were headquartered in north america. they were therefore not included in lamberg and peltoniemi (2019), which studied only finnish companies. another way in which this research differs from that of the extant literature regards the role of emerging biomaterials within the forest industry. as discussed in the introduction, much of the forest products literature discusses the role of biorefineries in transforming the industry. whereas 25% of the pulp and paper companies in this study have invested in emerging wood-derived biomaterials such as nanocellulose or lignin, only a handful (i.e., upm kymmene, metsä) currently appear to be actively relying on these materials playing a major transformative role in their businesses. the novotny and laestadius (2014) case study of three swedish pulp and paper companies pointed out that the company that mostly used thermomechanical (tmp) pulping processes faced greater “lock-in” (p. 885) to traditional products and processes than did the companies that had more chemical process (kraft or sulphite) mills. as thermomechanical mills do not separate lignin from cellulose, they have fewer options for producing wood-derived chemicals. the fact that building new mills is extremely expensive may explain why only a few companies have made bioproducts an active part of their adaptation strategies: only companies that have existing chemical mills and/or companies that are very large (as indicated on table 3) have the ability to expand in this direction. for the others, purchasing existing tissue or packaging facilities, or converting existing mills to make these products, made better financial sense. 4.2 turnaround = business exit + transformational repositioning? overall, the concept of business turnaround was a helpful tool for investigating and conceptualizing change within the pulp and paper industry. first, it provided a framework of activities to look for when examining the company documents for evidence of change. second, the majority of the concepts highlighted in the simplified turnaround model were observed among the industry’s actions. for example, the industry undertook both retrenchment activities, such as mill closures, and a wide variety of recovery activities. furthermore, it highlighted the utility of both operational and strategic changes (both of which were observed in our study) and the situations in which each would be most useful. although the dual concept of retrenchment and recovery was useful for discussing change in the pulp and paper industry, there are some ways in which retrenchment was more nuanced in reality than in the model. for example, the model’s simple retrench-then-recover pattern was rarely observed in the industry; rather, most pulp and paper companies have used both capacity reduction (retrenchment) activities and strategic changes simultaneously over the past decade. the reasons for retrenching also varied. for example, several companies retrenched not by choice but because they lacked the resources to continue operating. this observation supports a study by barker and mone (1994) which suggested that retrenchment, rather than being a prerequisite to turnaround, was instead a consequence of business decline. other companies divested or closed mills not to free up resources for change, but as a vital part of their strategic reorientations away from graphic paper. in this instance, the concept of business turnaround overlaps with the concept of business exit, as per porter (1976), harrigan (1980) and harrigan and porter (1983) (figure 5). 82 bioproducts business 5(7) 2020 within the forest products literature, madero et al. (2019) suggest that the term “transformation” as frequently used in the forest industry may be a more palatable way of describing the concept of business turnaround. there are indeed many similarities between the two concepts. for example, investigations into business transformation by cohen and nikolakis (2013) and madero et al. (2019) highlighted the importance of simultaneous operational improvements and strategic changes. however, neither study mentioned specific retrenchment activities. it is possible that the reason the theme of retrenchment was absent from the interviews was simply because the interviewers did not ask about it. however, given that frequent retrenchment is often the norm in cyclical resource industries such as forestry, the absence of retrenchment from discussions of transformation may indicate a difference between the concepts of turnaround and transformation. in this context, transformation could be described as the second, repositioning phase of a turnaround (figure 5). if firms have already completed their retrenchment activities, or were relatively financially stable to begin with, a “transformation” (be it strategic, operational, or a mix of both) would be the logical next step. if firms cannot free up enough resources from retrenchment alone to fund their recovery activities, where should this money come from? nearly a quarter of the firms in the study underwent some degree of financial restructuring, in addition to their retrenchment activities. the observations of this study indicate that the basic turnaround model, and by extension much of the theory upon which it is based, offers an incomplete explanation for capital-intensive businesses such as pulp and paper. 4.3 questions for future research in the process of investigating pulp and paper companies’ recent strategic actions, this study has generated several new questions. most important is the unexpected result that the company documents consulted in the study mentioned fiber supply and government incentives roughly as often as they mentioned declining demand. it is not clear whether this result indicates that declining demand is indeed unimportant to over half of the companies examined, or if there is another factor at play. for example, the company documents may have intentionally stressed some topics over other ones, and the two-step (abductive search plus inductive coding) may also have led to some themes being overor undercounted. to gain a better understanding of the relative importance of the different issues, a quantitative method such as a survey of industry executives would be useful. the companies’ apparent interest in government incentive programs indicates that such programs are both widespread regionally and attractive to the companies. how do the impacts of such programs match their objectives and what could different regions learn from each other? a policy-related complement to this company-focused study would be an add-on study of government documents outlining different national or figure 5. linking the concepts of business turnaround, exit and transformation. palmer and cohen — adapting to the digital age: strategic change in the pulp and paper sector 83 regional policy objectives, comparing such objectives with the results of this study. the role new products, including emerging bioproducts, will play in future company portfolios is another important question. as discussed in section 4.1, the increasing importance of new product development in general, and biorefineries in particular, has been a strong focus of recent literature. however, new products have received less emphasis in the company publications than in the scholarly literature, and actual investments in emerging products have been even less common. it is possible that firms have focused more on specialization (producing fewer products) in the recent past, but are considering diversification (producing more products) for the future. examining the timeline of when companies began mentioning and then adopting new biorefinery technologies could provide insight into whether such products will receive more emphasis in coming years. a final question for future investigation is theoretical: if the resources freed up through retrenchment are inadequate for funding strategic repositioning or operational improvements, how should a turnaround model incorporate firms’ need to raise additional funds? future studies should both ask this question and explore models that incorporate funding as a dimension. 4.4 limitations the research undertaken in this study must be taken with a caveat. as in any qualitative study, the relative frequency and importance of the indicators in the study do not necessarily represent their actual frequency in the population. indeed, the company documents examined in this study may not have contained all of the issues that were important to the companies, and the data search and coding processes may not have identified every issue. in addition, there was more data available for some companies (i.e., larger, publicly owned firms) than others, which could sway the conclusions. furthermore, content analysis of public data cannot capture all types of adaptive change. for example, changes to culture and human resources are still important, but hard to measure and rarely documented publicly. 5. conclusion pulp and paper companies in north america and nordic europe have been challenged to adapt to a rapidly changing business landscape. this study took a detailed look at exactly what types of actions these companies have been taking to do this. drawing upon the business turnaround literature to create a list of change indicators, the study searched company publications with a broad range of potential change activities in mind. the emerging picture was of an equally broad panorama of company situations and corresponding turnaround options. while it is clear that many firms making graphic paper will need to expand into other products, not all companies have the deep pockets required to invest in new mills. indeed, nearly a quarter of the companies in the study have undergone at least one round of financial restructuring. nevertheless, lower-cost options have been successfully piloted, such as the conversion of newsprint mills to linerboard. these observations have been shared with companies in the pulp and paper industry, enabling them to identify actions that could also work well for them. using abductive content analysis as a methodology and a diverse sample of companies added an angle of nuance to the extant scholarly forest products knowledge base. much of the extant literature has focussed on such optimistic themes as expanding into new products (including emerging forest-based bioproducts); however, such widely discussed solutions are not available to many companies. by carefully examining the actions of both large, public firms and smaller, lesser-known firms, this paper illuminated a wider landscape of adaptive action within the pulp and paper industry. 6. references barker, vl, & duhaime, im. 1997. strategic change in the turnaround process: theory and empirical evidence. strategic management journal 18(1), 13–38. retrieved from http://www.jstor. org/stable/3088193. barker, vl, & mone, ma. 1994. retrenchment: cause of turnaround or consequence of decline? 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roberts, d, & nikolakis, w. 2014. thoughts on transforming the forest sector: the potential (and reality) of the bio-economy. pp. 25–35 in forests and globalization: challenges and opportunities for sustainable development, ed. w nikolakis & j innes. routledge, london. retrieved from http://ebookcentral. proquest.com/lib/ubc/detail.action?docid=1791234. schendel, d, patton, gr, & riggs, j. 1976. corporate turnaround strategies: a study of profit decline and recovery. journal of general management 3(3), 3–12. https://doi.org/article. schoenberg, r, collier, n, & bowman, c. 2013. strategies for business turnaround and recovery: a review and synthesis. european business review 25(3), 243–262. http://doi. org/10.1108/09555341311314799. toppinen, a, pätäri, s, tuppura, a, & jantunen, a. 2017. the european pulp and paper industry in transition to a bio-economy: a delphi study. futures 88, 1–14. http://doi.org/10.1016/j. futures.2017.02.002. trahms, ca, ndofor, ha, & sirmon, dg. 2013. organizational decline and turnaround: a review and agenda for future research. journal of management 39(5), 1277–1307. doi:10.1177/0149206312471390. zhang, y, toppinen, a, & uusivuori, j. 2014. internationalization of the forest products industry: a synthesis of literature and implications for future research. forest policy and economics 38, 8–16. https://doi.org/10.1016/j.forpol.2013.06.017. 86 bioproducts business 5(7) 2020 appendix 1: studies exploring change in the pulp and paper industry study method bio-product emphasis? title respondent-based studies brunnhofer et al. (2020) delphi yes the biorefinery transition in the european pulp and paper industry – a three-phase delphi study including a swot-ahp analysis cohen & nikolakis (2013) interviews no changing gears: insight on transformation in the north american & european forest sector hämäläinen et al. (2011) survey + interviews yes forest biorefineries – a business opportunity for the finnish forest cluster hurmekoski et al. (2018) delphi yes diversification of the forest industries: role of new wood-based products karltorp & sandén (2012) interviews + data yes explaining regime destabilisation in the pulp and paper industry madero et al. (2019) interviews no business transformation in the british columbia forest industry näyhä (2019) interviews yes transition in the finnish forest-based sector: company perspectives on the bioeconomy, circular economy and sustainability näyhä (2020) interviews yes finnish forest-based companies in transition to the circular bioeconomy – drivers, organizational resources and innovations näyhä & pesonen (2012) delphi yes diffusion of forest biorefineries in scandinavia and north america näyhä & pesonen (2014) interviews yes strategic change in the forest industry towards the biorefining business pätäri et al. (2016) delphi yes global sustainability megaforces in shaping the future of the european pulp and paper industry towards a bioeconomy toppinen et al. (2017) delphi yes the european pulp and paper industry in transition to a bio-economy: a delphi study studies that examine company actions or characteristics ghosal (2015) case study + financial analysis no business strategy and firm reorganization: role of changing environmental standards, sustainable business initiatives and global market conditions lamberg & peltoniemi (2019) historic analysis no the nanoeconomics of firm-level decision-making and industry evolution: evidence from 200 years of paper and pulp making pätäri et al. (2011) conceptual + financial analysis yes opening up new strategic options in the pulp and paper industry: case biorefineries novotny & laestadius (2014) case studies + interviews yes beyond papermaking: technology and market shifts for wood-based biomass industries management implications for large-scale industries abstract this study aims to define the emerging concept of firm-level business transformation from the perspective of british columbia-based forest sector executives, and to investigate its drivers, enablers, and barriers. the ten executives interviewed for the study generally defined transformation as the execution of different business strategies with the purpose of delivering significant performance improvement to the firm. both strategic and operational changes could be considered transformational, depending on their impact over time. however, the executives stressed that operational efficiency should be used in combination with one of six other strategies, such as diversification of the product mix, entry into the bio-economy, sustained growth, market diversification, diversification of the geographic base of operations or adoption of a customer-driven focus. transformational changes were initiated both to respond to market challenges, such as volatility and competition, and to take advantage of emerging opportunities. several factors could serve as either enablers of or barriers to change: access to financial resources (or lack thereof), leadership, managers’ and employees’ attitudes toward change, and government policy. the risks associated with large capital outlays could be mitigated through benchmarking, collaboration, and careful timing. drawing upon the scholarly business management, applied business management, and forest products business literatures, this study provides new insight into the emerging concept of business transformation. keywords: forest industry, business transformation, strategy, executive perceptions business transformation in the british columbia forest industry a natural-trade ltd., 309-1277 lynn valley rd, north vancouver, bc b department of wood science, faculty of forestry, university of british columbia, 2424 main mall, vancouver, bc v6t 1z4 c department of forest resources management, faculty of forestry, university of british columbia, 2424 main mall, vancouver, bc v6t 1z4 * corresponding author. email: alice.palmer@alumni.ubc.ca; tel: 604-833-3596 acknowledgements: the authors would like to thank the interview participants for graciously sharing their time with us, and dr. shannon hagerman for her insights regarding the design of the interview schedule. we would also like to thank the three anonymous reviewers of this article for their extensive comments and suggestions. alvaro maderoa, alice m. j. palmerb*, john l. innesc, david h. cohenb bioproducts business 4(8), 2019, pp. 93–108. issn 2378-1394. https://doi.org/10.22382/bpb-2019-008 1. introduction the competitiveness and financial health of northern hemisphere forest sector producers have been under pressure in recent years due to changes in their business environment. pulp and paper manufacturers have been hit by a dual challenge of declining demand for printing and writing grades of paper and increasing competition from new mills in emerging producing regions (bogdanski 2014; jonsson 2011; hetemäki & hurmekoski 2016; zhang, toppinen, & uusivuori 2014). for solid wood manufacturers, an unprecedented housing downturn in the united states in 2008 and the subsequent global financial crisis led to a major drop in demand followed by a decade-long recovery in wood products markets, particularly in north america (hansen 2014; panwar, vlosky, & hansen 2012). other changes, such as shifting currency exchange rates, international trade regulations and changing climatic conditions, are ongoing and also impact the competitiveness of one country vis-à-vis another. this analysis focuses on forest sector firms that operate in british columbia (bc). british columbian mills produce about half of canada’s softwood lumber and roughly one quarter of canada’s pulp and paper prod94 bioproducts business 4(8) 2019 ucts by value (statistics canada 2018). historically, the bc forest sector has provided a significant number of jobs for forest-dependent communities (mflnro 2009). bc has therefore been affected by the forces of change impacting the rest of the continent. for example, as over half of bc’s softwood lumber production is exported to the united states (us), the long downturn in us housing wood products markets resulted in greatly reduced demand for bc forest products (bc lumber trade council 2017). closer to home, a mountain pine beetle outbreak has infected an area of 18.3 million ha – roughly half the size of germany – resulting in an approximate 16% reduction of the province’s merchantable timber supply and multiple mill closures in the most heavily impacted communities (government of british columbia 2015). the combined impacts of recent shifts in the business environment have uncovered an urgency to initiate transformative change in bc forest sector firms. multiple stakeholders within the canadian forest sector recognize the competitive pressures caused by changing business environments and the need to find new ways to adapt to this change (natural resources canada 2014; palma, bull, goodison, & northway 2010). over the past decade, the term transformation has emerged as an all-inclusive phrase to describe the broad-ranging changes that may be required to improve industry profitability. for example, starting in 2009, canadian federal government programs such as the “pulp and paper green transformation program” and “investments in forest industry transformation program” have provided funding incentives to forest sector firms to invest in green products and/or technologies; and from 2007-2011 the “transformative technologies program” provided research funding (natural resources canada, 2016 and 2018). such terminology is also popular among industry associations such as the forest products association of canada (fpac) and its constituent corporate members (fpac 2015). following the trend, consulting companies have published white papers on the sector’s transformation, such as berg & lingvist’s (2017) study entitled “pulp, paper and packaging in the next decade: transformational change.” with multiple organizations and stakeholders discussing transformational change, one might expect there to be a shared understanding about what it means to be “transformational.” improved financial performance appears to be a near-universal goal, and a reduced environmental footprint is mentioned frequently. however, the forest sector literature offers few explicit descriptions of what types of activities constitute a transformative change at the firm level. in other words, “transformation” is a commonly used buzzword, but the various organizations discussing it may or may not be using a common terminology. recognizing that different organizations may define firm-level transformations in different ways, our study aims to improve the understanding of how decision makers of forest sector firms define transformative initiatives in their companies. this study aims to describe which alternatives are considered transformative by senior executives of resources, commodities, and valueadded forest products businesses in bc. furthermore, it examines the factors shaping firm-level transformations: the drivers, barriers, and enablers of change. 1.1 theoretical background: defining transformation while the phrase “business transformation” is rapidly entering the lexicon among canadian forest sector industries, it is relatively uncommon within the scholarly literature. this study draws upon a variety of sources to illustrate the concept of transformation, including both the scholarly literature, which does not frequently use the term “transformation” to describe organizational change, and the applied business literature, which does. the scholarly literature about forest products is also considered. the scholarly business literature offers a variety of definitions and descriptors for the sort of major organizational change discussed in this paper. for example, barnett & carroll (1995), quoting hannan & freeman (1984), submit that a “core structural change” is one in which a firm makes major changes to its mission, its organizational structure, its technology, or its marketing strategy. similarly, a case study by pettigrew (1987) highlights strategic changes intended to improve a multi-national firm’s competitive position. these papers consider both what types of changes could be considered important (or transformative) as well as why the firms are making them (adaptation and/or improvement). fast-forwarding to 2017, coleman & thomas discuss how the change management literature has broadened to include many different types of change, ranging from the developmental (gradual culture and process changes) to the transformational (radical and potentially high-risk). madero et al. — business transformation in the british columbia forest industry 95 furthermore, firms may have a portfolio of several different types of change initiative simultaneously. the term “transformation” is more common in the applied business literature (i.e., literature written primarily for a practitioner audience). for example, kotter (1995) describes the goal of a corporate transformation effort as being “to make fundamental changes to how a business is conducted in order to help cope with a new, more challenging market environment.” several other studies (butner 2014; day & jung 2000; dewar et al. 2011; isern, meaney, & wilson 2009) describe firm transformations as a process of accelerated change to improve overall performance (productivity and shareholder returns) and create unprecedented competitive advantages. davidson (1993) defines transformation as a three-phase process, progressing from improving internal processes, to enhancing customer relationships through additional products and services, to transitioning the enhanced products and services into stand-alone businesses. in the forest products literature, chambost, mcnutt, & stuart (2008) describe enterprise transformation as a two-dimensional “continuum of opportunities” including “inside-out” transformations that are mostly operational in nature and strategic “outside-in” transformations that change “the core mission, vision, as well as the goods and services that are delivered in the marketplace.” (p.20). similarly, novotny & laestadius (2014) describe transformation as a change to a firm’s product portfolio, production technology, and cognitive processes. work by cohen & nikolakis (2013) focuses primarily on strategic change, defining firm-level transformation as a “fundamental shift in a firm’s business model to better compete in an ever-changing business environment.” a change to a firm’s business model could include one or more of four components: a change in organizational structure, operations, products and/or markets, or type of business. the goal of such transformation is “a shift to sustainable profitability” (cohen & nikolakis 2013). it must be noted that although all of the executives in the cohen & nikolakis studies (2012, 2013) indicated that they were transforming their companies, many offered examples of transformation that did not match the authors’ definition of firm-level transformation as a fundamental shift in business model. indeed, several described incremental, operational improvements as examples of transformation, suggesting that the term does not share a universal definition. like kotter (1995), cohen & nikolakis’s (2013) definitions incorporate an aspect of why the change is happening: namely, to adapt to a changing external environment. chambost et al. (2008) also clearly state, “there is little argument over whether the north american forest products industry is in deep distress.” although neither paper’s definition of transformation explicitly indicates that firms undergoing transformation are doing so to escape hardship, both introduce the transformation concept within the context of widespread industry change, particularly in the pulp and paper sector. for an alternative concept to business transformation, one could examine the scholarly literature on business turnaround. once defined more narrowly as the study of the “decline and recovery in firm performance” (schendel, patton, & riggs 1976) or “how firms reverse firm-threatening performance declines” (barker & duhaime 1997), the turnaround literature has grown in scope to include proactive changes in strategy firms may take after the immediate threat to their existence has been avoided (pearce & robbins 2008; braun & latham 2012; trahms, ndofor, & sirmon 2013). pearce & robbins (2008) point out that the term “turnaround” has taken on a pejorative label within the applied management literature, associated with cost-cutting and asset reductions. however, this unpopular cost-cutting component, often referred to as “retrenchment” in the scholarly literature (robbins & pearce 1992; barker & mone 1994; barbero, martínez & moreno 2018), is described by braun & latham (2012) as just one of the “twin engines of turnaround.” the second half of a turnaround effort, according to the authors, should be a repositioning phase. within the applied literature, “transformation” is a very palatable way of describing this second half of a turnaround effort. in summary, the scholarly business, applied business, and forest products business literatures provide a broad assortment of viewpoints on business transformation; there is no universal criteria for defining transformation. given that different players within the forest sector also appear to define industry transformation differently, there is a need for additional exploratory research into how forest sector executives perceive this concept. 1.1.1 factors that shape firm-level transformations both the scholarly and the applied business management literature provide insights into the factors that shape firm-level transformations. for example, pettigrew 96 bioproducts business 4(8) 2019 (1987) ascertains that studies of change in businesses often use three different guiding inquiries. the first seeks to identify the “transformation content,” or answer the question of what has changed within the firm. the second line of inquiry centers on identifying the factors triggering major changes across firms (the why of the transformation). third, studies targeted at managers and senior executives often focused on examining the processes and tactics implicit in driving these changes (the who and how of transformation). studies focused on answering why firms’ transformations occur have distinguished between the external and internal factors triggering or driving major changes in organizations (barnett & carroll 1995; isern et al. 2009; kotter 1995; pätäri, tuppura, toppinen, & korhonen 2016; pettigrew 1987; trahms et al. 2013). external factors refer to the social, economic, political, and competitive conditions that activate transformational processes in organizations and in firms. internal factors include aspects such as the company’s vision, the capacities and skills of the workforce and staff, leadership style and the culture of the organization. the opposite question, why not, is also important. for example, näyhä & pesonen (2014) describe several cultural barriers to change in forest sector companies. although each of the above internal and external factors can stimulate change to different degrees, the presence of a visionary leadership and loss of a company’s competitiveness are both factors that are consistently highlighted as major influences for initiating transformations (butner 2014, cohen & nikolakis 2012, isern et al. 2009, kotter 1995, pettigrew 1987, tice & evans 2014). regarding the who and how of transformation, much literature emphasizes the role of senior leadership in the design and implementation of transformative initiatives (kotter 1995, pettigrew 1987). pettigrew (1987), for instance, placed senior leadership as a central element in choosing, justifying, and implementing transformational initiatives. studies in the business management literature underscore the role of corporate leaders and senior executives in deciding the viability of new initiatives (kaplan & norton 2008, mintzberg & quinn 2002). this high level decision-making process takes place within a firm through both formal and informal strategic planning. transformative initiatives figure among the new strategies assessed by decision makers. in summary, in addition to the defining features and content of business transformation, this paper also examines the drivers, barriers and enablers of change. although it does not explain the change-planning process in detail, it does discuss the role that leadership plays in enabling change. 2. methods 2.1 methodological approach the exploratory nature of the specific research objectives (see section 1) led to the adoption of an inductive type of inquiry to facilitate the discovery and explanations of patterns across the views of different senior executives. the grounded theory method provides a ‘logic framework’ for linking data collection to the formulation of general explanations about executives’ views on forest sector business transformations (babbie 2004, charmaz 2006). this study used semi-structured interviews to elicit the views of industry executives about transformational change in their businesses. as per flick, von kardoff, and steinke (2004), the use of semi-structured interviews enabled the interviewer to balance the dual needs for flexibility and specificity, combining exploratory openended questions with confirmatory questions drawn from previous research. the individual was adopted as the unit of analysis in this study. although the primary focus of this research was to examine organizations’ transformation, the means to achieve that goal consisted of analyzing the views of individuals (senior executives) who belonged to these organizations. as insiders of forest sector businesses, senior executives can provide an in-depth view of the processes and outcomes of firm-level transformations. 2.2 selection of interviewees the study used purposive sampling to identify individuals who were directly involved in the strategic planning processes of forest sector businesses. the research team recruited senior executives from established british columbia-based forestry and forest products firms producing a range of different products. these executives’ roles fell into roughly two categories: those executives who prepared detailed proposals for transformation initiatives, and those who initiated, analyzed, and/or decided upon which initiatives to adopt. the companies in this study included resource producers, such as timberland companies; commodity producers, such as lumber or pulp producers; and valueadded producers, such as engineered wood products madero et al. — business transformation in the british columbia forest industry 97 and pre-fabricated house producers. selected companies were in the marketplace for a minimum of 20 years. the rationale for this criterion is that the longer a company has stayed in the marketplace, the higher the probability it has passed through transformational processes in the past. moreover, the firms and organizations analyzed in the comparable applied business literature often have long trajectories (butner 2014). in an effort to broaden the diversity of opinions, the researcher attempted to interview two executives from each firm. the goal in testing the methodology of this exploratory research was to interview between 10 and 15 senior executives or to stop the interviewing process when saturation of new concepts was reached. according to charmaz (2006), this saturation point is attained when no new descriptive codes or themes are emerging from the analysis of data. 2.3 data collection ten interviews were conducted in the two-month period between december 2013 and january 2014.1 nine of these were conducted in-person and one was done remotely. of the nine interviews undertaken in-person, seven were held in the offices of the executives and the remaining two were conducted on campus. a webconferencing service with video streaming was used for the remotely conducted interview. interviews ranged in duration from 28.4 to 56.1 minutes, with an average length of 37.2 minutes. each of the ten interviews was recorded and transcribed for analysis. data collection was concluded after the tenth interview, for two reasons: the first was the difficulty in scheduling additional interviews with high-level executives; the second was the apparent saturation of concepts after the seventh interview conducted. although the data obtained from the 10 interviews was sufficient to address the objectives of this exploratory research, it is possible that having a more diverse sample would have revealed additional themes. 2.4 coding and analysis verbatim transcriptions of each interview were coded line-by-line using the logic of open coding (coffey & atkinson 1996). parallel to the coding exercise, demographic and firm-specific information about the executives was compiled in an attribute table and cross-indexed with the coded text in order to facilitate the indirect identification of patterns. for example, the type of ownership structure of executives’ firms (public or private) and the type of producer they belonged to (resources, commodity or value added) were compared to the coded themes, to see if executives from different types of companies displayed different coding trends. the thematic content analysis tools of the nvivo 10 computer software were used for both the coding and cross-indexing activities. 3. results 3.1 research participants ten senior executives from six companies were interviewed for this study. this sample size, although small, facilitated the exploration of a diverse range of views on forest sector business transformation. table 1 provides a breakdown of the number of executives and details about their positions. the executives represented three general categories of company: resource (i.e., timberland) management, primary products producers (i.e., lumber and/or pulp/ paper manufacturers), and secondary producers (i.e., engineered wood products, secondary manufacturers, etc.) (table 2). note that the number of research informants from resource management companies was limited by the number of firms of this type that operate in british table 1. number of executives by position. generic position title number of executives chief executive officer-president 2 chief financial officer 1 senior vice president 3 vice president 3 director 1 total 10 table 2. number of executives interviewed per type of producer (n = 10). type of producer number of companies number of executives resource management 1 1 commodity producer 3 6 value-added manufacturer 2 3 total 6 10 1 in addition to the questions discussed in this paper, interviewees were asked to select their firms’ current and potential future products from among a list. this product selection will be summarized in a forthcoming article. 98 bioproducts business 4(8) 2019 columbia, due to the high proportion of publicly owned forest land. all executives provided information about the sector and professional domain of their work experience, as well as the duration of such experience. the executives interviewed were a well-seasoned group: they averaged a total of 29 years of work experience, 24 years of which occurred within the forest sector and 5 years of which occurred in other sectors. the following sections report on the views of senior executives on the topic of forest sector business transformation.2 3.2 what makes a change “transformative?” a common theme among the executives’ various definitions of firm-level transformation was the execution of different business strategies that have the objective of delivering significant performance improvement to the firm. activities categorized as “transformational” were generally described in relative terms over four dimensions: they were radical in magnitude, had a long-term impact, employed novel or innovative strategies, and were generally triggered by forces external to the company. for example, all but one of the executives interviewed mentioned that transformation implies producing major changes, large-scale shifts that positively affect the firm’s performance. (1) we’re always trying to do things better, but we’re also looking for that transformative change, the change that’s really going to make a difference, like a step change. (5) we've added a whole new revenue stream to our organization… we've been able to successfully transform, grow, develop, radically change our organization and how it's perceived in the marketplace. it is a complete change in production. however, three of the executives who linked transformation with producing major changes also linked transformation to executing minor changes in the structure of the firm. to these executives, transforming can be “a little or a big thing” (7). (10) so for us it [transformation] comes in many different forms. so it's little innovations or transformations that happen on the shop floor trying to get all of our team members engaged in what they can do differently and how can we be slightly more efficient or slightly more productive. so those are minor transformations, minor innovations. 3.2.1 strategies for transformation although all executives described transformative change as having significant impact, the means of achieving it could be either strategic or operational in nature. analysis of the interview transcripts classified responses into seven different business strategies for forest sector firms to radically improve their competitiveness. in order of frequency of mention, they were: • improve operational efficiency (mentioned by 9 out of 10 executives); • diversify the product mix (8 executives); • enter the bio-economy (5 executives); • expand into new markets (4 executives); • diversify the geographic base of operations (3 executives); • implement a more customer-driven focus (3 executives); and • grow the size of the firm (3 executives). the most frequently mentioned means of transforming a business was to increase operational efficiency, for example, through manufacturing, energy use, or supply chain improvements. however, although nine of the ten3 executives highlighted improving efficiency and reducing costs as important to business transformation, eight of the nine also highlighted that this path is only one component of delivering performance improvements. for these executives, in order to create sustained competitive advantages, it is necessary to combine operational efficiency focuses with other transformational paths, such as diversifying the mix of products or penetrating new markets.4 2 these views are reported anonymously: however, each executive was randomly assigned a number from 1 to 10 in order to facilitate the data analysis. the numbers in parentheses at the beginning of the excerpted interview quotes indicate the response of a specific senior executive. 3 interestingly, the one executive who did say operational efficiency was a means to achieve transformation specifically mentioned that it was not transformational. 4 within the forest sector, “new markets” could mean either new geographic markets or new market segments. for example, a softwood lumber producer could begin supplying the unique grades of lumber and specific logistics required by the do-it-yourself home center segment. madero et al. — business transformation in the british columbia forest industry 99 the second most commonly mentioned strategy carried a greater degree of risk. the transformational path “diversifying the product mix of the company” was one of the more dramatic strategic changes mentioned. as explained by the executives, this consisted of adding new revenue streams to the company by producing and commercializing new products. the examples provided by executives include the adoption of products already being traded by other forest sector businesses in bc, as well as some products that were traditionally outside the forest products sector (i.e., new engineered products or bio-chemicals). executives’ interests in adopting new products varied from one company to another, but were similar between executives from the same company. the third most commonly mentioned strategy for transformation was “enter the bio-economy.” executives saw this transformation happening in their firms on two fronts. firstly, the changes could focus on the production of forest-based energy, including bio-energy products such as biomass-fueled electrical power or wood-based biofuels, and renewable energy initiatives such as solar panels, windmills, or geothermal stations. the second front of this transformational path relates to the production of various emerging bio-products and bio-materials. executives highlighted the relevance of upgrading the kraft pulp model in order to further refine pulp byproducts into new materials. there was considerable variation in opinion across the sample of executives, depending on which types of products their firms manufactured (resources, commodities or value added). for instance, the transformational paths “customer-driven focus” and “market diversification” were mentioned almost solely by executives in value-added and commodity producers, respectively. on the other hand, the transformational paths “operational efficiency” and “diversifying product mix” were the only two paths mentioned by all types of executives. 3.3 factors shaping transformation the executives were asked the following questions regarding the factors influencing firm-level transformation: • in your company, what (if any) are the major factors driving business transformation? • what risks or barriers do you see in the way of transforming your company? • what would facilitate (or enable) business transformation in your view? the change drivers could be grouped into two general themes, depending on the type of change resulting from them. just as the executives indicated that transformation could be either a radical change or a series of gradual improvements, the change drivers included those that prompted strategic or disruptive changes, and others that nudged more incremental changes. firms undertook strategic changes to address changes in their external business environment; meanwhile, they made frequent operational improvements in order to retain everyday competitiveness. an interesting pattern emerged when organizing the barriers and enablers into themes: over half of the themes either were mentioned in more than one category, or had a corresponding opposite theme. for example, government regulation could be seen as either a barrier or an enabler of transformation efforts, depending on its effectiveness. similarly, although executives frequently table 3. summary of factors shaping firm-level transformation. factors shaping firm-level transformation drivers strategic change • new business opportunities • • product substitution • continuous improvement • competition • • market volatility • • capital-intensive production • barriers enablers risk-related • hard to forecast new products • • large project scale • • running pilot trials • • benchmarking • • collaboration • • identification of right timing • • long-term perspective • resources • capital • • trained personnel • • infrastructure • leadership • values, principles and culture • • flexibility • • risk tolerance • • support of corporate board • attitudes toward change • negative attitudes • entrepreneurial mindset • government policy • legislation • • incentive programs • 100 bioproducts business 4(8) 2019 expressed frustration over their employees’ or managers’ resistance to change, several indicated that a changewelcoming or entrepreneurial mindset could be change enabler. because the same themes often emerged twice, the results have been organized not into barriers and enablers (which would be repetitive) but rather into the themes risk, access to resources, leadership, attitudes toward change, and government policy (table 3). much of the variation of responses between executives from different firms could be attributed to whether the firms were publicly or privately owned. both goals and challenges tended to differ: what is seen as an issue in a public firm may not be seen as such in a private firm, and vice versa. for example, three barriers (difficulties making projections, limited risk tolerance, and constrained resources) were referred to exclusively by the six executives representing public firms. in contrast, three different barriers were mentioned solely by the four executives representing private companies: skills and training, lack of a research and development culture, and ineffective collaboration. 3.3.1 drivers of strategic change when firms made strategic changes, such as changes to product offerings, it was most commonly in response to changes in their external business environments. such change drivers could be interpreted not just as threats, but also as opportunities; indeed, the emergence of new business opportunities was the most commonly cited driver of business transformation, mentioned by all ten executives interviewed. forest products firms often initiate transformative processes to take advantage of rapidly emerging products and markets. the use of wood residuals and pulp byproducts to produce energy were examples given by executives of growing business applications triggering major changes in their firms. (9) talking about that waste that you have in the log that maybe ten years ago was considered waste and was actually a bit of an irritant, is now an opportunity. there is a developing business for that, rapidly developing business for that around the world. so really, we're in a business now where 100% of that log could be utilized in a commercial way. likewise, product substitution is another driving force of forest business transformation. in particular, the rise of electronic media has resulted in a decline of traditional print media, which has in turn reduced the demand for certain types of printing and writing paper. on the other hand, the possibility of using wood products as a substitute of non-wood materials is also triggering a pro-wood transformation. executives mentioned examples that illustrate the potential for using wood products as a replacement of other materials, such as glulam replacing concrete. 3.3.2 drivers of continuous improvement a common characteristic of many mature industries is an ever-challenging business environment. tight competition, market volatility, and capital-intensive production all pressure forest sector businesses to find better ways of delivering value. eight executives emphasized the high level of competition that characterizes the forest products sector in british columbia as a major driver of continuous operational improvement. for example, the solid wood subsector can have lower barriers to entry compared to other manufacturing industries. also, competitors can quickly adopt the processes and technologies of the leading firms. as a result, these leading firms often need to find alternative ways of delivering value. nine executives perceived volatility as an important driver of operational change. forest sector companies can be exposed to global economic cycles, changing climatic conditions, currency fluctuations, geopolitical risks and many other factors that are beyond their control. the presence of these factors can affect the competitive position of a firm, eventually forcing the senior leadership to initiate transformative processes in the firm. (8) take a look at the volatility of a commodity business, which lumber and pulp both are … we have had exposure in the past to economic cycles and we want to minimize that exposure going forward or at least have it, so that in the bottom troughs of cycles that we still continue to generate positive cash flow, versus depleting our cash reserves. eluding stagnant returns is another driver of transformation. seven executives referred to this driver as the need to deliver outstanding performance in order to continue attracting investment into their companies. this particular driver was of particular relevance to publicly traded companies. 3.3.3 risk-related barriers and mitigating enablers planning and implementing a successful transformational change initiative can be a challenging proposition, especially if the change is rapid rather than incremental. madero et al. — business transformation in the british columbia forest industry 101 executives indicated that they face constraints in developing forecasts for the execution of transformative initiatives. for example, the difficulties associated with creating future scenarios are attributed to highly unpredictable business environments and to the absence of historical trends of entrant products. (4) the model doesn't compute because it is new. it's not like, for example, putting in a new power generation. you understand the variables and you know the standard deviations in sort of the risk. something transformative, you can estimate it but…. two executives highlighted the large project scale that characterizes many transformational initiatives. the risks that accompany transformations (in terms of the size of the investment) can leave little margin of error when adjusting for deviations. this condition often impedes initiating transformational processes in forest products firms. (8) when you move from lab to a pilot plant, to a demo plant, to a full-scale operation, those full-scale operations will take hundreds of millions of dollars. so, you can’t afford to make too many mistakes around those. nevertheless, firms have multiples tools for easing the risk inherent in making a transformational change: running pilot trials, benchmarking, collaboration, identifying the right timing for the change, and taking a long-term perspective. executives underscored the importance of piloting5 new products and/or technologies prior to scaling up transformative projects, enabling them to select only those potential projects that have attractive risk-reward relationships. the practice of benchmarking competitors’ products and technologies can help a team leading a transformation effort accelerate the design stage by focusing on technologies and products already tested by their competitors in other jurisdictions. the creation of a collaborative support network can help companies identify new business solutions and assess new technologies (r&d networking). moreover, executives underscored that business partnerships can help reduce the risks associated with moving into unfamiliar commercial areas. inherent in adapting to a changing marketplace was the need to identify the right timing for transformation initiatives. the executives described being an ‘early mover’ as an instrumental factor in transforming their companies. this is particularly relevant in transformations that involve asset purchases or the adoption of new technologies. (7) you can transform a company, taking advantage of an expectation that things will get better and the sooner you can anticipate both directions going down the wave or going up the wave, the sooner you can anticipate those things, the better you are prepared to take advantage. the challenges inherent to implementing transformative change initiatives can be lessened in part by adopting a long-term perspective according to executives. when senior managers and the board of directors adopt a long-term view, it can become easier to prioritize transformative initiatives. in addition, having a long-term view can foster the discipline to continue implementing transformational projects up to their final stage, despite not achieving attractive performance improvements in the short-term. 3.3.4 access to resources another barrier to transformation was the limited resources that companies often had available for driving transformation efforts. the most frequently mentioned resource was capital. executives underscored that although not all the transformative changes are capitalintensive, the absence of an appropriate capital structure for financing transformative initiatives can limit transformation efforts. some executives even commented that not having the right capital had been a decisive factor in halting transformational processes in the past. (7) in transformation in terms of growing the company, capital is always a constraint. so capital is precious. it's something that you don't stumble upon. it's something you have to earn. to be able to borrow from a bank and to be able to have your shareholders invest in the company, you have to earn that right. personnel and infrastructure are also required for executing transformative initiatives. executives mentioned existing technological limitations (i.e., for biomass densification or catalytic/thermal conversion of biomass), as well as the need to upgrade their it support infrastructure. similarly, the skillset and training of the workforce (including the senior management) can sometimes inhibit transformation efforts, especially when the transformative initiatives deal with unexplored commercial areas. 5 here, a pilot is defined as a small-scale test of the production process in an environment that closely mimics the actual business situation. 102 bioproducts business 4(8) 2019 according to senior executives, attracting the right people to the organization can make a difference to achieving successful transformations. when firms embark on transformative processes, they need people with the specific skills and expertise necessary to deliver the changes. some executives emphasized that the risks of not keeping up to the pace of changes are higher if companies are unable to hire personnel with new skills. providing the proper equipment and training to the company’s workforce is also a factor contributing to successful transformations according to five of the executives. one commented that a well-designed transformational plan could become ineffective without the personnel who can “extract value of the equipment … and [who] can make it run.” 3.3.5 the role of effective leadership in enabling change aspects of company leadership were cited as one of the most critical factors shaping firm-level transformation. in particular, the values or principles imparted by the senior leadership were seen as a fundamental aspect defining the organizational culture of a forest products firm. the executives referred to such values as influential behavioral factors as well as guiding principles in the decision-making process. (7) the skills are important, yes, but it's more about the culture of the company and having your core values rooted and everybody knowing what the vision of the company is. the company has an absolute clear vision and with that vision, we have our core values and everybody in the company knows what the company is all about. two major dimensions of executives’ leadership style were the leaders’ flexibility (willingness to modify their strategy), and their risk tolerance in decision-making. corporate leaders must balance the need for strategic consistency with the need to be open to proposals that may not match the current strategy. similarly, the interviewees’ project risk tolerance varied. for instance, five executives expressed concerns at not being able to recover the capital required for transformative projects within the projected timelines. for senior executives, having the support of the board of directors for proposing and implementing transformative initiatives was an important transformation enabler. a supportive board of directors and ceo of the company can not only facilitate the startup of transformational projects but can also clear the path to reach the final stage of these projects. 3.3.6 attitudes toward change a frequently-mentioned barrier to transformation was employees’ attitudes towards change. according to the executives, the different mentalities and individual objectives of the people working in a company sometimes are incompatible with the transformational goals. one executive underscored that the resistance to change among senior managers and technical staff can represent significant barriers to transformation. another executive stated that the real challenge of executing transformation consists of stepping people out of their “comfort zone.” (1) it has so much to do with people. imagine [an executive] who is just sort of “okay.” [he is] making his paycheque, [he] is five years from retirement. everything is good. are you going to stick your neck on the line and go merge your company with somebody else or take on a major initiative? conversely, all but one executive acknowledged the role of encouraging an entrepreneurial mindset in the company as an essential factor facilitating transformational change. the executives described this transformation enabler as allowing the employees from all levels of the organization to constantly search for new initiatives and business solutions. new ideas could be spotted from almost any source, including from within the company (i.e., other divisions), competitors, suppliers, distributors of end products, previous and research work, among many other sources. (6) you have to constantly look. what are people doing? what are people doing better than us? what’s an opportunity that’s out there that we can take advantage [of ] with our equipment and our expertise? and you got to have that mindset, of always scanning the horizon for those opportunities. 3.3.7 government policy legislation and government support have the potential to either enable or inhibit transformation, particularly in the areas of building codes, immigration programs for hiring skilled workers, tenure and stumpage systems, and transportation perimeters in forestlands, among others. on the enabling side, executives acknowledged the suitability of recent government programs, some of them designed exclusively to stimulate transformation madero et al. — business transformation in the british columbia forest industry 103 of the forest sector. for example, the federal “green transformation program” provided cash contributions and government grants to forest products firms. executives indicated that these grants helped firms undergoing transformation to reduce the risks associated with large capital expenditures. other supportive policies included the canadian government’s efforts to establish free trade agreements with asian countries as a means of fostering market diversification. conversely, some executives considered that there is a substantial gap between the resources committed by the government and the needs/potential for assistance. the gap was mostly identified at the provincial rather than at the federal level. (4) the province should be investing in transformation and innovation on a scale that is commensurate with the size of their resource. and you know, they're not even in the solar system in terms [of support]. 3.4 results summary the emerging definition of firm-level transformation as “the execution of different business strategies that have the objective of delivering significant performance improvement to the firm” reflects the executives’ relative agreement on the “why” of transformation versus their variety of ideas as to the “how”. a transformative change can be large or small, all-at-once or incremental, and strategic or operational. indeed, of the seven different strategies that executives identified for transforming their firms, the most referred to, “improve operational efficiency”, was incremental and operational in nature, whereas the next two, “diversify the product mix” and “enter the bioeconomy”, were more strategic in focus. furthermore, executives stressed that transformational initiatives often contained multiple strategies at once. just as transformations can be either rapid or incremental, the drivers of transformation identified by the executives can be classified as either major external events triggering strategic changes, or as on-going challenges driving the need for continuous, operational improvement. barriers and enablers to transformation often represented two sides of the same coin: risks vs. mitigation strategies, access (or lack of access) to resources, positive or negative attitudes, and government policies that either help or hinder. leadership in particular stands out as an enabler, because it can create a culture for change. 4. discussion the following section discusses how executives’ definitions of transformation, and their views about its drivers, barriers, and enablers, reflect the extant business and forestry literature. 4.1 a broad definition of “transformation” this study showed that although many organizations are talking about transformation, they do not all define it the same way. the executives interviewed in this study expressed divergent views about the nature of forest business transformations in bc: while most of them agreed that a change ought to have a significant long-term impact on firm performance in order to be qualified as “transformational”, the actual content of such a change could include a very broad range of activities. this trend mirrors the findings of cohen & nikolakis’s (2013) study of forest sector firms in north america and northern europe, in which executives considered a much broader range of activities to be “transformational” than a contrasting sample of forest sector experts consisting of former executives, government official and researchers did. the business literature displays a similar diversity of opinion about change activities: while several organizational change studies have identified activities that are frequently considered to be “core structural changes” (amburgey, kelly, & barnett 1993; barnett 1994; hannan 2005; hannan & freeman 1984), barnett & carroll (1995) pointed out that such studies should be carefully interpreted, given that the changes that were deemed as core in some of these studies are assessed as peripheral or minor in others. in the context of this study, “firm performance” primarily refers to financial performance. however, the executives also occasionally touched on aspects of performance that could lead to improved financial results, such as company culture and reputation. for example, an executive quoted in section 3.2 commented that their company’s new revenue stream would “…radically change our organization and how it’s perceived in the marketplace…” there were few references to changes to other types of performance, such as environmental performance. this focus on financial improvement over other types of change does not necessarily mean that culture or the environment are unimportant to executives; instead, it is more likely indicative of the pressure on firms’ financial results at the time the survey was conducted. 104 bioproducts business 4(8) 2019 4.1.1 identifying the boundaries of a transformational change the results of this study reflect a relatively recent shift in the scholarly literature regarding the observable boundaries of transformational change initiatives. whereas organizational change studies from the 1980s and 1990s often adopted a linear approach to defining and measuring the impacts of firm-level transformations, more recent studies tend to recognize that firms may work on several overlapping change activities simultaneously (coleman & thomas 2017). when following a linear approach, the transformation content is identified by comparing the structure of the firm at two points in time: a pre-transformation moment (t0) and a posttransformation (t1) (barnett & carroll 1995, barnett 1994, pettigrew 1987). in contrast, senior executives in this study referred to the transforming process as cyclical and iterative rather than linear, a definition more aligned to coleman & thomas (2017). to most executives in our study, the outset and completion of transformational processes are elements that cannot always be directly identified. senior managers sometimes initiate a business initiative without having the certainty that it will produce transformative changes in the firm; such initiatives may be labeled as “transformational” only post-intervention. similarly, most executives had difficulties identifying the completion of transforming processes, given that the implementation of a single transformational strategy often triggers additional changes in the firm. furthermore, having two or more simultaneous transformational strategies can make identifying the overall conclusion of a transforming process quite complex. 4.1.2 a hierarchy of transformational strategies studies on business transformation suggest that the transformation initiatives can be categorized according to their impact on the business. cohen & nikolakis (2013) have adapted a model by davidson (1993) to illustrate the hierarchy of transformational strategies employed by forest sector firms (figure 1). davidson (1993) describes three phases of transformation, moving along a continuum from inward-facing, low-risk change to more outward-facing, high-risk change. cohen & nikolakis (2013) add a base to the pyramid: the “conventional competition” phase describes the day-to-day improvements made to remain competitive in an everchanging business environment. the first step upwards, as the firm strives for operational excellence within its internal operations, is termed “operational efficiency.” next, a firm may look for additional customers or suppliers to expand its business, and/or sell related products or services within its existing supply chain. this step is called “business enhancement.” the third and riskiest step is to make the leap to selling different products, to a different clientele. this step is referred to as “new business development.” the seven transformational strategies highlighted in our study roughly correspond to the different levels of cohen & nikolakis’s model (figure 2), suggesting that this model may indeed be a useful tool for describing transformational initiatives in this context. nevertheless, the pyramidal shape of the model should be interpreted cautiously: although the relative size and position of the layers on the pyramid suggest a hierarchy among the phases of transformation, the actual frequency and/or importance of the different phases may vary. for example, the most frequently mentioned strategy, “improve operational efficiency”, corresponds with the “operational efficiency” layer on the cohen & nikolakis (2013) pyramid – what might be expected, given its place at the base of the pyramid. however, the next most commonly-mentioned strategies, “diversify the product mix” and “enter the bio-economy” straddle the upper two levels of the pyramid. a strict interpretation of the model might suggest that these two strategies should occur less frequently. still, findings of this study reflect that the frequency of mention of the various transformational strategies is not necessarily a definitive indicator of their relative importance. new business development business enhancement operational efficiency conventional competition figure 1. four phases of firm-level transformation (from cohen & nikolakis 2013). madero et al. — business transformation in the british columbia forest industry 105 the key ideas resulting from this discussion are twofold. first, according to the executives, a change does not necessarily need to be a strategic “core structural change” (as per hannan & freeman 1984) or “fundamental shift in a firm’s business model” (as per cohen & nikolakis 2013) in order to have a transformational impact on the business. instead, chambost et al.’s (2008) concept of transformation as either “inside-out” or “outside-in” may be more relevant in a forest sector context, as may novotny & laestadius’s (2014) description of transformation as a change to a firm’s product portfolio, production technology, or cognitive process. indeed, operational improvement is essential for maintaining competitiveness, especially in a mature industry such as the forest sector. the second important take-away is that executives stress the importance of exploring more than one strategy simultaneously. applying this realization to the pyramid model, “higher-level” (i.e., new business development or business enhancement) would typically occur at the same time as operational efficiency improvements, and vice versa. 4.2 influential forces triggering transformation initiatives the results of this study revealed a number of factors triggering transformation initiatives in bc forest sector businesses. the factors or drivers of transformations identified in this study lend support to the findings of previous research in the fields of business transformation and organizational change. for example, barnett & carroll (1995) distinguished between external and internal forces driving changes in firms. all but one of the transformation drivers identified in our study qualify as external forces (see section 3.2). this predominance of external forces triggering transformations in bc forest sector businesses concurs with the prevalence of external drivers of change identified in previous studies of firm-level transformation (cohen & nikolakis 2013, isern et al. 2009, kotter 1995). moreover, the business turnaround literature also clearly delineates between external and internal causes of business decline (pearce & robbins 1993, trahms et al. 2013). the internal driver “eluding stagnant returns” described in this paper could be interpreted as another way of saying, “enabling a financial turnaround.” in the particular context of the forest sector, cohen & nikolakis (2013) identified that all executives from their sample of 33 forest products firms associated the emergence of transformative initiatives with responses to external pressures. 4.3 barriers to and enablers of transformational change several of the risk/barrier themes in this study matched themes identified in the literature. for example, access to capital, employee recruitment and training, and attitudes toward change were also discussed by davidson (1993) and cohen & nikolakis (2013). likewise, grace, nelson, & kozak (2018) stressed the need for management skills training for bc-based smalland medium-sized forest products businesses. enablers related to leadership (such as the importance of defining and communicating a firm’s values and gaining the support of the board of directors) and risk mitigation (such as collaboration, timing, and a long-term perspective) were reflected in several new business development enter the bio-economy (5) diversify product mix (8) g ro w fi rm s iz e (3 ) business enhancement customer-driven focus (3) expand into new markets (4) operational efficiency broaden geographic base of operations (3) improve operational efficiency (9) conventional competition figure 2. seven transformational strategies visualized. 106 bioproducts business 4(8) 2019 examples of the applied literature (blackburn, wood, ryerson, weiss, & wilson 2011; day & jung 2000; kotter & schlesinger 2008; kotter 1995). this is not surprising, as due to its practitioner-oriented focus, the applied literature tends to focus on themes such as change leadership. the central role of the organizational culture in the execution of successful corporate transformations was another theme common to both the executives’ responses and several applied studies (day & jung 2000, kotter & schlesinger 2008, kotter 1995). the results of this research suggest the presence of patterns between the different types of barriers and the characteristics of firms. for example, the firms’ size, ownership structure (private versus public), and product offerings all tended to influence which barriers their respective executives highlighted as most important. executives representing firms that were relatively larger, publicly owned, or selling commodity products tended to be more concerned about capital availability and risk than those that represented smaller, privately held, or value-added firms. with a small and geographically limited sample, this exploratory research was limited in its ability to determine if these trends are indicative of the forest sector as a whole. additional research with a larger sample could confirm the patterns identified in this study, as well as formulating a set of policy recommendations to address common barriers to transformation. 4.4 unanswered questions for future research this study has shown that bc-based forest sector firms are responding to a variety of different external and internal forces in a variety of different ways – some of which are operational, and others of which involve changes to products, markets, and business lines. this is in line with how davidson (1993) and cohen & nikolakis (2013) suggest firms should transform their businesses. indeed, the insights gained from this qualitative study of bc-based executives have much in common with the insights gleaned from cohen & nikolakis’s (2013) primarily quantitative study of executives in north american and northern europe. a complementary study examining a different source of information (such as forest sector literature) and/or using a different methodology (such as content analysis or a survey) would be useful for further triangulating the results. a second question concerns whether the responses received are indicative of the bc forest products sector as it would normally operate, or if they instead represented an atypical snapshot in time during a period of change. future studies could include a longitudinal component or ask respondents to reflect on changes over time. further empirical studies could strengthen and expand upon the conclusions of this exploratory paper by including a larger and more diverse sample of participants. involving participants from a broader geographic area would clarify whether the results of this study are regional in nature, or whether they represent a wider global trend. including a broader range of stakeholders (i.e., other than forest sector executives) might more accurately reflect the diversity of opinion regarding the meaning of firm-level transformations. the interviews upon which this paper is based were completed in early 2014. while the authors do not believe the respondents’ overall concept of transformation will have changed between then and 2019, it is possible that the respondents’ priorities may have shifted. one of the interview questions asked the respondents to identify which products they might make in the future. the authors plan to do follow-up interviews before publishing this information in a future study. 4.5 study limitations the nature of this study is exploratory and qualitative; therefore, its findings cannot be generalized to explain transformational changes of companies beyond the ones analyzed here. the small and geographically limited sample further limits the degree to which the results of this study can be used to infer trends in the forest sector globally. however, the results of this study open new research avenues to continue analyzing firm-level transformations with larger and more geographically diverse samples. additionally, most of the questions and topics covered in the interviews dealt with commercially sensitive information about the executives’ firms. this information was treated with extreme caution, which in many occasions limited how the findings and patterns could be presented. 5. conclusions business transformation has emerged as a popular catchphrase among forest sector practitioners, the applied business literature, and the scholarly business management and forest products literatures. this study sought to identify how forest sector executives define and describe madero et al. — business transformation in the british columbia forest industry 107 the concept of business transformation. it found that the executives’ perception of this frequently discussed topic differed from both the implicit definitions of government and industry associations and many of the explicit definitions in the literature. in aggregate, the bc-based executives interviewed in this study defined firm-level transformation as the execution of different business strategies that have the objective of delivering significant performance improvement to the firm. in other words, what made a change “transformative” was not the type of actions taken, but rather the long-term results. although change activities generally needed to be innovative in nature and radical in scale to be considered transformative, there was no one specific path to transformation. indeed, changes could fall anywhere on a spectrum between incremental, operational improvements and large-scale strategic initiatives. often, firms undertook more than one type of change at once. the fact that the executives interviewed in this study had a broad definition of transformational change has implications for different groups of people. for forest sector practitioners, the awareness that there may subtle differences between employment sectors (i.e., industry, industry associations, government, etc.) regarding the concept of transformation could help enable clearer cross-sectoral communication. for researchers, the discovery that practitioners in the forest sector often consider operational (as opposed to strategic) changes to be transformative may challenge the current orthodoxy about transformative change and stimulate new research. future studies with a larger and geographically broader sample could further explore the relative occurrence and importance of the different strategies and challenges 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(2014). internationalization of the forest products industry: a synthesis of literature and implications for future research. forest policy and economics 38, 8–16. http://doi.org/10.1016/j.forpol.2013.06.017. abstract cross-laminated timber (clt) construction systems have been used commercially for over 20 years, mainly in western europe and north america. however, there has not been a report on the current status of clt buildings. deterioration of wooden buildings could result from a variety of causes, and the life of the structures could be extended if periodic inspections were conducted. this research introduces a visual inspection methodology for assessing deterioration of clt structures. the inspection methodology was tested in six clt buildings in austria. the methodology was proven to be effective in determining the current internal and external condition of the examined clt structures. the oldest clt structure inspected dates from 2004. the newest structure inspected was still under construction. the results of the application of the visual inspecting tool show that there was very little damage to the clt structures. visual inspections cannot always find damage to structural members, but it is an accepted inspection methodology to discover potential causes or more severe damage. the main causes of damage came from exposure to water on the exterior of the buildings and poor control of humidity and temperature in indoor conditions. architects who designed the inspected buildings were interviewed to cross validate the results of the visual inspection methodology. in addition, the interviews provided important insights related to the design, construction, and current conditions of the buildings. furthermore, the architects also provided information regarding the main barriers and drivers that affect clt construction in austria. keywords: cross-laminated timber, clt, inspection tools, wooden buildings, inspection, wood deterioration a visual assessment of cross-laminated timber structures in austria 1 professor, department of sustainable biomaterials, virginia tech. 1650 research center drive, blacksburg, va, 24061 2 professor, department of sustainable biomaterials, virginia tech. 1650 research center drive, blacksburg, va, 24061. rsmith4@vt.edu 3 salzburg university of applied sciences. campus kuchl: markt 136a, 5431 kuchl, austria. email: guenter.berger@fh-salzburg.ac.at 4 professor, department of sustainable biomaterials, virginia tech. 1650 research center drive, blacksburg, va, 24061. email: jlofersk@vt.edu * corresponding author. email: quesada@vt.edu acknowledgement: this project was funded through a grant from the softwood export council. henry j. quesada1*, robert smith2, guenter berger3, joseph loferski4 bioproducts business 5(5), 2020, pp. 51–62. issn 2378-1394 https://doi.org/10.22382/bpb-2020-005 1. introduction cross-laminated timber (clt) construction systems started in germany and austria at the end of the 1990s. in less than 20 years, this construction system has become very popular in western europe and in north america (karacabeyli & douglas 2013, muszyński 2015, pei et al. 2016, harte 2017). private and public organizations in these regions are leading the effort in sustainable construction around the globe, and clt construction systems are perhaps the best way to achieve their goal of decreasing the carbon footprint in the construction industry, by sequestering carbon in the thick wooden walls, floors, and roofs. there has not yet been research showing results of the status and longer-term durability of clt buildings. the first clt structures are now over 20 years old, and there are questions about their current status and potential damage from fire, weather, fungi, or insects. most of the clt members in buildings in europe and north america are not exposed to direct moisture from rain. in addition, a variety of solutions have been implemented to allow for quick removal of moisture, such as better ventilation systems and using air circulation to remove water from structures. mailto:rsmith4@vt.edu mailto:guenter.berger@fh-salzburg.ac.at mailto:jlofersk@vt.edu mailto:quesada@vt.edu 52 bioproducts business 5(5) 2020 architects, who are interested in using renewable materials for their projects, see clt systems as a great way to mitigate the carbon footprint in construction systems and also as a strategy to increase aesthetic beauty, while decreasing lead times and overall manufacturing and construction costs (viļuma & bratuškins 2016). companies that have participated in clt construction projects have indicated that these systems can decrease their construction lead times by 25% or more, compared to other materials, impacting overall construction costs (thinkwood 2020). this project addresses the lack of an available tool or method to evaluate the performance of clt buildings using visual criteria. therefore, the project seeks to answer the following research question: what criteria could be used to assess the performance of clt buildings using visual methods? to answer this question, a visual deterioration inspection tool for clt structures was developed and applied to clt buildings in austria. the inspection methodology included an assessment of the buildings’ performance related to moisture, insects, fungi, sunlight, and occupancy. in addition to the visual inspection, interviews with the occupants, the architects who designed the buildings, and the builders themselves were conducted to complement the visual inspections and to determine the perceptions and realities of the design and construction of clt buildings. 2. background research cross-laminated timber is an engineered wood panel that is composed of an odd number of layers of lumber, which are arranged with the grain directions oriented at a 90-degree angle to each other and connected by adhesive bonding. this engineered wood product was developed in germany and austria. production of clt panels in europe is expected to reach 1.2 million m3 by 2020 (ebner 2017). just as any other structure, deterioration in wood buildings may result from a variety of causes during the life of the structure, and periodic inspections are critical to detect deteriorated material that needs to be repaired or replaced (highley 1999, white & ross 2014). wooddecay fungi decompose the wood cell wall and require a relatively high moisture content (mc) in the wood, typically near or above 30% mc. many wood-boring insects prefer wood with high mc, but some insects, such as powder post beetles and old house borers, can live in relatively dry wood with mcs as low as 10%. a properly constructed wooden building in the temperate climates of the world will have interior mcs between 6% and 10%, and protected exterior wood may have mcs in the range of 12% to 16% (simpson & tenwolde 1999, loferski 1997). wood will decay if it is in a situation that causes the mc to raise to the 30% level, which may be caused by contact with moist ground or exposure to water from different sources, such as rain, plumbing leaks, or condensation (loferski 1997). in addition, drier wood is less likely to be attacked by insects. visual inspection of all types of buildings is very common in the construction industry; for example, delgado et al. (2013) developed an inspection and diagnosis protocol for wood flooring systems. the authors developed a list of defects, including surface, aesthetic, functional, and joints and interfaces. the defects are visually inspected using an urgency repair classification, where 0 means immediate action, 1 means action required within 12 months, and 2 means action required in the long term. the protocol also correlates defects with potential causes. researchers have developed a methodology for the visual inspection of selected engineered wood products and connector hardware for prescriptive non-compliance at the pre-drywall stage of residential construction (bouldin 2011, bouldin et al. 2013, loferski et al. 2013). the researchers indicated that there was no standardized inspection methodology, but options were available, such as the top-down method and sighting along the patterns of repetitious framing elements to detect defects or non-compliant installations. in addition, bouldin et al. (2014) conducted similar research to visually inspect the installation of trusses in residential construction with the goal of detecting truss installation errors. onsite inspection of wood members is often limited by the capacity of obtaining sufficient information (saporiti et al. 2019). there are cases where the research/ inspection team has plenty of time and resources to conduct the inspection and more data is collected. for example, russell et al. (2006) conducted an assessment of a 15-year-old stress-laminated timber bridge in augusta, ga, usa. the team conducted the following tests: moisture tests in wood members, re-stressing of post-tensioning bars, photo documentation of bridge site, load test with deflection and longitudinal strain measurements, and in situ vibration testing. levi (1975) quesada et al. — a visual assessment of cross-laminated timber structures in austria 53 suggested a procedure for the inspection of residential buildings outside and inside that involved visual detection to look for excessive moisture around the house. lately, there has been a trend in architecture to consider wood as a viable option for large structures. however, there are still factors or barriers that prevent the use of wood as a permanent, long-lived construction material. espinoza et al. (2016) investigated potential barriers for clt adoption by surveying timber engineering and civil engineers with a focus on wood construction in europe. it was found that compatibility with building codes, availability of technical information, misperceptions about wood or clt, and cost were the most significant barriers noted by these experts in europe. similar results were obtained by viļuma & bratuškins (2016) in their study conducted in latvia which surveyed 73 architects and asked them about barriers preventing the use of wood in construction projects. the most significant barriers in decreasing order of importance were stereotypes, legislation, specialist qualification, lack of knowledge, lack of experience, lack of information, and inaccessible consultancy. 3. methods a visual inspection methodology was developed as a checklist to evaluate the condition of clt buildings. the inspection methodology was applied to six buildings in austria in 2019. the inspection methodology was based on the experience of the authors and literature such as levi (1975), loferski & espinoza (2014), and the usda forest service (1973). the tool included three sections: a general description of the building, an evaluation of the exterior, and an evaluation of the interior. the general building description section included 10 items: location, inspection date, date of construction, number of stories, area of the building, clt panel manufacturer and builder, architectural firm, type of construction, type of finishing, and a sketch of the building. table 1 shows the items to be inspected on the exterior of the building. a rating scale of 0, 1, or 2 was assigned to each item. a rating scale value of “0” meant “not evident”; a value of “1” was given for “some evidence”; and scale value of “2” was assigned for situations with “very evident” features. these scale ratings were also used table 1. items to be inspected on the exterior of the building. # evidence of deterioration 0 1 2 comment (location of damage, etc.) 1 clt panels exposed to rain (presence of overhangs, etc.) 2 clt panels exposed to condensation (windows and doors) 3 exposure to runaway water from rainwater 4 untreated structural wood is below 8 inches from the ground 5 lack of siding (lumber, shingle, panel, others) 6 direct contact of clt panels with soil 7 decay signs in architectural rain run-off areas such as doors, windows, balconies 8 decay in water trapping joints (panel edges) 9 evidence of shrinkage and swelling 10 lack of flashing 11 presence of blue stain 12 presence of surface black staining ( such as mold or mildew) 13 presence of fungi or rot 14 water damage in concrete foundation (splash wetting) 15 damage caused by uv light 16 insect damage (termites and borers) 17 presence of carpenter ants and bees 18 deterioration of clt panels in contact areas with concrete 19 visible damage on glue lines 20 deterioration of clt panels in contact areas with steel 21 signs of mechanical wear damage scale: not evident (0), some evidence (1), very evident (2). 54 bioproducts business 5(5) 2020 table 2. items to be inspected in the interior of the building. # evidence of deterioration 0 1 2 comments 1 clt panels exposed to natural elements 2 clt panels exposed to condensation 3 lack of finishing (plain, varnish, stain, paint, etc.) 4 decay signs in architectural rain run-off areas such as doors, windows, balconies 5 evidence of shrinkage and swelling 6 lack of flashing 7 presence of surface black or grey staining (such as mold or mildew) 8 presence of fungi or rot 9 insect damage (termites and borers) 10 presence of insects (carpenter ants and bees, etc.) 11 deterioration of clt in contact areas with concrete 12 visible damage on glue lines 13 deterioration of clt in contact areas with steel 14 signs of mechanical wear (walls and flooring) 15 visible water leaks rating scale: no evidence (0), some evidence (1), very evident (2). to indicate the presence, or absence, of deterioration in the building. an overall building rating was calculated by averaging the individual ratings. the interior of the building was evaluated using the checklist shown in table 2. a rating scale similar to the exterior parts of the building was used to evaluate each item or feature of the building interior. case study methodology was used to collect the data for the validation of the inspecting tool. first, appointments with the building managers and architects of the selected buildings to be inspected were set up between february and may 2019. the list of buildings to be inspected is shown in table 3. the real names of the buildings and architects were removed to preserve the confidentiality of the research. note that architect 1 designed buildings a, c, and d. the inspection of the buildings was conducted in may 2019. second, the research team prepared a questionnaire for the building occupants and the building managers to obtain additional information in support of the inspection tool. the questions for the building dwellers included aspects related to the living and working conditions offered by the structure, such as noises, interior temperatures, and smells. also, a question about reported complaints or damage to the structure was included. for the building managers, the authors included questions table 3. characteristics of buildings to be inspected. building name architect construction type year of construction area (m2) a 1 prefabricated walls, clt system for ceiling/floor 2004 4,500 b 2 clt system for walls and ceiling/flooring concrete core 2012 1,700 c 1 prefabricated clt dormitories 2014 8,000 d 1 clt system for walls and ceiling/flooring concrete core 2014 1,200 e 3 clt system for walls and ceiling/flooring concrete core 2016 126 f 4 clt system for walls and ceiling/flooring concrete core 2019 600 quesada et al. — a visual assessment of cross-laminated timber structures in austria 55 regarding building inspection procedures, maintenance, and issues with the building such as noises, deterioration, energy consumption, and overall performance. a set of questions was also formulated to the architects who designed the structures. the topics in this set of questions included: the decision process for selecting clt for the structure, major challenges before and during the construction of the building, cost of the project, references to similar projects completed by the architects, and feedback from the building dwellers or building managers. 4. results and discussion 4.1 visual inspection of the buildings and interviews with dwellers and building managers building inspections and interviews of architects took 5 days. table 3 shows the characteristics of the buildings that were inspected. the oldest structure was lowincome housing, built in 2004. building f was still under construction when inspected, but even though it was new, the inspection of this site provided critical insights into construction methods, building codes, and potential early damage to the structures. building a: residential this project was designed by architect 1 and built in 2004. the project features three buildings, each with 60 flats and total area of 4,500 m2. the project was developed to provide social housing for people in salzburg, austria. the walls of the building were prefabricated and included structural insulated panels (sip). clt panels were used only in the ceiling and flooring systems. the exterior walls included insulation and exterior siding made of larch lumber. a space of 3 cm was left between the siding and the exterior water-resistive membrane for air circulation to allow for quick removal of moisture. a relatively small amount of deterioration was observed due to green staining in some parts of the siding on the exterior parts of the buildings. the siding showed heavy discoloration due to exposure to ultraviolet light (see figure 1). the siding was close to the ground and did not have protective flashing to avoid rain splash contacting the siding. these buildings were inspected from the exterior only. discussions with architect 1 indicated that, initially, figure 1. direct exposure to sunlight and moisture accumulation on siding leading to (a) discoloration and (b) blue, black, or green staining. a b there was a concern regarding the long-term maintenance and upkeep because the buildings were intended for social housing, but it seems that the tenants had taken good care of their housing units. interviews with the buildings’ occupants were not conducted, but according to architect 1, “the tenants love their building.” in addition to the architectural features and overall design of the building, the tenants also enjoyed the low maintenance costs of the building. the overall grade for this building was 0.33 in 0-2 scale, where 0 is no damage evident and a score of 2 means damage is very evident. building b: commercial the building was designed by architect 2 and built in 2012. it is considered a commercial building, has three stories, and an area of 1,700 m2. clt panels were used for the walls and the ceiling/floor system. the clt wall panels were exposed in the interior, but on the outside the panels were covered with insulation, and there is gap between the wood siding and the insulation for air circulation. 56 bioproducts business 5(5) 2020 according to the architect who designed the building, the cost of using concrete vs. wood was similar, but the customer decided to use ctl panels because the customer wanted to have better living conditions in the building. it took over a year to complete the project. the building has been recognized by the construction and architectural community and has received design prizes. the wood siding showed sunlight damage and gray or black staining. the inspection did not find any evidence of decay on the exterior side of the clt walls, but evidence of water damage was found in the balconies. figure 2a shows discoloration that was visible on the exterior and interior surfaces of the siding and clt panels, especially beneath the balconies. the water damage found in the balconies could have been prevented by adding appropriate flashing, to minimize water penetration into the end grain of the wood in the clt panels. figure 2b also shows some delamination of the interior clt panels, likely caused by cyclic changes in the humidity of the internal environment of the building. the tenants of building b were pleased with the overall performance of the structure. the building is 7 years old, and there have not been any major structural or serviceability issues. the building is very quiet and pleasant, but the tenants reported that it tended to get very hot in summer because the large glass windows collected the warmth of the sun. this could be causing low relative humidity in the interior, leading to delamination and wood splitting, as seen in figure 2b. based on visual inspection, this building received a 0.30 on a scale from 0 to 2. building c: residential this building was designed by architect 1 and built in 2014. the structure features five stories, 136 bedrooms, and an area of 8,000 m2. an innovation was that each bedroom was a self-contained box unit, which was prefabricated off-site, using clt panels. the boxes were brought to the construction site and stacked on top of each other to assemble the building, a modular system. the building has a concrete core in the middle for the elevator shafts, and the first floor is made of concrete. the siding of the building is made of copper. the exterior of the building was inspected and did not show any visual signs of decay or related problems, as expected, but there was evidence of water infiltration near the windows, which could cause wood decay in the future. the interior of the building had evidence of shrinkage and swelling of the wood. there were gaps between panels, splits in the clt surfaces, and gaps near the openings around windows, doors, and walls. these issues were likely caused by the accumulated shrinkage and swelling of the overall system. the architect pointed out that the structural integrity of the building was not compromised. the issues were more evident in the upper floors, as the impact of the movement of wood, due to the absorption and release of moisture, accumulated. the image in figure 3a shows a black cell phone inserted into a 12 mm gap between a door frame and the ceiling. figure 3b shows a pronounced wave in the surface of the floor system. according to the building manager, the tenants liked living in the building. the manager also reported that the main issue was the expansion of the wood in the figure 2. (a) exterior signs of discoloration in the clt balcony; (b) interior checking of clt panels. a b quesada et al. — a visual assessment of cross-laminated timber structures in austria 57 vertical direction, which was magnified by the height of the fourth floor. this caused some visible gaps, and interference, and binding when closing and opening doors. the overall grade for this building was 0.82 on a scale of 0 to 2. building d: commercial this building was built in 2014. it has three stories and is 1,200 m2 in area. the structure was awarded a wood building construction award in 2019. clt panels were used for the walls and the floor/ceiling system. the panels were classified as industry grade by the clt manufacturer. the exterior of the building had wood shingles for siding made from larch species. the building had a core concrete structure to meet fire prevention regulations. the stairs were made of concrete and were attached to the core concrete structure. the exterior of the building had little to no deterioration, except for water damage in the balconies or overhangs (see figure 4a). the wood siding covered and protected the clt walls from the direct wetting from rain. the clt walls were exposed in the interior, but water-resistive material was applied on the exterior of the clt panels. there was a gap between the wood siding and the insulation to allow for air circulation and quick removal of moisture. inside the building there was some visible damage related to changes in moisture content of the building interior. splitting and separation of the clt lamellas was noticeable (see figure 4b) in several sections of the ceiling/flooring clt panel system. the clt panels were fabricated by gluing only the face side of the lamellas and not the edge. the overall grade for this building was 0.84 on a scale of 0 to 2. building e: residential this is a private home with an area of 126 m2 and three stories. the structure was built in 2017 and took about 7 months to complete. the owner and designer of the house is architect 3, who has been involved with clt construction systems since the year 2000. architect 3 figure 3. (a) a gap between a door and the ceiling; (b) ceiling and floor showing waving in the fifth floor due to the impact of accumulated shrinkage and swelling of clt boxes. figure 4. (a) damage caused by exposure to moisture into the end grain of the clt panels near the bottom of the overhangs; (b) splits in the surfaces of the clt panels caused by changes in equilibrium moisture content inside the building. a b a b 58 bioproducts business 5(5) 2020 pointed out that the most critical aspect, when constructing with clt panel, is protecting the structure from moisture. air circulation is critical to remove undesired moisture from the interior and exterior of the structure. in this structure, ctl panels were used for the walls and the ceiling/floor system. similar to the previous structures, the wall clt panels were exposed in the interior of the structure. insulation and siding were added on the exterior side of the walls. the siding was made of spruce boards and was painted to slow water penetration and potential attacks from insects and fungi. the exterior inspection did not reveal any particular issues with damage or decay. steel beams were used to support the clt ceiling/ floor system. the only visible defects in the interior of the house were some delamination and splitting in the wall clt panel, which is considered normal. the inspection grade for this project was 0.75 on a scale of 0 to 2. building f: residential this project was still under construction when the visit was conducted. the company completed a similar project adjacent to the new construction, which was already occupied by tenants. the area of the new project is 600 m2 for eight flats on three stories. clt panels were used for the wall and the ceiling/floor systems. the project included underground parking and a concrete elevator shaft. figure 5 shows a view of the exterior, still under construction. the thickness of the clt panels used in the floor system was 24 cm. all ducts for utilities were run on top of the floor clt panels. a 20 cm layer of lightweight concrete was poured on top of the utilities to cover and protect them. additionally, the concrete layer contributed to noise abatement and to strengthen the floor structure (see figure 6a). the internal clt walls were covered with gypsum wallboard in most of zones. the architect decided not to have the clt wall panels exposed. this was a visual and aesthetic decision. the gypsum wall coverings can be seen in figure 6a. insulation was added to the external face of the wall clt panels, as shown in figure 6b. the insulation was painted after installation to prevent or slow down potential damage from exposure to water. the balconies were part of the ceiling/floor structure. flashing material was used to protect the clt panels from water and moisture, as shown in figure 7a. however, some signs of staining were visible, as seen in in figure 7b. figure 5. exterior view of apartment complex, building f. quesada et al. — a visual assessment of cross-laminated timber structures in austria 59 even though this project is still under construction, there were no signs or evidence of damage in the structure. it seems that the construction techniques being used will enhance the durability and performance of the clt systems. tenants who were living in the adjacent apartment complex indicated that they were very happy with their building. tenants liked the climate control system because the building features passive heating and cooling systems. occupants also indicated that they liked the smell of wood and the sustainability and environmental aspects of the building. the overall grade for this project was 0.24 on a scale of 0 to 2. table 4 summarizes the assessment of the six buildings that were inspected. in all cases, there were no visually identifiable issues compromising the structural integrity of the buildings. the bigger issues arise from changes in humidity in the internal conditions of the building and the damage from exposure to water and sunlight on the exterior of the buildings. a b figure 6. (a) light-weight concrete being poured on the clt floor system; (b) insulation added to the exterior clt wall. figure 7. (a) flashing used in balconies; (b) visible damage caused by water exposure in balconies. a b 4.2 interviews with architects the architects involved in five of the six clt projects presented in this paper were interviewed in order to clarify and obtain additional information after applying the visual inspection tools. there were three projects designed by architect 1: buildings a, c, and d. buildings b and e were designed by architects 2 and 3, respectively. the research team was not able to interview the architect who designed building f, but instead interviewed the developer of this building. see table 5 for details. the architects agreed that the architect, planner, and contractor must work closely together to make sure the project goes well. this input aligns with the findings by muszyński et al. (2017). project lead times varied from project to project, but there seemed to be agreement among the architects that it could be from 6 to 12 months. for example, a single-family house could take from 5 to 7 months. the developer for building f indicated that a 600 m2 apartment complex with eight flats took about 10 months to complete. the use of 60 bioproducts business 5(5) 2020 table 4. summary of the inspection procedures. building code rating (0-2) major issues found a 0.33 presence of black, gray or green stains in the exterior of the building. b 0.30 sunlight damage and black and gray stains, water damage in the end grain of the balconies. delamination in the interior clt panels. c 0.82 evidence of water infiltration near the window. in the interior, evidence of shrinkage and swelling (gaps and splits). d 0.84 water damage in balconies and overhangs. visible damage in the interior caused by changes in moisture content. e 0.75 visible delamination and splitting in the interior but considered normal. f 0.24 early signs of water damage in the exterior (black stain) were visible. table 5. data from the architects and building contractor interviewed. architect year of first clt project clt projects per year major challenge major driver 1 2002 5-8 static loading, evaporation, and acoustics wood creates better living and learning conditions 2 2001 3-4 planning between architect, clt manufacturer, and contractor government regulators more receptive to timber construction 3 2000 10-15 requires more up-front planning than other construction systems customers want to see more wood developer 2014 2nd clt project acoustics abatement sustainability and environmental aspects of wood wood for construction in austria has grown from a 3% to 30% market share over the last 20 years. this increase in the use of wood, and specifically clt construction systems, has put a lot of pressure on clt manufacturers, and construction lead times are increasing. the inspection of the buildings did not show any damage related to over-exposure of the panels to inclement weather conditions during construction. the observation of the construction of building f showed that there is a high level of coordination between the architect, the clt manufacturer, and the construction company to expedite the construction process. a big challenge with clt construction is keeping the panels dry during inclement weather, and the panels must be handled with special care to avoid contact with water or excessive exposure to sunlight during construction. the architects indicated that fire risk concerns are still a critical barrier that must be overcome for each project. in many cases, code officials are not very familiar with clt construction systems, and architects need to work with code officials to get all the permits aligned and authorized. architect 1 indicated that younger code officials tend to be more receptive to clt construction systems than are older ones. this input from the architects regarding fire performance should be considered in the visual inspection tool. the architects also agreed that the overall project costs are similar to concrete and steel. most customers believed that building with the clt systems was more expensive than using concrete and steel, so the architects needed to spend time with customers to explain that costs were indeed similar. however, the developer of building f indicated that clt construction systems are still more expensive than standard concrete construction because clt systems are relatively new and, for some contractors, are more difficult to use than standard systems. during the inspection of the buildings, building managers and dwellers interviewed indicated a high level of satisfaction with the performance of the buildings related to sustainability and social aspects. these types of aspects were not included in the visual inspection tool, however, because they are difficult to evaluate by sight alone, without asking people who interact with the buildings. both managers and dwellers recognize that a clt structure could be more expensive than a concrete or steel building, but both groups pointed out that sustainability aspects such as better insulation, quesada et al. — a visual assessment of cross-laminated timber structures in austria 61 carbon sequestration, and the use of renewable materials are equally or more important than just the cost of the building. socially speaking, dwellers love the wood surfaces in walls, ceilings, and floorings. similar results were found by conroy et al. (2019). when building with clt systems, the architects agreed that the designer must have excellent knowledge of wood mechanics, wood connections, techniques to keep water and moisture away from wood, and vibration and noise abatement systems, in addition to understanding the structural design of buildings. one architect indicated a preference for exposing the exterior face of the clt panel for aesthetics and not using moisture barriers or coatings on the exterior clt panel face. during the application of the visual inspection tools, it was found that all the buildings were designed following the basic principles to prevent moisture presence in exterior and interior surfaces. with a couple of exceptions, damage due to exposure to moisture was observed, but this damage in those cases was not compromising the structural integrity of the building. it is important to note that the critical aspects related to the design of this type of building were included in the visual inspection tool. the interviewees indicated that the main advantages for clt customers were a great living atmosphere, sustainable construction, and short construction lead time. according to the contractor of building f wood gains and releases moisture in the atmosphere, which creates better living conditions for occupants. the interviewees indicated that wood creates better living and learning conditions. the indoor working environment is becoming more important in the decision process of selecting a construction material for a building. this seems aligned with recent research by kotradyova et al. (2019), where their study highlights the positive impact of wood environments for humans. 5. conclusions a visual inspection tool to evaluate the interior and exterior damage of clt structures was successfully developed and implemented in six clt buildings in austria. the application of the inspection tool was complemented through interviews with the building managers, dwellers, and the architects who designed the buildings. the clt buildings that were inspected in austria have design features that protect the clt panels from weather. all of the inspected buildings showed little or no evidence of decay or insect damage. most of the observed decay was found in the wood shingles used for siding, which can be easily replaced without impacting the performance or integrity of the building. in regards to the construction techniques used in the inspected buildings, it was found that common construction techniques for clt floor systems in austria use a layer of lightweight concrete on top of the clt floor system to increase acoustic performance of the building. architects also indicated that clt construction systems require more planning from architects and contractors than other standard construction systems. in addition, both architects and contractors still have concerns about fire codes. regarding the level of exposure of clt panels, wall clt panels are usually exposed in the interior of buildings and insulation and siding are added to the external side of the clt panel to protect against weather (rain and sunlight). it seems that the exposure of clt panels in the interior of the building is an attractive feature for customers because of perceived environmental benefits, and the building environment provides excellent living and working conditions. the interviews with building dwellers, managers, and architects during visits to the buildings were very useful to validate and complement the findings from the visual inspection. this tool was designed to work as a stand-alone visual inspection protocol, but open questions were introduced in order to determine if the tool had missing elements, conflicts, repetition, or implementation issues. it was found that the visual tool should have included an item to evaluate aspects related to fire performance and also items to evaluate the social and environmental performance of the building. in addition, the questions to the dwellers and building managers were important to determine the overall satisfaction with the building, something that can only determined by asking people. overall, the visual inspection tool was found to be useful in determining the general exterior and interior conditions and the acceptance and performance of the inspected clt buildings. 6. bibliography bouldin, jc. 2011. methodology for the visual inspection of selected engineered wood products and connector hardware for prescriptive non-compliance at the pre-drywall stage of residential construction (doctoral dissertation, 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https://www.timber-online.net/holzprodukte/2017/06/brettsperrholz-produktion-in-europa---20162020.html https://www.timber-online.net/holzprodukte/2017/06/brettsperrholz-produktion-in-europa---20162020.html https://www.timber-online.net/holzprodukte/2017/06/brettsperrholz-produktion-in-europa---20162020.html http://www.scientific.net/amr.778.342 https://www.thinkwood.com/news/home-advantage-mass-timber-a-differentiator-for-multifamily-developers https://www.thinkwood.com/news/home-advantage-mass-timber-a-differentiator-for-multifamily-developers https://www.thinkwood.com/news/home-advantage-mass-timber-a-differentiator-for-multifamily-developers abstract agritourism combines visiting and experiencing farms, orchards, and other agricultural activities. it integrates traditional tourism with educational and recreational aspects of agriculture. technological advancements have boosted tourism activities, changing the core values of sustainable tourism inherent in agriculture. this study analyzes tourists’ behavior, perceptions of sustainable tourism, and the influence of technology on their intention to revisit the context of agritourism in vietnam. adopting a mixed-methods approach with structural instrument design, we used surveys to quantify visitors’ attitudes, perceptions, and intentions. implementing the partial least squares structural equation modelling (pls-sem) statistical method through smart-pls software version 4.0.9.2 ensures a robust analysis of the collected data. these findings provide original perspectives that can inform strategic and culturally sensitive initiatives, thereby enhancing sustainability and enriching experiences within vietnam’s agricultural tourism landscape. the nuanced insights derived from demographics, coupled with the acknowledgement of perceived behavioral control as a linchpin, add a unique dimension that directly influences visitors’ intentions to return. furthermore, recognizing technology’s pivotal role, alongside concerns about sustainability and cultural impact, underscores the importance of a balanced integration approach. keywords: agricultural tourism, technology, sustainability, revisit intention, emerging market agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 1 faculty of marketing, thuongmai university, hanoi city vietnam; https:// orcid.org/0009-0000-1487-3847 2 faculty of marketing, thuongmai university, hanoi city vietnam; https:// orcid.org/0009-0003-2113-7305 * corresponding author email: ngocnb@tmu.edu.vn bioproducts business 9(2), 2024, pp. 19–37. issn 2378-1394 https://doi.org/10.22382/bpb-2024-002 1. introduction agricultural tourism, a burgeoning niche within the broader tourism industry (abdullah et al., 2022), has gained considerable attention in recent years due to its potential to bridge the gap between urban and rural environments (susila et al., 2023; wu et al., 2023). in the context of vietnam, a country with a rich agrarian heritage, the exploration of agricultural tourism is particularly intriguing (quang et al., 2022). this research investigated the multifaceted interplay between agricultural tourism, technology, perceived sustainability, and visitors’ intention to return, contributing to the growing body of literature on sustainable tourism development. vietnam, with its diverse landscapes and vibrant agricultural practices, offers a unique platform for the convergence of agriculture and tourism (van long et al., 2020). the nation’s economy has historically relied on its agricultural sector, serving as a fundamental pillar that has substantively influenced the country’s cultural identity. characterized by vast agricultural landscapes and a primarily rural population, constituting 62.7%, the agricultural sector remains a cornerstone in shaping the essence of the nation (greenfield, 2022). in recent years, there has been a noticeable shift in the tourism landscape, with an increasing number of travelers seeking authentic and immersive experiences in rural settings (cole & ingalls, 2020). this surge in interest has propelled agricultural tourism to the forefront, prompting researchers to investigate the factors that influence its success and sustainability (loureiro et al., 2022). ngoc bao nguyen 1 * and long hoang nguyen 2 20 bioproducts business 9(2) 2024 sustainable tourism development, thereby fostering a more balanced and resilient future for vietnam’s agricultural tourism sector (trupp & dolezal, 2020). 2. literature review the theory of planned behavior (ajzen, 1985) provides a robust theoretical framework for understanding and predicting visitors’ intention to return in the context of agricultural tourism in vietnam. the model comprises key constructs such as attitude toward agricultural tourism, subjective norms, and perceived behavioral control, which collectively shape visitors’ intentions to participate in agricultural tourism activities (mohammadrezaei et al., 2023). visitors’ attitudes toward the experience, subjective norms influenced by societal and peer approval, and perceived behavioral control regarding obstacles or facilitators all play pivotal roles in determining their intention to engage in agricultural tourism. building upon this established model, our research expands its horizons by introducing the moderating variable of the role of technology. technology, encompassing digital tools, applications, and smart farming practices, is posited to moderate the relationship between perceived sustainability and visitors’ intention to return (marchesani, 2023). technology integration is expected to amplify the impact of perceived sustainability on visitors’ intention to return, emphasizing the transformative role technology plays in shaping the overall tourism experience and influencing sustainable practices (kokash et al., 2024). similarly, previous studies have highlighted that individuals who cultivate positive or negative attitudes towards engaging in such behaviors are likely to show matching intentions to revisit, suggesting a strong link between attitude formation and behavioral intentions (bianchi et al., 2017). by bridging the gap between perceived sustainability and visitors’ intention to return, the model provides an understanding of the intricate dynamics in the agricultural tourism sector in vietnam, shedding light on the nuanced interplay between traditional agricultural experiences and contemporary technological advancements. 2.1 attitude toward agricultural tourism attitude, as a central component of the theory of planned behavior, serves as a crucial determinant while agricultural tourism holds immense potential, the incorporation of technology into this niche has become a central point of discussion. technology, ranging from mobile applications and virtual reality to smart farming techniques, has the capacity to enhance the overall tourism experience and contribute to the sustainability of agricultural practices (kumari et al., 2022). however, there remains a significant gap in understanding the intricate dynamics between technology, sustainability perceptions, and visitors’ intention to return within the context of agricultural tourism in vietnam. despite the increasing popularity of agricultural tourism in vietnam, limited scholarly attention has been devoted to exploring the role of technology in shaping visitors’ perceptions of sustainability and their subsequent intention to return (l. l. tsai, 2020). tsai’s study reveals that flow experience, positive emotions, and event satisfaction directly influence the intention to revisit, with event satisfaction having the most significant impact. furthermore, positive emotions serve as a mediator between flow experience and both event satisfaction and the intention to revisit. existing studies often focus on broader aspects of sustainable tourism or technology adoption in the hospitality sector, neglecting the specific nuances of the intersection between agriculture and tourism. moreover, as technology evolves rapidly, there is a need to comprehend its evolving impact on agricultural tourism in a developing nation like vietnam. furthermore, while the concept of sustainability is integral to tourism development, its application and perception within the agricultural tourism context in vietnam remains under-explored. understanding how visitors interpret sustainability in the agricultural tourism setting, especially concerning the use of technology, can provide valuable insights for policymakers, practitioners, and local communities seeking to capitalize on the potential of this unique tourism segment (janjua et al., 2023). in light of these considerations, this research aims to address these gaps by examining the intricate relationships among the role of technology, perceived sustainability, and visitors’ intention to return within the context of agricultural tourism in vietnam. by doing so, this study aspires to contribute to the theoretical and practical understanding of nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 21 of visitors’ inclination to participate in agricultural tourism activities. numerous studies highlight the significance of a positive attitude as a driving force behind tourist engagement in unique and culturally immersive experiences (tussyadiah et al., 2018; yin et al., 2023). in the context of agricultural tourism in vietnam, a positive attitude is expected to be positively associated with visitors’ perceived sustainability. perceived sustainability becomes a pivotal link in this relationship, acting as a mediating factor between attitude and intention to return (dabbous & tarhini, 2019). tourists with favorable attitudes are likely to perceive agricultural tourism experiences as environmentally, socio-culturally, and economically sustainable, aligning with the broader global trend towards responsible and eco-friendly tourism practices (li et al., 2023; olya et al., 2023). recent publications suggest that sustainable practices contribute positively to visitors’ overall satisfaction and sense of fulfillment, thus enhancing their intention to return to the destination (kamrul hassan et al., 2023). moreover, the integration of technology into agricultural tourism experiences introduces a moderating influence on this relationship. technology, in the form of digital applications, virtual reality, and smart farming practices, has the potential to amplify the positive effects of perceived sustainability on visitors’ intention to return (tussyadiah et al., 2018). related research suggests that technology-driven enhancements can foster a deeper connection between tourists and sustainable practices, thereby reinforcing positive attitudes and strengthening the intention to revisit agricultural tourism destinations (yamagishi et al., 2023). h1: visitors’ positive attitudes toward sustainability within agricultural tourism positively influence their intention to return. 2.2 subjective norms subjective norms, defined by the theory of planned behavior, involve the perceived pressure from society to perform certain behaviors. while social media can amplify this pressure by showcasing individual behaviors, it is not the core element driving the phenomenon of agritourism. in the realm of agricultural tourism, the impact of subjective norms is critical, as tourists frequently look for validation and approval from their social networks for their involvement in these activities. however, the essence of agritourism’s appeal extends beyond social media’s influence and is rooted in the authentic experiences and connections with agricultural life (ajzen, 1985; liu et al., 2020). this perspective is further supported by recent findings. a comprehensive report underscores that subjective norms wield a considerable influence on tourists’ choices to adopt sustainable practices within agritourism settings. these social pressures, whether amplified through social media or traditional social interactions, significantly guide tourists’ commitment to sustainability (brune et al., 2021), highlighting the intricate relationship between societal influences and individual decisions in the context of agritourism. in the case of agricultural tourism in vietnam, where traditional values and communal ties are deeply ingrained, subjective norms are likely to play a crucial role in shaping visitors’ perceptions of sustainability (mehraj et al., 2023). positive subjective norms can contribute to the favorable evaluation of sustainable agricultural practices, fostering an environment where tourists view these practices as socially acceptable and culturally aligned (megeirhi et al., 2020). moreover, the incorporation of technology in the form of social media, online reviews, and virtual communities, can amplify the impact of subjective norms on perceived sustainability and, consequently, on visitors’ intention to return (gössling, 2017). tourists, influenced by subjective norms prevalent in their social networks, may utilize technology platforms to validate and reinforce their sustainable tourism decisions (lin & rasoolimanesh, 2023). h2: visitors who perceive stronger subjective norms toward sustainability within agricultural tourism are more likely to express an intention to return. 2.3 perceived behavioral control the concept of perceived behavioral control is vital for predicting behavior. in this study, it is standardized from the theory of planned behavior and its role in linking perceived control, sustainability, and tourists’ intentions to revisit agritourism destinations. exploring the nexus between perceived behavioral control, perceived sustainability, and visitors’ inten22 bioproducts business 9(2) 2024 tion to return in agricultural tourism. as an integral component of the theory of planned behavior, perceived behavioral control represents individuals’ perceptions of ease or difficulty in engaging in a particular behavior. in the realm of agricultural tourism, it becomes especially pertinent, as visitors assess their ability to actively participate in sustainable practices and integrate these experiences into their travel itinerary (ajzen, 1985; zhao et al., 2022). in the context of vietnam’s agricultural tourism, where visitors may encounter unfamiliar farming practices or cultural experiences, advanced it can empower tourists to actively participate in sustainable activities, fostering a sense of personal capability and control (susila et al., 2023). furthermore, technologies are increasingly applied to the agricultural sector through mobile applications, virtual reality, and smart farming techniques, which can enhance visitors’ perceived control over their agricultural tourism experiences (loureiro et al., 2020; kokash et al., 2024). research suggests that technology-driven advancements, such as interactive farm tours or digital guides, can provide tourists with a sense of mastery and control over their engagement with sustainable practices, consequently influencing their intention to return (kapsalis, 2022; metta et al., 2022). understanding the dynamic interplay between perceived behavioral control, perceived sustainability, and intention to return in the agricultural tourism context not only sheds light on tourists’ perceived capability to adopt sustainable behaviors but also emphasizes the pivotal role technology plays in shaping these perceptions. this synthesis contributes to a comprehensive framework for sustainable tourism development, providing valuable insights for policymakers, practitioners, and researchers in the agricultural tourism sector in vietnam. h3a: higher levels of perceived behavioral control over sustainability practices within agricultural tourism are associated with increased awareness of sustainability. h3b: visitors with a stronger perceived behavioral control regarding sustainability within agricultural tourism are more likely to express an intention to return. 2.4 perceived sustainability tourism sustainability traditionally includes environmental, social, economic, and institutional dimensions, aiming to enhance both material and non-material wellbeing, ensure equity across generations, maintain biodiversity and ecological integrity, and protect cultural heritage (unesco, 2012; united nations, 2001). sustainable tourism, which has evolved into various forms like ecotourism and community-based tourism, aims to uphold these principles. perceived sustainability tourism specifically relates to how tourists view the sustainability efforts of tourism activities, assessing their impact on the environment, society, and economy, ensuring that current actions do not hinder future needs (guizzardi et al., 2022; lee & jan, 2019). this perception plays a crucial role in shaping tourists’ decisions and promoting more sustainable travel practices. examining the relationship between perceived sustainability and visitors’ intention to return within the context of agricultural tourism in vietnam sheds light on the mediating role of perception in shaping tourists’ behavioral intentions (gannon et al., 2021; zhou et al., 2023). perceived sustainability, as a key mediating factor, encapsulates visitors’ beliefs and evaluations regarding the environmental, sociocultural, and economic sustainability of agricultural tourism practices in vietnam. related research on sustainable tourism has a strong positive correlation between perceived sustainability and visitors’ intention to return in various tourism contexts (tabaeeian et al., 2023; thipsingh et al., 2022). in the specific case of agricultural tourism in vietnam, where traditional values and eco-friendly practices are intertwined with the tourism experience, perceived sustainability becomes a crucial factor influencing visitors’ decisions to revisit (satrya et al., 2023). positive perceptions of sustainability contribute to visitors’ overall satisfaction with their agricultural tourism experience, creating a sense of fulfilment and connection to the destination (kamrul hassan et al., 2023). when tourists perceive that their activities align with sustainable principles, it fosters a positive image of the destination, which, in turn, enhances their intention to return for future visits (s. i. n. w. abdullah et al., 2019). nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 23 furthermore, the relationship between perceived sustainability and intention to return is nuanced by the incorporation of technology. modern advancements, such as mobile applications, virtual reality experiences, and smart farming practices, can amplify visitors’ perceptions of sustainability (kumari et al., 2022; loureiro et al., 2020; kokash et al., 2024). technology enhancements not only showcase sustainable practices but also engage tourists in meaningful ways, reinforcing positive perceptions of sustainability and subsequently influencing their intention to return. h4: there is a positive association between perceived sustainability practices and intention to return to agricultural tourism. 2.5 the moderating variable role of technology the exploration of the moderating variable, the role of technology’s impact on the relationship between perceived sustainability and visitors’ intention to return in the context of agricultural tourism in vietnam, introduces a dimension that reflects the transformative impact of technology on the tourism experience. while research has shown a positive association between perceived sustainability and visitors’ intention to return (lin et al., 2017; tabaeeian et al., 2023), the role of technology as a moderating influence in this relationship has gained recent interest as an emerging field. technology acts as a facilitator, augmenting the perceived sustainability of tourism experiences and influencing visitors’ return intentions (phang & kong, 2023; talwar et al., 2023). digital advancements, such as mobile applications offering real-time information on sustainable practices or virtual reality experiences showcasing eco-friendly initiatives, provide tourists with enhanced perceptions of the sustainability efforts within agricultural tourism settings (li et al., 2023; olya et al., 2023). this has the potential to strengthen the link between perceived sustainability and the intention to return, as technology becomes a conduit for delivering immersive and educational content. moreover, the interactive nature of technology allows visitors to actively engage with sustainable practices, fostering a deeper connection and understanding (susila et al., 2023). the role of technology, in this context, emerges as a catalyst that not only showcases sustainability efforts but also engages visitors in a meaningful way, thus heightening their intention to revisit agricultural tourism destinations (deb et al., 2023). understanding the interplay between perceived sustainability and intention to return, with the moderating influence of the role of technology, provides valuable insights for the design and implementation of sustainable tourism strategies. this literature review underscores the need for agricultural tourism stakeholders in vietnam to leverage technology strategically, emphasizing its potential to enhance visitors’ sustainable perceptions and foster long-term engagement with the destination. h5: the moderating effect of technology positively influences the relationship between visitors’ awareness of sustainability within agricultural tourism and their intention to return. 2.6 visitors’ intention to return understanding visitors’ intention to return is crucial in the context of agricultural tourism in vietnam, particularly as it pertains to the evolving role of technology and perceptions of sustainability. recent research underscores that tourists’ intention to return is intricately linked to their overall satisfaction, positive experiences, and the perceived value of a destination (zhao, z., et al., 2023). in the case of agricultural tourism, the intention to revisit farms and rural settings is influenced by a combination of factors, ranging from cultural authenticity to the incorporation of sustainable practices, and other variables: customer service, logistics, easy access, accommodations, meals, etc. (chen et al., 2023). studies suggest that visitors’ positive experiences and satisfaction with agricultural tourism activities significantly contribute to their intention to return (kamrul hassan et al., 2023; (zhao, z. et al., 2023). agricultural tourism in vietnam, with its rich cultural heritage and diverse landscapes, provides a unique setting where visitors can immerse themselves in authentic farming experiences. the intention to return, therefore, becomes a reflection of the quality and authenticity of these experiences. the role of technology emerges as a pivotal factor in shaping visitors’ intention to return. technology not 24 bioproducts business 9(2) 2024 only enhances the quality of the agricultural tourism experience but also acts as a catalyst for sustainable practices, positively influencing visitors’ intention to return (hossain et al., 2023). furthermore, the concept of perceived sustainability plays a significant role in shaping visitors’ intention to return to agricultural tourism settings. research indicates that tourists increasingly value destinations that demonstrate a commitment to environmental, socio-cultural, and economic sustainability (olya et al., 2023; li et al., 2023). the integration of sustainable practices in agricultural tourism becomes a key driver of visitors’ positive perceptions, fostering a sense of responsibility and connection to the destination, thereby influencing their intention to return. 3 methodology 3.1 sample size ensuring an adequate sample size is crucial for the reliability of statistical methods like partial least squares structural equation modeling (pls-sem), guaranteeing robust results and the potential for generalization of the model. inadequate sample sizes may lead to misleading outcomes. following the recommendation (hair jr. et al., 2017), the 10 times rule is applied to determine the minimum sample size, 240 respondents. specifically, this entails ensuring that the sample size is at least 10 times the number of items within the scale structure with the highest count and 10 times the number of action paths directed into the scale structure with the most paths (hair et al., 2019). pls-sem employs this criterion based on either the largest formative observed variable or the greatest number of paths influencing a concept in the model (becker et al., 2013). hair and colleagues (2017) also suggest considering cohen’s (1992) standards for sample size calculations in many instances (cohen, 1992). the study was designed to collect 400 responses, with the actual collection yielding 368 responses, indicating a 92% recovery rate. nonprobability sampling was employed, and data collection utilized a designed questionnaire. the questionnaire comprises two sections: one for general demographic information, including gender, group age, and job characteristics (back et al., 2021; bhat & mishra, 2021) and the other focusing on the main content aligned with the research model of six constructs: attitudes toward sustainability, subjective norms, perceived behavioral control, perceived sustainability, role of technology, visitors’ intention to return. 3.2 data collection this study relies on primary data obtained directly from respondents through the distribution of questionnaires. to achieve the research objective, a twophase survey process was employed (li et al., 2008). in phase 1, the comprehension of measurement concepts was tested on a group of 60 individuals. moving to phase 2 data collection, a formal sampling method was utilized. vietnam has experienced a boom in agritourism, with local governments, organizations, and individuals capitalizing on agricultural features to create culturally immersive tourism offerings aligned with tourist interests (jackie ong, 2023). in northern vietnam, for instance, tours emphasize perceived sustainability role of technology (rt) visitors’ intention to return (ir) subjective norms (sn) perceived behavioral control (bc) attitudes toward sustainability (at) h1 h5 h4 h3a h3b h2 figure 1. the conceptual framework and hypothesis. nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 25 table 1. sample characteristics. demographics items frequency percentage gender male 155 42.1 female 213 57.9 group age 18–29 93 25.3 30–39 202 54.9 40–49 21 5.7 50–59 30 8.2 up 60 22 6.0 job characteristics managers 47 12.8 employee 269 73.1 unemployed 52 14.1 source: authors’ analysis from data, 2024. rice cultivation and traditional crafts. notable examples include the cultural rice fields experience and the heritage trail in duong lam ancient village, hanoi. additionally, the hemp collective group in ta phin, sa pa, and lao cai, offers unique experiences centered on rice cultivation and fishing in the fields (hardwick et al., 2020). at agricultural tourist destinations, orchards, and hydroponic farms, domestic tourists were approached to seek permission to introduce the research context and explain measurement concepts. those who agreed to participate were provided with a link to the survey contents. this study utilizes a closed-end questionnaire methodology, incorporating a five-point likert scale as a standardized psychometric instrument for assessing participant responses. the likert scale, with values ranging from 1 (strongly disagree) to 5 (strongly agree), serves as the coding mechanism for capturing respondent feedback (nicholas & thapa, 2010). to instill participant confidence, a commitment to confidentiality was communicated, assuring individuals that their information would be handled with utmost privacy. furthermore, researchers explicitly pledged to avoid any subsequent contact with participants under all circumstances, reinforcing the security and confidentiality of the collected data. 3.3 data analysis cronbach’s alpa (α) was used to assess scale reliability a value of 0.6 or higher is considered satisfactory, indicating that scales are internally consistent and reliable for subsequent analysis (nunnally, 1978). for the examination of confirmatory factor analysis (cfa) and partial least squares structural equation modeling (pls-sem), the research utilized smartpls 4.0.9.2 software. pls-sem, as described by hair and colleagues (2014). the software smartpls 4.0.9.2, chosen for its capabilities, facilitated the intricate analyses involved in assessing the relationships between various constructs in the research model. 4 results 4.1 descriptive analysis table 1 presents findings derived from 368 respondents, revealing that 42.1% were male and 57.9% were female. a majority of participants were between 30 and 39 years of age, constituting 54.9% of the total. regarding job characteristics, 73.1% of those surveyed held employee positions, 12.8% were managers, and 14.1% belonged to the group with indefinite employment. these demographic insights underscore a predominant female representation in the study sample, while the age distribution highlights a concentration of participants in the 30 to 39 age group. furthermore, a significant proportion of respondents occupy employee positions, signifying a key aspect of the current job characteristics among those surveyed. 4.2 reliability of measurement scales in evaluating the internal consistency of measures, the widely accepted method involves computing the coefficient alpha for the constructs. as depicted in table 2, all cronbach’s alpha values surpass 0.70, affirming the robust internal consistency of all measures (nunnally, 1978). furthermore, the outer loadings’ values, exceeding the threshold of 0.708, indicate high reliability of the reflective constructs in scale measurement. to address potential multicollinearity issues within the inner model, variance inflation factor (vif) was scrutinized. the analysis revealed an absence of multicollinearity concerns, as all vif values remained below 3, aligning with the defined threshold (sarstedt et al., 2017). the metrics detailed in table 2 underscore the study’s methodological precision and enhance the credibility of the measurement concepts (hair et al., 2020). 26 bioproducts business 9(2) 2024 table 2. result of analysis cronbach’s alpha. items measurement scales cronbach’s alpha outer loading outer vif at attitudes toward sustainability 0.905 at1 engaging in agricultural tourism activities aligns with values and positive beliefs 0.888 2.821 at2 visitors believe that participating in agricultural tourism positively reflects their image and identity 0.880 2.810 at3 visitors have a favorable impression of agricultural tourism and perceive it as an enjoyable experience 0.897 2.820 at4 engaging in agricultural tourism gives me benefits 0.864 2.436 sn subjective norms 0.897 sn1 visitors feel societal pressure to engage in sustainable practices during agricultural tourism activities 0.869 2.499 sn2 the opinions of my peers significantly influence my decision to participate in sustainable agricultural practices during my visit 0.870 2.554 sn3 visitors perceive engaging in sustainable agricultural practices as socially acceptable within any social 0.881 2.926 sn4 technology, such as social media and online reviews, plays a significant role in shaping my perception of sustainable norms during agricultural tourism 0.875 2.860 bc perceived behavioral control 0.896 bc1 visitors feel confident to actively engage in sustainable practices during agricultural tourism experiences 0.861 2.355 bc2 visitors believes in the necessary skills to integrate sustainable activities into agricultural tourism itineraries. 0.895 2.828 bc3 visitors perceive a high level of control over participation in sustainable practices during agricultural tourism 0.893 2.786 bc4 technology, such as mobile applications and virtual reality experiences, enhances perceived control over sustainable activities during agricultural tourism 0.844 2.135 ps perceived sustainability 0.888 ps1 visitors believe that agricultural tourism practices in vietnam are environmentally sustainable 0.846 2.491 ps2 visitors perceive agricultural tourism activities in vietnam as contributing positively to the sociocultural sustainability of the region 0.885 2.952 ps3 visitors evaluate the economic sustainability of agricultural tourism practices positively in vietnam 0.873 2.490 ps4 technology-enhanced aspects of agricultural tourism in vietnam positively influence the perception of sustainability 0.857 2.329 rt role of technology 0.912 rt1 technology, such as mobile applications and online guides, improve understanding of sustainable practices during agricultural tourism 0.886 2.739 rt2 visitors believe that tourism app support contributes positively to the enhancement of the sustainability of agricultural tourism 0.899 2.895 rt3 smart farming practices, enabled by technology, positively influence visitors’ perception of the environmental sustainability of agricultural tourism 0.890 2.757 rt4 the integration of ecosystem technology enhances satisfaction with the sustainability initiatives in agricultural tourism, influencing tourists’ intention to return 0.885 2.822 ir visitors’ intention to return 0.864 ir1 visitors’ positive experience with sustainable agricultural practices enhances travelers’ intention to return 0.832 1.912 ir2 the overall perceived sustainability of agricultural tourism activities positively influences tourists’ desire to return 0.838 2.063 ir3 the integration of technology, such as app mobile, virtual reality, and smart farming, enhances visitors’ intention to return for future agricultural tourism experiences 0.846 2.066 ir4 visitors satisfaction with the technological role aspects and perceived sustainability of agricultural tourism significantly influences the intention to return in here 0.855 2.217 source: authors’ data analysis, 2024. nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 27 table 3. convergent validity fornell and larcker (1981). cr ave at bc ir ps rt sn at 0.908 0.779 0.882 bc 0.899 0.763 0.288 0.873 ir 0.864 0.710 0.468 0.391 0.843 ps 0.892 0.749 0.453 0.532 0.568 0.865 rt 0.915 0.792 0.409 0.433 0.43 0.522 0.89 sn 0.897 0.764 0.544 0.278 0.541 0.417 0.401 0.874 source: authors’ data analysis, 2024. note: attitudes toward sustainability (at), perceived behavioral control (bc), visitors’ intention to return (ir), perceived sustainability tourism (ps), role of technology (rt), subjective norms (sn), composite reliability (cr), average variance extracted (ave). 4.3 confirmatory factor analysis (cfa) in table 3, the analysis of convergent validity, following fornell and larcker’s (1981) approach, reveals robust results. the use of composite reliability, favored over cronbach’s alpha in pls-sem (hair jr. et al., 2017) surpasses the recommended threshold of 0.70 (bagozzi & yi, 1988). moreover, all standardized loadings for indicators exceed the benchmarks set by (fornell & larcker, 1981). moving on to construct validity, both convergent and discriminant aspects were thoroughly examined. convergent validity, gauged by the average variance extracted (ave), demonstrates its mettle with values exceeding 0.50, as illustrated in table 3 and in alignment with fornell and larcker (1981). shifting focus to discriminant validity, the evaluation, as per fornell and larcker’s (1981) guidelines, investigates whether latent variables exhibit stronger correlations with their own items than with those of other constructs. in table 3, the square root of each construct’s ave (sqrt of aves) consistently outperforms the squared values of correlations between latent variables, a decisive indication supporting discriminant validity (kock, 2015). bringing it all together, the outer model testing affirms the validity and reliability of the studied constructs. the convergence and divergence analyses, detailed in table 3, collectively provide a strong foundation for the confidence in the measurement scale’s ability to accurately reflect the underlying constructs. 4.4 hypothesis testing from table 4, the results of the analysis of direct and indirect relationships indicate that the provided hypotheses are statistically significant. analysis of the dynamic relationship of tourists’ perception of sustainability tourism, based on the theory of planned behavior framework, reveals that the measured concepts, including attitudes toward sustainability, subjective norms, and perceived behavioral control, positively impact agricultural tourism activities. notably, in the context of agricultural tourism activities in vietnam, the concept of perceived behavioral control, for tourists, is indicated to be the highest, with a corresponding beta coefficient of 0.415. additionally, individual perceived behavioral control directly influences visitors’ intention to return, albeit with the lowest beta coefficient of 0.102. on the other hand, the direct impact relationship between sustainable tourism activities and visitors’ intention to return is also noted to have a positive correlation. furthermore, this relationship is influenced by the role of technology as a moderating variable. the analysis results demonstrate that the moderating variable role of technology regulates the corresponding negative beta coefficient of -0.193. this reflects tourists’ perception of concerns related to the use of technology in agricultural activities affecting environmental sustainability, foreign cultural impact, and the economic development of agricultural tourism (kumari et al., 2022; loureiro et al., 2020). moreover, these findings may indicate that excessive application of technology in agricultural tourism activities may lead to conflicts between traditional culture and modern technology. in addressing the issues related to the chain of effects leading to tourists’ intention to return, approaching the analysis of reconciling effects is crucial (kenny et al., 2018). the results highlight the intermediary role of sustainability tourism activities in the context of agricultural tourism, examining the 28 bioproducts business 9(2) 2024 table 4. path coefficients of the concept framework. hypothesis relationships path coefficients standard deviation t statistics p-value h1 at → ps 0.240 0.051 4.686 0.000 h2 sn → ps 0.171 0.054 3.194 0.001 h3a bc → ps 0.415 0.052 7.943 0.000 h3b bc → ir 0.102 0.047 2.146 0.032 h4 ps → ir 0.290 0.067 4.353 0.000 h5 rt × ps → ir -0.193 0.034 5.608 0.000 source: authors’ data analysis, 2024. note: attitudes toward sustainability (at), perceived behavioral control (bc), visitors’ intention to return (ir), perceived sustainability tourism (ps), role of technology (rt), subjective norms (sn). table 5. total of direct and indirect effects. specific effects path coefficients standard deviation t statistics p values bc → ps → ir 0.120 0.030 3.959 0.000 sn → ps → ir 0.050 0.019 2.567 0.010 at → ps → ir 0.070 0.024 2.861 0.004 rt × ps → ir -0.193 0.034 5.608 0.000 source: author’s data analysis, 2024. direct impact of tourism motivations and emphasizing the significant moderating role of technology at the destination concerning the intention to return. the study revealed meaningful connections within the examined framework. specifically, it explored the impact of tourists’ perceptions of sustainability on their intention to return. the findings demonstrate significant effects in this area. table 5 contains a detailed presentation of these results. the research findings were synthesized, and the results of the analysis framework on tourists’ intention to return, along with the moderating role of technology variables influencing tourists’ intentions, were visualized. 5 discussion agricultural tourism is a form of tourism that involves visiting and experiencing farms, fruit orchards, or other agricultural business activities. it is a blend of traditional tourism with the educational and entertainment aspects of agriculture. over time, activities in this sector have evolved with technological advancements, and the applications of technology in tourism have altered the core values of sustainable tourism inherent in agriculture (izquierdo-gascón & rubio-gil, 2023). this study analyzes the dynamics of tourist behavior, considering the perceptions of sustainable tourism and the influencing factors of technology in regulating tourists’ intentions to return within the context of agricultural tourism in vietnam. the research results need to be interpreted and discussed in relation to studies in different contexts within the experiential tourism industry. studies in agricultural tourism share a consensus, and the findings of this research align with a study by dedeoğlu and colleagues (2022) in turkey. the results, encompassing attitudes, subjective norms, and perceived behavioral control, reveal a positive and significant influence on the intention to consume local food. furthermore, responsible tourist behavior acts as a moderator, influencing both of the relationships related to consumption intention (balıkçıoğlu dedeoğlu et al., 2022). this research examines demographic characteristics, tourists’ views on sustainable tourism and their fit with the theory of planned behavior, the connection between these activities and visitors’ intentions to return, and how technology influences this desire’s impact. each of these is thoroughly discussed, providing a more objective and comprehensive understanding of the findings. the demographic profile allows insightful comparisons, emphasizing the study’s significance. gender distribution (42.1% male, 57.9% female) indicates nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 29 balanced representation (truong et al., 2014; hai et al., 2020). notably, 54.9% in the 30 to 39 age bracket suggests specific demographic interest. job characteristics reveal 73.1% in employee positions, with 14.1% having indefinite employment, adding complexity. these demographics impact the study’s variables; analyzing age and job roles may unveil nuanced insights into participant perspectives (kronenberg & fuchs, 2022). this comparative approach enhances the study’s depth and applicability, emphasizing the importance of demographic considerations in understanding research outcomes. the examination of tourists’ perception of sustainability tourism, based on the theory of planned behavior, reveals a positive impact on agricultural tourism activities. in the specific context of vietnam’s agricultural tourism, the concept of tourists’ perceived behavioral control stands out, with the highest beta coefficient of 0.415. this underscores its significant influence on tourists’ engagement in agricultural activities. notably, the influence extends to the visitors’ intention to return, although the beta coefficient is the lowest, at 0.102. this intriguing finding prompts a deeper exploration of the complex relationship between perceived behavioral control and return intentions, enhancing our comprehension of the factors shaping tourists’ behavior in agricultural tourism (he et al., 2023). the direct impact relationship between sustainable tourism activities and visitors’ intention to return exhibits a positive correlation. this relationship is influenced by the moderating variable role of technology (deb et al., 2023). the analysis reveals that technology’s moderating role regulates a corresponding negative beta coefficient of -0.193. this signifies tourists’ concerns regarding the technological influence on environmental sustainability, foreign cultural impact, and the economic development of agricultural tourism (raihan & tuspekova, 2022). these findings suggest that an overreliance on technology in agricultural tourism may result in conflicts between traditional culture and modern technological practices, emphasizing the pivotal role of technology moderation in achieving a balanced and sustainable tourism experience (susila et al., 2023). the mention of technology’s moderating role in reducing the strength of the positive relationship (as indicated by a negative beta coefficient of -0.193) suggests that as the influence of technology increases, it might negatively impact visitors’ intentions to return. this negative impact could be due to tourists’ concerns about how technology affects figure 2. the path analysis of visitors’ intention to return. source: authors’ data analysis, 2024. note: attitudes toward sustainability (at); perceived behavioral control (bc); visitors’ intention to return (ir); perceived sustainability tourism (ps); role of technology (rt); subjective norms (sn). 30 bioproducts business 9(2) 2024 environmental sustainability, impacts foreign cultures, and contributes to the economic development of agricultural tourism (yersüren & özel, 2024). this suggests that the way technology is integrated into sustainable tourism activities can influence tourists’ perceptions and intentions (ponnapureddy et al., 2019). if tourists perceive that technology is used in ways that harm the environment, overshadow local cultures, or disrupt the economic balance of local agricultural sectors, their intention to return may decrease (tsai et al., 2016). for tourists wanting to return, this emphasizes the importance of carefully considering how technology is applied in tourism settings. sustainable tourism should aim to integrate technology in a manner that enhances the visitor experience without compromising environmental integrity, cultural authenticity, and economic benefits for local communities (bhatti & alnasser, 2023). 6 conclusion in examining the multifaceted landscape of agricultural tourism in vietnam, our research unfolds with a meticulous exploration of participant demographics. a balanced representation emerges, revealing a distinct demographic interest, particularly within the working age group. job characteristics, dominated by employee positions, add complexity, hinting at the nuanced fabric of the agricultural tourism participant profile. transitioning into the realm of perception and behavior, our analysis, grounded in the theory of planned behavior framework, unravels the positive impact of tourists’ attitudes toward sustainability, subjective norms, and perceived behavioral control on agricultural tourism activities. notably, perceived behavioral control emerges as a linchpin, directly shaping visitors’ intention to return. this underscores the profound influence of tourists’ perceived control in sculpting their engagement and future interactions with the agricultural tourism landscape. as our exploration delves deeper, the correlation between sustainable tourism activities and visitors’ intention to return unveils a dynamic interplay, moderated significantly by technology. technology’s role, a key variable in this relationship, surfaces with paramount importance. here, tourists express concerns about its implications on environmental sustainability, foreign cultural influence, and the economic trajectory of agricultural tourism (gunn, 2014; arabadzhyan et al., 2021). a cautionary note is sounded, emphasizing the potential conflicts arising from an overreliance on technology, including virtual reality headsets and interactive or virtual system displays, urging a balanced and culturally sensitive integration within the agricultural tourism context (beck et al., 2019). in conclusion, our research paints a comprehensive picture of agricultural tourism in vietnam. from the intricate tapestry of participant demographics to the influential role of perceived behavioral control and the moderating impact of technology on sustainability, the findings weave together a narrative that calls for nuanced strategies. balancing tradition and technology become imperative, underscoring the need for an approach that respects cultural roots while embracing advancements. as vietnam’s agricultural tourism landscape evolves, these insights provide a compass for sustainable growth and an enriching experience for both participants and visitors alike. 7 implications (practical, social, research) the research underscores the potential for targeted strategies in agricultural tourism, particularly within the working age group. tailoring experiences to the preferences and expectations of working professionals, given their dominance in employee positions, is crucial. practical implications point towards customized offerings aligned with time constraints, enhancing engagement. recognizing demographic diversity is essential for inclusive initiatives that ensure that benefits reach various societal segments (baghirov et al., 2023). socially, community engagement and cultural sensitivity contribute to the sustainability of agricultural tourism in vietnam. these insights lay the foundation for future research, exploring the evolving interplay between employment dynamics, lifestyle choices, and agricultural tourism preferences. within the framework of the theory of planned behavior, our analysis reveals implications for agricultural tourism in vietnam. tourists’ positive attitudes towards sustainability, subjective norms, and perceived behavioral control shape their engagement. nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 31 the emergence of perceived behavioral control as a linchpin, influencing visitors’ intention to return, highlights a critical touchpoint for practical interventions. businesses can design empowering experiences, fostering control and connection (annamalah et al., 2023). socially, understanding tourists’ perceived control encourages community involvement, contributing to social sustainability. future research can delve into evolving dynamics between technology, sustainability, and visitors’ intentions, providing insights for continued development. in exploring the correlation between sustainable tourism activities and visitors’ intention to return, technology’s influential role emerges. practical implications emphasize the need to address tourists’ concerns about technology’s impact on sustainability, cultural influence, and the economic trajectory of agricultural tourism (zhao, x., et al., 2023). a delicate 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(2023). impact of perceived environmental restorativeness on tourists’ pro-environmental behavior: examining the mediation of place attachment and the moderation of ecocentrism. journal of hospitality and tourism management, 56, 398–409. https://doi.org/10.1016/j. jhtm.2023.08.006 nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 35 9 appendix. research ethics approval form research ethics approval form: everyone conducting research activity that involves human participants or the use of data collected from human participants is required to gain ethical approval before commencing research. please answer all relevant questions and note that your form may be returned if incomplete. for further support and guidance please contact the author’s workplace. please complete this form in good time before your research project is due to commence. section 1: basic filtering title: agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 1. researcher the first author: ngoc bao nguyen, faculty of marketing, thuongmai university, hanoi city vietnam, corresponding email*: ngocnb@tmu.edu.vn; https://orcid.org/0009-0000-1487-3847 79 ho tung mau street, mai dich ward, cau giay district, ha noi city, 100 000, viet nam the second author: long hoang nguyen, faculty of marketing, thuongmai university, hanoi city vietnam, corresponding email*: nhlong@tmu.edu.vn; https://orcid.org/0009-0003-2113-7305 79 ho tung mau street, mai dich ward, cau giay district, ha noi city, 100 000, viet nam 2. intended research start date and end date: from march 10 to september 30, 2023. section 2: research summary please select all research methods that you plan to use as part of your research: • interviews: yes • questionnaires: yes • observations: no • use of personal records: no • data analysis: yes • action research: no • focus groups: no • other (please specify): ............................................................................................. section 3: participants please answer the following questions, giving full details where necessary. will your research involve human participants? who are the participants? under 18 years old – stop over 18 years old – continue to inform survey participants about our research, we will share the questionnaire through a link on drive.google.com, detailing the study’s purpose to offer them the choice to participate. before distributing the link, we will seek consent from tourists who have expressed interest in participating. the link will then be sent via vietnam’s messaging application, zalo, to those who have agreed. for those who do not consent, the link will not be sent. 36 bioproducts business 9(2) 2024 how will you obtain consent from participants? at each destination, we approached tourists to introduce ourselves and briefly explain our research’s purpose, asking for a few minutes of their time. upon receiving their agreement, we provided a more detailed explanation of the research concepts. for those tourists who consented to participate, we then shared the survey link through the zalo messaging app. how will it be made clear to participants that they may withdraw consent to participate at anytime? participants have the option to refrain from responding, revisit their answers, or opt not to answer once the data collection period ends, at which point the link will automatically deactivate. this action will be considered as the participant retracting their consent. studies involving questionnaires: will participants be given the option of omitting questions they do not wish to answer? yes  no  if no please explain why below and ensure that you cover any ethical issues arising from this. answer: there are no ethical concerns with this approach since participants are given the choice to select the “cancel” option, allowing them to skip questions as they wish. sections left unanswered will be deemed incomplete, and the corresponding data will be excluded from the analysis. studies involving observation: confirm whether participants will be asked for their informed consent to be observed. yes  no  will you debrief participants at the end of their participation (i.e. give them a brief explanation of the study)? yes  no  will participants be given information about the findings of your study?(this could be a brief summary of your findings in general) yes  no  section 4: data storage and security confirm that all personal data will be stored and processed in compliance with the data protection act (1998) yes  no  who will have access to the data and personal information? during the research: author where will the data be stored? https://forms.gle/dryyynftrqbhg4hn8 will mobile devices such as usb storage and laptops be used? yes  no  if yes, please provide further details: project laptop nguyen & nguyen — agricultural tourism in vietnam: role of technology for perceived sustainability and visitors’ intention to return 37 after the research: where will the data be stored? answer: the data will be stored in a password-protected file on storage to maintain its confidentiality. how long will the data and records be kept for and in what format? answer: the data will be kept in the pdf format for 2 years and after two years it will be disposed of so that no one can damage the confidentiality of the data. will data be kept for use by other researchers? yes  no  if yes, please provide further details: section 5: ethical issues are there any particular features of your proposed work which may raise ethical concerns? if so, please outline how you will deal with these: it is important that you demonstrate your awareness of potential risks that may arise as a result of your research. please consider/address all issues that may apply. ethical concerns may include, but are not limited to the following: • informed consent. • potentially vulnerable participants. • sensitive topics. • risks to participants and/or researchers. • confidentiality/anonymity. • disclosures/limits to confidentiality. • data storage and security, both during and after the research (including transfer, sharing, encryption, protection). • reporting. • dissemination and use of your findings. answer: the research’s ethical guidelines encompass obtaining informed consent from participants, which will be secured by sharing detailed information about the study and considering their acknowledgement as an agreement to participate. to ensure data confidentiality, all collected information will be kept in a password-protected file, which will be securely disposed of after two years. only individuals directly involved in conducting the research will have access to this file. the research findings will be exclusively utilized for exploring the research questions, and no personal data will be used in the study. abstract a wide variety of wood products exist for both structural and non-structural uses; however, these products are underutilized in non-residential construction in the us. since architects are one of the key decision makers for material selection in the construction sector, we investigated architects’ familiarity, use, and perceptions of wood products. we targeted american institute of architects certified architects on the us west coast, a prominent area for the forest product industry, for our survey. respondent familiarity with wood products and their specification of wood products showed a positive relationship. durability, fire resistance, and strength were seen as weaknesses of wood products, a common theme from the last two decades of research on this topic. despite any weaknesses, respondents from washington and oregon predict the use of wood in the construction industry to grow more in the next five years compared to steel and concrete. the tools architects value most for gathering information about building materials have evolved, with an increased use of digital media and internet. moreover, collaboration with engineers, the other key technical specifiers, has been found to be relevant to increase knowledge as well as the use of wood in construction. the authors recommend that the forest products industry improves its internet presence, reaching professionals across disciplines (i.e., engineers and architects) to increase the use of wood as a construction material for the structure and building enclosure in non-residential buildings. keywords: architect perceptions, engineered wood products, wood construction industry familiarity, use, and perceptions of wood building products: a survey among architects on the united states west coast 1 masters student, department of wood science and engineering, college of forestry, oregon state university, 119 richardson hall, corvallis, or 97331. 2 assistant professor of wood design and architecture, department of wood science and engineering, college of forestry, oregon state university, 236 richardson hall, corvallis, or 97331. 3 associate professor of forest products marketing, department of wood science and engineering, college of forestry, oregon state university, 118 richardson hall, corvallis, or 97331. kendall conroy1, mariapaola riggio2*, and chris knowles3 * corresponding author email: mariapaola.riggio@oregonstate.edu. bioproducts business 3(10), 2018, pp. 118-135. issn 2378-1394. https://doi.org/10.22382/bpb-2018-010 1. introduction wood products represent approximately 80% 90% of residential construction in the us (sinha et al. 2013). while utilization of wood products in low-rise residential construction is high, the utilization of wood products in non-residential buildings is much lower (gaston 2014; kozak & cohen 1999; o’connor et al. 2004), making up roughly 10% market share, with steel accounting for 60%, and concrete 30% (robichaud et al. 2009; softwood lumber council 2010). large potential exists to increase the amount of wood used in non-residential construction (adair et al. 2013; gaston et al. 2001). the 10% market share of wood products in non-residential construction is equal to about 1.5 billion board feet. it is estimated that by replacing applicable construction materials with wood products in non-residential buildings, there is potential for an increase to 15 billion board feet (roth 2015). architects and structural engineers are the two primary technical actors involved in the material selection for a given project. when specifying, architects generally consider visual and functional aspects, while engineers evaluate the structural performance of a material (gaston et al. 2001;kozak and cohen 1997 and 1999; laguarda mallo & espinoza 2015; o’connor et al. 2003; o’connor et al. 2004; roos et al., 2010). the perceptions and knowledge architects possess regarding building materials and their performance can differ, which results in different material specifications in building design. architects’ familiarity with wood products available for the structure and building envelope 119 bioproducts business 3(10) 2018 and how they perceive wood as a building material is therefore highly relevant for the wood products industry (e.g., manufacturers), in order to formulate effective communication and promotional strategies. a wide variety of wood products are available in north america and in other regions for both structural and nonstructural uses (e.g., mayo, 2015). innovations in engineered wood products in particular allow for a wider range of design possibilities than in traditional uses of wood such as low-rise housing. with new products, such as cross-laminated timber (clt), being introduced to north america, midand high -rise wood structures are being built (e.g., 8-story carbon 12 building in portland, oregon, completed in 2017; 5-story first tech credit union headquarters in hillsboro, oregon, completed in 2018, 4-story albina yard building in portland, oregon, completed in 2016). because of new products and building techniques, there has been an increase in interest among designers to incorporate wood products in construction (hemström, 2010; kitek kuzman & sandberg, 2017; knowles et al., 2011). in order for architects to specify wood products, they need to be knowledgeable and familiar with the products available to them. moreover, if they have a positive perception of these products, it is more likely that they will specify them in their projects. this research builds upon past studies, and provides current familiarity, use, and perceptions of wood products, among architects on the us west coast. this region is a prominent location for forest product manufacturers. approximately half of washington and oregon are forestland (wfpa, 2017; ofri, 2017), and approximately one third of california is forestland (usda, 2016). kozak & cohen (1999) recommended investigation of architect perceptions of wood products in the western us, since this region shows the highest market share of wood as a structural material in north america (including residential and non-residential construction). information obtained in this study can support development of communication methods, product information, and educational materials for today’s architects, with the aim of increasing the specification of wood products in non-residential construction, as well as maintaining the specification of wood use in residential construction. since perceptions can evolve rapidly, together with advances in the industry and marketing efforts, this research aims to fill a temporal knowledge gap from previous studies (e.g., knowles et al. 2011; kozak & cohen, 1999; robichaud et al. 2009), providing the most recent data on perceptions of different types of wood-based building materials, among an important category of material specifiers (architects) and in a specific geographic area, particularly relevant for the production and diffusion of engineered wood products. 2. research objectives 1. provide an update on the current state of us west coast architects’ familiarity, use, and perceptions of wood products. 2. identify what us west coast architects currently perceive as the most prominent advantages and disadvantages of using wood products. 3. identify how us west coast architects prefer to gather information about materials and what additional information they need to incorporate wood into their designs. 4. identify approaches for the wood products industry to deliver information and address identified knowledge needs of these architects. 3. literature review 3.1 advantages and barriers to wood product use reported advantages of wood products by architects in past studies have included: aesthetics, ease of use, familiarity, and costs (kozak & cohen, 1999; o’connor et al., 2004). additionally, an array of barriers to wood products, reported by architects in past studies, have included fire resistance, strength, durability, cost, acoustics, and building codes (bayne & taylor, 2006; knowles et al., 2011; kozak & cohen, 1999; o’connor et al., 2003; o’connor et al., 2004; roos et al., 2010). research suggests that there are perceived weaknesses to designing with wood and that these weaknesses need to be addressed. poor acoustic insulation of wood is one of the weaknesses reported (asdrubali et al., 2016).various design challenges for high-rise wooden buildings, such as fire, wind, seismic performance and durability, are highlighted by buchanan (2016). however, research also suggests some of these barriers may have already been addressed. for example, predictable fire performance of large timber members is reported in many studies (e.g., karacabeyli and douglas, 2013). wood construction can provide cost savings due conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 120 to wood products being relatively light weight compared to other construction materials, reducing foundation costs (wood-works! – program of the canadian wood council, 2018a). cost savings from reduced construction time can also be achieved with prefabricated wood assemblies (wood-works! – program of the canadian wood council, 2018b). research has also suggested that when correctly designed and built, wood structural systems are capable of matching or exceeding the lifespans of comparative materials (e.g., concrete), but that buildings in north america are commonly demolished for reasons other than durability (o’connor, 2004). finally, a study published in 1999, found that existing building codes would have permitted the use of wood construction in over 50% of all non-residential buildings, but it was actually used in only about 17% of non-residential buildings (goetz & mckeever, 1999). since then, the national design standard (nds) for wood construction was updated in 2015 incorporating clt, as was the international building code (ibc), allowing for increased height and floor areas of wood construction (showalter et al., 2015). while wood products and wood construction systems have developed to provide increased performance and overcome some of the limitations of this material, facts on these innovations and advances do not necessary reach the architecture community (williamson et al. 2009). in marketing, perceptions establish three of the four major stages of information processing (i.e., exposure, attention, interpretation) and precede information retention (hawkins et al. 2007). consumer choice is commonly determined by perceptions over reality, i.e., actual advantages and limitations of a given product. therefore is it important to address the perceptions architects currently hold of wood products, so that they can reflect the actual performance and opportunities offered by these products. 3.2 communication communication and education are key methods for increasing awareness of new products, which is critical for the adoption and diffusion of products (king, 1996). communication can go one-way (i.e. from the sender to receiver), or two-way (i.e. back and forth from sender to receiver), but one-way is considered less effective due to the lack of discourse (morsing et al., 2006). examples of one-way communication could include articles, advertisements, and certification labels; examples of two-way communication could include web-based services, and education (lähtinen et al., 2017). historically, the forest products industry has mainly been production-oriented, rather than stakeholder-oriented (juslin & hansen, 2002), but the industry has been changing this approach to be more stakeholder focused. a component of building relationships with stakeholders is two-way communication (lähtinen et al., 2017). 3.3 perceptions of wood products previous studies on the perceptions of wood products have explored a variety of topics, including perceptions of wood product use in north america (kozak and cohen 1997; kozak and cohen 1999; o’connor et. al. 2004; robichaud et al., 2009); perceptions of wood product use in green building (knowles et al. 2011); perceptions of wood use in tall buildings (hammon, 2016; hemström, 2010; larasatie et al., 2018) and architect perceptions of clt (laguarda mallo & espinoza 2015). the studies most relevant to the current research (kozak and cohen 1999; o’connor et. al. 2004; robichaud et al., 2009) focused on opportunities and barriers of wood-use in non-residential construction and concluded that the wood products industry is not properly addressing specifier perceptions, thus missing important growth opportunities in the construction sector. kozak and cohen (1999) found that there is room to improve the competitiveness of wood products in the north american construction sector, but that regional differences must be taken into account. they suggested creating targeted campaigns that focus on regions of north america that are “wood friendly”, such as western north america, to start. hammon (2016) and laguarda mallo & espinoza (2015) highlighted that architects or end-users who were most familiar with wood (or specific wood products) were least concerned with potential obstacles or barriers to wood construction. laguarda mallo & espinoza (2015) suggested that the success of clt will greatly depend on the information about the material being disseminated to architects. another study identified drivers of material selection, and found that architects’ knowledge of wood (e.g., physical, mechanical, and environmental properties), experience with the use of wood, perceived control of the use of wood, and attitudes toward wood used structurally in buildings three stories or higher, were all statistically significant influencers of architects’ specification of wood products in urban construction (bysheim & nyrud 2009). 121 bioproducts business 3(10) 2018 4. methods 4.1 setting and subjects this study focused on american institute of architects (aia) certified architects located on the us west coast (i.e. california, oregon, and washington). aia is the leading professional membership association for licensed architects and one of the most active organizations in connecting architects with continuing professional education programs (roth, 2015). therefore, this population was chosen as relevant for this study. a list of contacts was generated by the researchers using information from websites for all of the washington, oregon, and california aia chapters. this is the most inclusive list available. only one architect per architecture firm was contacted, with priority on the principal or main contact for the firm. this was, most likely, one of the people in the firm with a more extensive experience in using a broad range of construction materials and products, while the other people were excluded in the survey, to avoid duplicating some results about familiarity and use (see table 1) due to architects in the same firm referring to the same project (i.e., questions on a firm’s specification of wood products and use of building systems). some architects in this region may not have been included if they were not listed on their aia chapter website or did not have an available email. however, since the number of architects that could be possibly excluded from this study is unknown to the authors, it is difficult to evaluate its impact on the validity of the results. a total of 3,469 architects were identified, 297 from washington, 172 from oregon, and 3,000 from california. 4.2 data collection the questionnaire was administered online through the platform qualtrics, and the questionnaire link was distributed through the emailing system mailchimp. because the research involved human subjects, institutional review board (irb) approval at oregon state university was obtained before distributing the questionnaire. data was collected between june and november of 2017. following an adaption of the tailored design method (dillman et al. 2014), three rounds of emails were sent to each architect, each round was two to three weeks apart. 4.3 questionnaire the questionnaire was developed for use in a broader international study with regional focuses on the us west coast, central and eastern europe, and sweden (markström et al. 2018). questionnaire topics covered familiarity and perceptions of wood products, as well as the perceptions of the sustainability of wood products. however, in this paper we report only on familiarity and perceptions of wood products. questionnaire items were generated by researchers across these regions, incorporating and building upon questions from previous wood product perception studies (kozak & cohen 1999; o’connor 2004; robichaud et al. 2009). questionnaire items were worded equally in positive and negative formats as a means of minimizing any bias from researchers. items in the questionnaire utilized 5-point, likert-type scales, multiple choice, and short answer options. all questions had an “unsure” option to prevent respondents from providing incorrect information on questions, and to be able to differentiate on likert-type scale questions between respondents who were unsure about a question versus respondents who were sure but had a neutral response. a focus group for this specific study was held with regional experts in wood science, forest products marketing, civil engineering, and architecture, to further refine the questionnaire for the us west coast. the questionnaire was also pretested with four architects within the target audience (dillman et al. 2014). their feedback helped to improve clarity and validity (vaske 2008) to better coincide with the terminology architects use. responses from the pre-test were not included in the final results. this study focuses on five topics: familiarity and use of wood products, advantages and weaknesses of wood products, perceptions of wood product use, how architects gather information, and respondent demographics (table 1). among these, the first two sections address the first research objective: “provide an update on the current state of us west coast architects’ familiarity, use, and perceptions of wood products”. goal of questions in the third section is to identify what us west coast architects currently perceive as the most prominent advantages and disadvantages of using wood products (2nd research objective). the last section of the questionnaire aims to identify how us west coast architects prefer to gather information about materials, and what additional information they need to incorporate wood into their designs (3rd research objective), and consequently identify possible approaches to effectively deliver information about wood construction materials among architects (4th research objective). conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 122 4.4 data analysis general data analysis was conducted using descriptive statistics. differences among respondents based on location and experience level were analyzed using anova. descriptive data analysis of questionnaire items was conducted using microsoft excel (microsoft 2013). statistical analysis was conducted using the software spss (version 24.0; 2016). all statistical analysis used α=0.05 for significance levels. one-way anova was used on items comparing groups of architects by state or years of experience. scheffe’s post-hoc test was used with groups exhibiting equal variance and tamhane’s t2 post-hoc test for groups exhibiting unequal variance. levene’s test for equality of variance was used to compare if architects who collaborate with engineers are more familiar with engineered products than architects who do not collaborate. items requiring respondents to rank items were analyzed using the modified borda count method (emerson 2013). in a modified borda count, respondents rank ‘x’ number of items, the item they rank first receives a count of (x), the item they rank second receives a count of (x-1), the item they rank third receives a count of (x-2), and so on until the ‘x’th item receives a count of (1) (emerson 2013). the responses to the short answer question asking respondents to list three weaknesses of wood products were grouped to find reoccurring themes. groups used for this were modeled after similar questions in related studies (markström et al. 2018; o’connor et al. 2004), using their top categories for wood product disadvantages or weaknesses, including: ‘fire resistance’, ‘acoustic performance’, ‘code’, ‘performance/ strength’, ‘decay/durability’, ‘difficult to design’, ‘quality’, ‘shrinkage’, ‘economics/cost’, and ‘labor skill’. additional table 1 list of questionnaire items and related research objectives. research objective topic question type1 demographic where is your practice located?2 (mc) what percent of your projects are located in [selected location]? (mc) what is your position at your company? (sa) how many years of professional experiences do you have? (mc) 1) provide an update on the current state of us west coast architects’ familiarity, use, and perceptions of wood products familiarity and use are you familiar with the following products? and have you used them? (ls) (mc) please rank the following structural engineered wood products that you are familiar with from most familiar to least familiar3 (r) please rank the following non-structural engineered wood products that you are familiar with from most familiar to least familiar3 (r) please rank the building systems that you use most (r) perceptions of use in your opinion, in the last 5 years the use of wood products in the following types of construction has… (ls) in your opinion, over the next 5 years the market for the following construction materials in the pacific northwest will… (ls) 2) identify what us west coast architects currently perceive as the most prominent advantages and disadvantages of using wood products. advantages and weaknesses please select 3 advantages of wood products that are most important to you (s) please indicate the degree to which you agree with the statement: wood can be a durable material (ls) please list three weaknesses of wood products (sa) 3) identify how us west coast architects prefer to gather information about materials and what additional information they need to incorporate wood into their designs. 4) identify approaches for the wood products industry to deliver information and address identified knowledge needs of these architects. information do you believe you have enough information about wood products to integrate them into your building designs? (mc) do you collaborate with engineers who have expertise in timber design? (mc) please indicate what additional information about engineered wood products you would like to have: (s) please select the 5 tools for obtaining information about materials that are the most valuable to you. then, rank those 5 tools in order from most valuable to least valuable. (r) 1. question types: mc = multiple choice, ls = likert-type scales, r = ranking, s = select all that apply, sa = short answer 2 this question was used for screening at the beginning of the questionnaire, to make sure the sample only included the target population. 3. engineered wood products that are commonly used in residential construction (e.g., plywood, oriented strand board, particleboard) were excluded from this question. 123 bioproducts business 3(10) 2018 categories were created for responses that did not fall into categories defined by previous studies including: ‘availability’, ‘aesthetics’, ‘perception/demand by client’, ‘lack of information’, ‘maintenance’, and ‘glues/vocs’. unsure responses for all questions were not included in the statistical analyses. however, questions with high percentages of unsure responses were identified and reported where appropriate. 4.5 response rate out of the 3,469 architects emailed, 263 emails bounced (i.e., delivery failure), and 533 architects completed the questionnaire resulting in an adjusted response rate of 16.6%. other similar studies report response rates from architects being 7% to 22.7% (gaston 2014; kozak and cohen 1999; laguarda mallo & espinoza 2015; markström et al. 2018; o’connor et al. 2004). washington and oregon had higher response rates than california, of 25% and 42% versus 14%, respectively. the questionnaire did not require respondents to answer every question, resulting in sample sizes per item varying from 533 to 304. in general, the sample sizes per question trended higher to lower, from the beginning of the questionnaire to the end. there did not appear to be one particular question that caused respondents to stop. 4.6 non-response bias a common concern with questionnaires is that nonrespondents would have completed the questionnaire differently than those who did respond, resulting in a non-response bias (dillman et al. 2014). to check if there was difference in responses from architects who completed the questionnaire from those who did not, a shortened questionnaire containing four of the original 22 items was sent to architects that had not responded, resulting in 48 respondes. statistically significant differences were found for the respondents’ locations, there were fewer architect’s from california in the non-respondent group (p=0.04) than the initial respondent group. respondents in the non-respondent group indicated a significantly higher use of one out of the 19 wood products (glulam, p<0.01) than the initial respondent group. no significant difference was found for the other 18 products, which does not suggest any significant difference among the two groups. t-tests revealed no statistically significant differences between the groups of respondents for the rest of the shortened survey; which included years of experience, type of building systems primarily used, familiarity of types of wood products and use of wood products. the results of this work may need to be interpreted understanding that california may be underrepresented (as evident from the lower response rate in california for the full questionnaire); other areas showed no substantive non-response bias. 5. results & discussion 5.1 respondent demographics of the 533 completed questionnaires, 13% (71) were from washington, 12% (64) were from oregon, and 75% (398) were from california. seventy-eight percent of respondents indicated that most (76-100%) of their projects are located in the same state as their firm (n=533) (table 2). sixty-two percent (244) of respondents held a principal or other management role at their firm. other respondents included designers 17% (66), designer/ managers 18% (70), and technical roles 3% (12) (figure 1). overall, respondent experience level was high, aligning with most of them being the principal of their firm. of 0 50 100 150 200 250 fr eq ue nc y figure 1. respondent’s role at their firm. (n=392). table 2. where respondent’s firms are located, and percentage of respondents’ projects located in same state as the firm. what % of projects are located in the same state as respondents’ firms location 0-25% 26-50% 51-75% 76-100% total washington 0 2 11 57 71 oregon 3 6 10 38 64 california 13 10 45 319 398 total 16 18 66 414 533 conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 124 the 398 respondents, 62% (246) had more than 25 years of experience, 23% (93) had 16-25 years of experience, 12% (46) had 5-15 years of experience, and 3% (12) had less than 5 years of experience. 5.2 familiarity and use there is a positive correlation between respondents’ familiarity and use of the 19 wood products included in the study (figure 2). responding architects’ familiarity with all wood products, when expressed in mean values of familiarity on a 5-point likert-type scale, was at least a 2.5. this indicates that the responding architects were closer to being at least ‘moderately familiar’, than to being ‘unfamiliar’, with all of the wood products included in the study. dimension lumber, plywood panels, and oriented strand board (osb) were the only three products that received a mean familiarity rating of a 4.5 or higher, showing the respondents were ‘very familiar’ with those products. all products that had an average familiarity rating of 3.5 (familiar) or higher, had been used by at least figure 2. respondent familiarity with various wood products versus if they have specified use of the product. scatter plot showing mean values of familiarity and use of 19 wood products of all respondents. the x-axis displays familiarity, with 1 = “very unfamiliar” to 5 = “very familiar”, and the y-axis shows use, with 1 = “have not used” and 2 = “have used” (varying responses per product, n=449 to n=377). 75% of respondents. all products that had an average familiarity rating of 2.5 to 3.4 (moderately familiar) had been used by less than 43% of respondents. generally, there was no relationship between years of experience and familiarity with wood products. four of the 19 wood products did however show a statistically significant difference in familiarity based on how many years of experience an architect had (table 3). the four products were sawn timbers, parallel strand lumber (psl), light sandwich panels, and wood fiber insulation boards. several other products showed a similar pattern, but it was not consistent across all products. this suggests that communication should be designed to reach architects at all levels of experience. when asked to rank familiarity with products in groups, respondents ranked glued-laminated timber (glulam) as the structural engineered wood product they were most familiar with; nail-laminated and dowellaminated timber were ranked the lowest and were very 125 bioproducts business 3(10) 2018 close to each other (figure 3, left). for the non-structural engineered wood products group, low/medium/highdensity fiberboards were ranked first, with thermally modified wood and light sandwich panels ranked the lowest and were very close to each other (figure 3, right). some of the wood products that respondents were less familiar with could potentially be attributed to the volumes or locations at which they are manufactured. for example, dowel laminated timber is not produced in a manufacturing setting on the us west coast, thermally modified wood and wood plastic composite manufacturers are few. glulam and laminated veneer lumber (lvl) manufacturers have a prominent presence along the us west coast (apa, 2018). additionally, some products have just recently been introduced in the north american market and have seen limited diffusion (e.g., clt). regarding common wooden building systems, the responding architects said they are most familiar with light frame/panel (e.g., platform, balloon), followed by engineering frame systems (e.g., glulam post-beam, hybrid systems) and timber frame (e.g., solid timbers) (table 4). other building systems such as cross-laminated timber (e.g., walls, floors, hybrid systems), log construction, and other, were ranked as being considerably less familiar to the respondents, respectively. these findings are an updated report on architect’s familiarity with wood products. in 1999, kozak & cohen found that architects and structural engineers were most familiar with lumber studs, dimension lumber, and plywood, similar to the results of the present study; but were least familiar with structural insulated panels and psl. in the present, architects were generally familiar with psl (mean = 4.15) with the product. a study in 2015 found that 57.5% of architects were ‘not very familiar’ or ‘had not heard about clt’ (laguarda mallo & espinoza, 2015). three years later 83.1% of architects were ‘moderately familiar’ or more with clt and 23.3% ranked clt as one of their top three most common types of wooden construction they specified. this is a considerable increase and shows that lessons learned for effective communication to architects regarding clt could be tailored for and transferred to other existing or new wood products in the future. it should also be noted that the percentage of respondents ranking clt table 3. respondent familiarity with various wood products based on years of experience. years of experience1 product <5 5-15 16-25 25+ f-value df p-value eta glued-laminated timber 4.50 4.17 4.45 4.53 2.50 392 0.06 0.14 nail-laminated lumber 2.58 2.83 2.48 2.71 1.41 393 0.24 0.10 dowel-laminated timber 2.25 2.48 2.48 2.56 0.48 390 0.70 0.06 cross-laminated timber 3.75 3.48 3.28 3.51 1.48 391 0.22 0.11 sawn timbers 4.00ab 4.07a 4.34ab 4.54b 5.66 390 0.01 0.20 round wood 3.17 3.00 3.09 3.33 2.24 392 0.08 0.13 parallel strand lumber 3.08a 3.80ab 4.26bc 4.24c 7.35 392 <0.01 0.25 laminated strand lumber 3.92 3.91 4.23 4.16 1.26 392 0.22 0.11 dimension lumber 4.83 4.78 4.80 4.78 0.02 392 0.99 0.02 laminated veneer lumber 3.92 3.91 4.33 4.31 2.73 392 0.02 0.16 plywood panel 4.75 4.74 4.78 4.70 0.15 388 0.79 0.05 low/medium/high density fiberboards 4.08 4.33 4.54 4.46 1.50 387 0.14 0.12 veneered particleboard 4.17 4.17 4.18 4.20 0.02 385 0.99 0.01 particleboard 4.17 4.18 4.34 4.44 1.11 388 0.14 0.12 oriented strand board 4.58 4.26 4.52 4.54 1.04 389 0.10 0.13 light sandwich panel 2.33a 3.20ab 3.20b 3.28b 3.46 389 0.05 0.16 wood plastic composites 2.83 3.20 3.42 3.44 2.04 391 0.15 0.12 thermally modified wood 2.50 3.11 2.93 2.97 1.21 388 0.34 0.09 wood fiber insulation boards 2.67ab 2.85ab 2.76a 3.18b 5.01 389 <0.01 0.18 1. cell entries are means of respondents’ familiarity of different wood products: 1 ‘very unfamiliar’, 2 ‘unfamiliar’, 3 ‘moderately familiar’, 4 ‘familiar’, and 5 ‘very familiar’. 2. means that have different letters for superscripts differ at a p < .05 for scheffe’s post-hoc test for equal variance conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 126 figure 3. structural and non-structural engineered wood products ranked by familiarity using a modified borda count. left: structural engineered wood product results, maximum possible count for one product was 2877, seven products, n=411. right: non-structural engineered wood product results, maximum possible count for one product was 2020, five products, n=404. 127 bioproducts business 3(10) 2018 as one of their most common types of construction is a strange result and should be investigated further since there should be a corresponding number of clt buildings built or in the design phase for this to be accurate. 5.3 advantages and weaknesses of wood products when asked about advantages of wood products, respondents ranked ‘ease of use’, ‘aesthetics’, and ‘cost’ as the top three advantages of wood products (table 5). fire resistance and health tied for last. responding architects in different states ranked the advantages only slightly differently, all three groups ranked ‘ease of use’, ‘aesthetics’, and ‘cost’, in the top three and had ‘fire resistance’, and ‘health’ somewhere in the last three positions. the attribute ‘ease of use’ was included by the researchers to mean designing with wood could be done with ease. it could have been interpreted by respondents differently as it is a less common phrase than the other attributes. interestingly, although ‘cost’ was in the top three advantages for wood products, 15% of respondents indicated it was a weakness of wood products. in 2015 another study in the same geographic location, responding architects identified cost as one of the biggest issues for wood products (roth, 2015). cost being reported as both a high-ranking advantage and as a weakness could be due to some wood products and building systems (e.g., glulam, timber frame) having higher relative costs table 5. ranking of different advantages of wood products regarding how important they are to responding architects across and between states. (n=413). state total washington oregon california advantage rank mbc1 rank mbc1 rank mbc1 rank mbc1 ease of use 1 599 2 90 2 65 1 448 aesthetics 2 559 1 98 1 67 3 400 cost 3 547 3 73 3 63 2 414 environmental impact 4 270 4 57 4 39 5 175 seismic performance 5 193 6 7 6 9 4 178 strength 6 190 5 24 5 16 6 151 fire resistance 7 47 6 7 8 3 7 37 health 7 47 8 4 7 8 8 35 1. mbc =modified boarda count table 4. type of common wooden building systems respondents reported being most familiar with. (n=396). conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 128 compared to traditional building materials, such as steel and concrete, and others (e.g., dimension lumber, light frame) having much lower relative costs. the top categories for weaknesses of wood products listed by responding architects were ‘decay/durability’ indicated by 61% of respondents, ‘fire resistance’ indicated by 48% of respondents, and “performance/strength’ indicated by 39% of respondents (table 6). regarding durability, although it was the most frequently indicated weakness of wood, 74% of respondents indicated, in a separate questionnaire item, that they agree with the statement “wood can be a durable material”. therefore, it is possible that the responding architects believe that this weakness can be overcome with proper design and treatments. an interesting difference of weaknesses reported by state included: ‘decay/durability’ where respondents indicating ‘decay/durability’ as a weakness in washington (64%) was lower than in oregon (78%) and california (79%). other slight differences were seen in ‘quality’. architects in washington (13%) and california (19%) were more critical than in oregon (5%) regarding the ‘quality’ of wood products. some examples of responses grouped in the ‘quality’ category included: “grade quality diminishing”, “quality is going down”, “guaranteeing that millwork is built to design intent”, and “hard to maintain universal quality over a large quantity of one product type”. these responses included concerns about quality at the material, product and built system level. successfully increasing the use of wood products will require manufacturers and contractors to address the quality concerns of their stakeholders. other researchers identify prefabrication and modularity (e.g. johnsson & meiling, 2009; koppelhuber et al., 2017), bim – building information modeling (aberger et al., 2018; le roux et al., 2016) and digital fabrication (schindler, 2007) as factors that could, and are, moving the wood construction industry towards increased quality control in all stages of design and production. overall the advantages and weaknesses indicated by responding architects were similar to those of past studies. advantages have largely remained the same over the years with aesthetics, ease of use, and costs being rated highly (kozak & cohen, 1999; o’connor et al., table 6. weakness of wood products as indicated by respondents1. state total wa or ca weakness (n=347)2 (n=45)2 (n=37)2 (n=265)2 decay/durability 267 77% 29 64% 29 78% 209 79% fire resistance 168 48% 19 42% 19 51% 130 49% performance/strength 134 39% 16 36% 16 43% 102 38% dimensional stability 60 17% 9 20% 4 11% 47 18% quality 58 17% 6 13% 2 5% 50 19% environmental concern 54 16% 5 11% 8 22% 41 15% cost 52 15% 7 16% 7 19% 38 14% maintenance 40 12% 6 13% 4 11% 30 11% codes 27 8% 7 16% 5 14% 15 6% availability 21 6% 3 7% 1 3% 17 6% perception/demand by clients 16 5% 4 9% 3 8% 9 3% other3 16 5% 4 9% 1 3% 11 4% glues/vocs 15 4% 3 7% 1 3% 11 4% labor skill 13 4% 2 4% 2 5% 9 3% lack of information 11 3% 3 7% 2 5% 6 2% aesthetics 9 3% 2 4% 1 3% 6 2% difficult to design 8 2% 3 7% 0 0% 5 2% acoustics 3 1% 0 0% 1 3% 2 1% 1. respondents were asked to each list 3 weaknesses, left column per group are frequencies, right column per group are percentages of architects in group who listed each weakness. 2. the n for each group is how many respondents who answered this question, not all respondents gave 3 weaknesses. 3. other category includes weaknesses that were not mentioned at least 3 times. 129 bioproducts business 3(10) 2018 2004). and disadvantages or weaknesses largely remaining the same with fire concerns, strength/performance and durability all being rated highly as concerns about use of wood products (kozak & cohen, 1999; o’connor et al., 2004). there has not been significant change in perceptions of advantages and weaknesses of wood products in the last twenty years. aesthetics, the second most highly ranked advantage by this study’s respondents, was reported as a ‘very important’ or ‘important’ characteristic for material selection by 94% of architects in another study (laguarda mallo & espinoza, 2015), and was rated as the most important attribute in another study (gaston, 2014). while this could be a promising attribute of wood products, structural performance and durability were reported as more important characteristics architects look for in material selection, with 98.6% and 97.8% of architects rating them as ‘very important’ or ‘important’ (laguarda mallo & espinoza, 2015). durability and performance/ strength were in the top three mentioned weakness of wood products in the present study. therefore, based on the responses from laguarda mallo & espioza (2015), it is suggested that improving these particular characteristics of wood products, or the communication of these characteristics, could increase the likelihood of architects specifying wood. the weaknesses identified by respondents are similar to the barriers indicated by the general public in the us in a survey from hammon (2016). in their study, the public on the pacific coast considered flammability, forest depletion, and strength as the biggest barriers, showing us that these weaknesses, perceived or real, are consistent across different stakeholders of the construction industry. 5.4 perceptions of wood product use respondents believed that the use of wood products has remained the same in seven types of construction over the last 5 years (figure 4). however, 34%-37% of respondents were ‘unsure’ about the past use of wood products in educational, institutional, civic, and higher education types of construction; 18% and 13% of respondents were ‘unsure’ about mixed-use and commercial (respectively), and only 4% of respondents were ‘unsure’ about residential. when breaking down these means by state it was found that generally respondents in california were more likely to have the opinion that the use of wood products has decreased in the last five years (mean = 2.26 – 3.26), except for in residential construction, where oregon (mean = 3.11) was slightly lower than california (mean = 3.13) (table 7). respondents in different states showed statistically significant differences in their opinions of change in wood product use over the past five years for all building categories except for residential and commercial. figure 4. respondent opinions on use of wood products in various types of construction over the past five years separated by state. chart showing means of respondent opinions of wood usage trends in seven types of construction over the past five years, not including ‘unsure’ responses (per type of construction for all respondents n=261 to 411; sd=0.65 to 0.97). conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 130 table 7. respondent perceptions of how use of wood products in building types have changed in the last five years, based on state. states1 types of construction wa or ca f-value df p-value eta squared4 (η 2 ) residential 3.28 3.11 3.13 1.31 408 0.27 0.08 commercial 3.31 3.25 2.97 3.81 362 0.02 0.14 mixed-use2 3.60a 3.47a,b 3.26b 3.74 339 0.03 0.15 institutional3 3.24a 2.97a,b 2.76b 5.50 265 <0.01 0.20 civic3 3.22a 3.11a 2.72b 7.02 260 <0.01 0.23 educational2 3.41a 3.33a 2.83b 10.50 272 <0.01 0.27 higher education2 3.27a 3.26a 2.75b 8.09 258 <0.01 0.24 1. cell entries are means of respondents’ opinions of how wood use has changed in various buildings over the last five years: 1 ‘greatly decreased’, 2 ‘decreased’, 3 ‘remained the same’, 4 ‘increased’, and 5 ‘greatly increased’. 2. means that have different letters for superscripts differ at a p < .05 for scheffe’s post-hoc test for equal variance 3. means that have different letters for superscripts differ at a p < .05 for tamhane’s t2 post-hoc test for unequal variance 4. eta squared ( η 2) is a measure of effect size for use in anova architects in washington (mean = 3.22 – 3.41) and oregon (mean = 3.11 3.33) were statistically significantly (f = 5.50 – 10.50, p < 0.01) more likely to think wood product use in civic, educational and higher education construction remained the same or increased slightly, than architects in california (mean = 2.83 and mean = 2.75) over the last five years (table 7). architects in washington (mean = 3.60 & 3.24) were also statistically significantly (p = 0.147 & p = 0.200) more likely to think that wood use in mixed-use and institutional construction remained the same or increased slightly over the last 5 years, than architects in california (mean = 3.26 & 2.76). in a study from 1999, only 8.9% of designers said they intended to use more wood in the future (kozak & cohen 1999). this went up fifteen years later, when a different study reported 32% of architects said they expected to use more wood in architectural elements in the next 5 years, while 62% expected to use the same amount in the future (gaston 2014). based on responding architect’s perceptions of wood use in the last five years in the present study, the prediction from gaston (2014) appears to have held true, and the trend for slow increases of wood use appear to have remained the same. looking forward, respondents’ mean opinion was that the market for wood, steel, and polymers in the pacific northwest will grow over the next five years, while concrete will remain stable (figure 5). it should be noted that 27% of respondents were ‘unsure’ about polymers, while 8% or less were ‘unsure’ about the other three products (n=426 to 429). when segmented by state, washington figure 5. projected market change for construction materials in the pacific northwest, by state. chart showing respondent opinions about the growth or shrinkage of the market for four construction materials over the next five years in the pacific northwest, not including unsure responses (per type of construction for all respondents n=311 to 403; sd=0.71 to 0.87). 131 bioproducts business 3(10) 2018 respondents predicted wood use and concrete use to grow, while oregon respondents predicted only wood use to grow, and californian respondents predicted wood use, steel use, and polymer use to all grow (table 8). the differences among respondents from different states suggests slightly different trends in wood use in different types of construction. wood product manufacturers, distributors or others, which produce, sell, or promote products for particular types of construction could use this information to target particular locations. stakeholders can also use this information to aim their communication efforts with architects in locations that already show momentum to use wood products, or with architects in locations with greater potential for increasing wood use. however, it should be noted that both of the results in this section are from questionnaire items asking respondents to predict market trends. these results could have been more accurate predictors of market trends if the questionnaire items asked respondents to indicate projections of their own future material use. 5.5 information three-quarters of respondents collaborate with engineers that have wood design expertise, 16% do not, and 9% were unsure if they did (n=432). when comparing these results to the respondents’ familiarity with structural engineered wood products, respondents who collaborate with engineers that have expertise in timber design are more likely to be familiar with engineered wood products than those who do not. respondents who collaborate with engineers that have expertise in timber design are statistically significantly more likely to be familiar with glulam, nail-laminated timber, clt, psl, and lvl, than those who do not (t-value = 2.138 to 3.681, p = 0.035 to <0.001) (table 9). effect size for all these products (rpb=0.118 – 0.178) was between small and medium (cohen 1988). seventy-eight percent (310) of respondents said that “yes” they have enough information about wood products to integrate them into their building designs, 13% (51) said no, and 9% (35) said they were unsure (n=396). respondents who believe they have enough table 8. respondent perceptions of how the market for different construction materials in the pnw will change in the next five years based on state. states1 material wa or ca f-value df p-value eta squared4 (η 2 ) wood3 4.03a 3.98a 3.54b 13.34 400 <0.01 0.25 concrete 3.54 3.29 3.48 2.02 389 0.13 0.10 steel2 3.46ab 3.17a 3.51b 6.14 391 <0.01 0.18 polymers 3.45 3.47 3.73 3.11 308 0.05 0.14 1. cell entries are means of respondents’ opinions of how the market for different construction materials in the pnw will change in the next five years: 1 ‘significantly shrink’, 2 ‘shrink’, 3 ‘remain stable’, 4 ‘grow’, and 5 ‘significantly grow’. 2. means that have different letters for superscripts differ at a p < .05 for scheffe’s post-hoc test for equal variance 3. means that have different letters for superscripts differ at a p < .05 for tamhane’s t2 post-hoc test for unequal variance 4. eta squared ( η 2) is a measure of effect size for use in anova table 9. familiarity with structural engineered wood products based on respondent collaboration with engineers who have expertise in timber design. do you collaborate with engineers who have expertise in timber design? products yes (83%) no (17%) t-value p-value effect size (rpb) glue-laminated timber 4.51 4.25 2.35 0.02 0.12 nail-laminated lumber 2.74 2.27 3.68 <0.01 0.16 dowel-laminated timber 2.54 2.39 1.15 0.25 0.06 cross-laminated timber 4.51 4.25 3.56 <0.01 0.18 parallel strand lumber 4.25 3.94 2.14 0.04 0.13 laminated strand lumber 4.18 4.04 1.05 0.30 0.05 laminated veneer lumber 4.33 4.00 2.72 0.01 0.14 conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 132 information about wood products to integrate wood into their designs are typically the same that collaborate with engineers that have expertise in timber design (table 10). these findings highlight the importance of collaboration between the two main technical specifiers, architects and engineers, to increase the use of advanced engineered wood products as structural materials. this is also relevant to expand use of wood in non-residential applications, since the above mentioned wood products are mainly used in midto high-rise buildings and large span structures. if the wood products industry wants to capitalize and even foster collaboration between architects and engineers, inter-disciplinary communication models should be developed, overcoming jargon and disciplinary structures (e.g., across professional organizations and schools). there was not a significant relationship between responding architects having enough information and their years of experience. it should also be noted that of the 310 respondents that indicated they have enough information about wood products to integrate them into their designs, 67% (208) ranked ‘light frame/panel (eg. platform, balloon)’ as the building system that they use most. the most frequently selected additional information responding architects would like to have about wood products, was ‘technical information’ (table 11). however, a little less than one third of respondents who answered this question indicated they would like no additional information. this indicates that there are no specific knowledge needs perceived by responding architects. this may also be an indicator of how receptive this group of professionals could be to receiving more information about wood products. the sources of information tools respondents indicated were the most valuable were internet searches, manufacturers, continuing education, consultants, professional associations, and colleagues (table 12). internet searches received a much higher count than other options, with 85% of responding architects ranking it somewhere in their top five most valuable sources (n=381). in a study from 1997, responding architects indicated that manuals, reading materials, and continuing education were the most influential methods for obtaining product information; and association promotion, computerized information, and proactive marketing were the least influential (kozak & cohen 1997). a little table 10. comparison of frequencies of responses if respondents have enough information about wood products and if they collaborate with engineers who have timber design expertise. collaborates with engineers who have expertise in timber design ye s no un su re has enough information about wood products to use them yes 251 33 25 no 26 22 3 unsure 22 8 5 table 11. what type of additional information respondents would like to have about wood products. (n=390). type of information # of times item was selected % of respondents that selected item technical information 207 53% direct contacts with manufacturers 142 36% visits to built objects 114 29% visits to building sites 105 27% other 33 8% none 118 30% table 12. most valuable sources of information about materials. a higher modified borda count (mbc) indicates a tool being more valuable. (n=381). tool mbc internet search 1234 manufacturers 759 continuing education 703 consultants 663 professional associations (aia, etc.) 523 colleagues 521 conferences 260 researchers 149 newsletters 113 owners 60 developers 52 contractors1 23 other2 20 trade publications1 10 1. if a respondent selected “other” they had the option to specify; contractors, and trade specifications were specified frequently, these two items were not a listed choice in the questionnaire. 2. the “other” category shown here is the count for “other” less the count for when “other” was specified as contractors or trade specifications. more than a decade later, in 2009, responding architects indicated that design manuals, physical examples, and design or company specific internet sources were among the most effective sources of information about wood products; and scientific papers, personal sales calls and 133 bioproducts business 3(10) 2018 internet discussion forums were among the least effective (robichaud et al. 2009). now roughly another decade later, in the present study, internet searches have gone from being the least influential source to being the most important. additionally, a study in 2014 found that internet searches and professional associations were responding architects’ preferred way for finding continuing education courses (roth 2015). continuing education courses were another top ranked source of information by respondents in the present study, and another place where architects can learn about new products, material properties, new building methods, etc. however, since the majority of responding architects claim they have enough information about wood products, they will unlikely search for additional information. without additional information their perceptions on specific limitations and disadvantages of wood as a construction material, will likely remain unchanged. if the wood products industry wants to remove barriers limiting wood use in buildings, a stronger internet presence alone may not be sufficient; inter-disciplinary communication and participation in continuing education initiatives may also be necessary. indeed, the architects in this study also indicated they value information from manufacturers, providing a case for manufacturers to host continuing education courses for architects, ideally with engineers, and improve their internet presence, which historically has been lacking (sowlati, 2013). this is also supported by a finding from roos et al. (2010) that architects desired more engagement with wood product suppliers for solutions. 6. conclusion aia certified architects across washington, oregon, and california were surveyed in 2017. as might be expected, familiarity with a product and specification by architects go hand-in-hand. products that respondents were most familiar with and used the most tended to be products traditionally used in residential construction and manufactured along the us west coast. manufacturers and distributors could benefit from communicating technical information to architects on the us west coast regarding the products respondents were least familiar with (dowel laminated timber, nail laminated timber, thermally modified wood, and light sandwich panel). responding architects’ perceptions of advantages and weaknesses associated with using wood have remained consistent in the last two decades. respondents had a positive outlook towards the most frequently reported weakness (durability), with a majority of them agreeing that wood can be durable. innovations in wood durability, and in other fields addressing other weaknesses identified by the respondents, could lead to an increase in wood use. change in the amount of wood used in different types of construction as perceived by the respondents, was fairly stable, with minimal change. predictions for different materials used in construction in the next five years indicates that respondents in washington and oregon predict more growth for wood products than californian respondents, whom predicted a higher growth for polymers. lastly, the sources architects value most for gathering information about building materials have evolved, which means the way industry communicates with architects must evolve as well. to increase wood use, it is recommended that the forest products industry improves its internet presence, developing inter-disciplinary communication strategies. last but not least, information not only must be more accessible to architects interested in specifying wood, but should reach also those architects who will not spontaneously search for this information, since many do not recognize their lack of knowledge. 6.1 recommendations for future research the information in this study should be periodically readdressed to ensure that communication is relevant, and efforts are successful in reaching the architecture community. future research could be conducted to address how architects’ educational background and participation in continuing education affects their perceptions of wood products as well as how their familiarity and perceptions affect their specification of wood products. future work could also address architect’s perceptions of the usefulness of social media as a means for receiving information from the wood products industry. 6.2 limitations while there could have been room for multiple interpretations on some measurement items in this study, the pretest process reduced the probability confusion. one particular instance of this was in the question regarding different building types designed by respondents. recommendations from the expert group were followed to define the different categories of building types, however, we are aware that some categories can be seen as conroy et al. — familiarity, use, and perceptions of wood building products: a survey among architects on the us west coast 134 overlapping, (e.g., post and beam with clt panel floors, a hybrid system, could be categorized as engineered frame or cross-laminated timber). additionally, inclusion of a non-wood building type category would have provided a better overview of the big picture. it is also possible that architects with a connection to wood, or to the university conducting the research, were more likely to complete the questionnaire. this could explain the higher response rate in the state of oregon. although california may be underrepresented in this study (as evident from its lower response rate) a significantly higher number of respondents (75%) were from california. this can be a potential source of bias, since codes and standards in this state, such as those related to seismic design, are particularly restrictive (e.g., california building code, 2016). despite these limitations, this study provides evidence that there is a need for improving wood products communication on the us west coast. it also provides a framework for future statistical analysis in the field of wood product architectural surveys. 7. literature cited aberger, e., koppelhuber, j., heck, d. 2018. building information modeling in timber construction – a solution for planning process, design phases and the unification of scope of works. in proceedings of the 2018 world conference on timber engineering, august 20-23, seoul republic of korea. adair, c., mckeever, d., gaston, c., stewart, m. 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(2018b, may 8). innovations in wood: emory point. retrieved from http://www.woodworks.org/wp-content/ uploads/cs-emory-point1.pdf. abstract widespread use of forest stewardship council (fsc) certification helps to promote forest sustainability in china. however, consumer purchasing behavior varies among cities because of differences in economies, education, and environments. this study assesses the price premium consumers are willing to pay for fsc-labeled wood flooring in five chinese cities. it examines differences in consumer preferences, identifies target markets for fsclabeled products, and suggests strategies to increase acceptable price premiums in different cities. results from 1,004 online questionnaires in five cities show that mean price premiums for fsc-certified wood flooring are 42 cny/m2 in beijing, 39 cny/m2 in shanghai, 37 cny/m2 in guangzhou, 48 cny/m2 in tianjin, and 45 cny/m2 in chongqing. guangzhou shows the largest potential market shares for spreading fsc-labeled wood flooring when the price premium range is 0–20 cny/m2, whereas chongqing shows the largest potential market shares when they span 80–90 cny/m2. the results also suggest city-specific strategies to raise consumer-accepted price premiums for fsc-certified wood flooring: increase consumer knowledge of the fsc label in beijing and shanghai, target buyers of high-priced wood flooring in guangzhou and chongqing, and improve consumers’ satisfaction with the urban environment in guangzhou and tianjin. keywords: consumer, price premium, fsc, wood flooring, chinese major cities consumer price premiums for fsclabeled wood flooring: a comparison of five chinese cities 1 graduate school of agricultural and life sciences, the university of tokyo, japan 2 the asian natural environmental science center, the university of tokyo, japan * corresponding author. email: masafumi@anesc.u-tokyo.ac.jp acknowledgement: this research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. qin tan1, kohei imamura2, kenji nagasaka2, masafumi inoue2* bioproducts business 5(2), 2020, pp. 13–24. issn 2378-1394 https://doi.org/10.22382/bpb-2020-002 1. introduction in 1993, forest stewardship council (fsc) certification was established as part of an initiative to reduce deforestation and promote the management of tropical forests (fsc 2012). as a global forest certification system, fsc certification is recognized as an effective tool for promoting sustainable forest management. by april 2019, the fsc had certified 198 million hectares of forest and issued 36,956 chain-of-custody (coc) certifications globally. to date, the fsc has certified 987,000 hectares of forest and issued 7,605 coc certifications in china (fsc 2019). as the world’s largest market for wood products, including wood flooring, china consumed 415 million square meters (m2) of wood flooring in 2017, representing over half of all global consumption (china timber organization 2018). china, therefore, might have a large potential market for fsc-certified wood flooring. understanding chinese consumer preferences in terms of forest-certified products could make a significant contribution to the accomplishment of sustainable development goals in china. many studies have shown that there are various consumer segments that intend to pay a price premium (pp) for forest-certified products (table 1). moreover, through a meta-analysis, cai & aguilar (2013) verified the fact that consumers considered wood products as worthy of a high pp. they suggested that frequently purchased wood products with lower base prices were more likely to have higher pps if they included forest certifications. the studies listed above showed that the following factors influenced pp. first, consumers with a higher degree of knowledge regarding forest certification intended to pay more for those products (e.g., kempen et al. 2009, shoji et al. 2014, tan et al. 2019). second, consumers’ budgets also positively affected their pp (e.g., gronroos & bowyer 1999, tan et al. 2019, veisten 14 bioproducts business 5(2) 2020 table 1. previous studies regarding consumers’ price points (pp) for forest-certified products authors survey sites research observations pp estimates influencing factors of pp ozanne & vlosky (1997) usa a range of certified wood products including studs, chairs, dining room sets, kitchen remodeling jobs, and homes 4%–19% females and members of both the democratic party and an environment conservation group gronroos & bowyer (1999) usa home built with forest certified lumber and wood products $2500 per home built budget and consumer’s environmental awareness kempen et al. (2009) usa legal firewood 25% knowledge and income aguilar & cai (2010) us, uk certified wood product 5% higher price can capture 34%–50% of the market knowledge (disclosure of forest of origin), gender (female), age, and income veisten (2002) uk and norway eco-labeled wooden furniture 5% or less (32%–39% of sample) eca and gender (female) veisten (2007) uk and norway eco-labeled wooden furniture 2%–16% (median) knowledge of the label, budget, and gender (female) aguilar & vlosky (2007) uk certified wood products 10% or more environmental consumption awareness and income lee et al. (2007) south korea certified timbers and wood products 11% gender (male) and age cha et al. (2009) south korea copier paper, wooden frame, wood dining table, wood flooring 7%–12% gender (female), age, married, education, and income shoji et al. (2014) japan fsc-labeled interior materials 41% knowledge of the label liu et al. (2007) china forest-certified bedside night table 10% trust for the label, education, and income wang et al. (2011) china forest-certified wood product 5%–15% (61% of samples) eca, gender (female), and education wang (2013) china fsc-labeled wood furniture 1%–5% budget and income liu et al. (2016) china forest-certified wood product 5% (48% of samples) budget, education, and income luo et al. (2017) china forest-certified wood product 10%–30% (29% of samples) knowledge of the label, purchase experience, and budget. tan et al. (2019) china eco-labeled wood flooring 17% (41 cny, mean) knowledge of the label, budget, purchase amount note: eca means consumers’ environmental consumption awareness. 2007). these findings aligned with those of cai & aguilar (2013) and ladenburg & martinsen (2004) suggesting that economic status gives consumers the ability to pay a pp for certified products. third, consumers’ consumption values and environmental concerns influenced their pp (e.g., gronroos & bowyer 1999, veisten 2002). suki & suki (2015) also affirmed that consumers’ social norms influenced their purchasing decisions regarding environmentally friendly products, as they aimed to help preserve the environment. finally, consumers’ socioeconomic status affected their pp. for instance, it was demonstrated that women paid a higher pp for certified wood products than did men (cha et al. 2009; ozanne & vlosky 1997; veisten 2002, 2007). however, lee et al. (2007) demonstrated that in south korea, men were more willing to pay a higher pp than women were for such products. also, kempen et al. (2009) and cha et al. (2009) identified income as a factor that positively influenced consumers’ pp. on the other hand, some studies compared the differences between consumer preferences for forest-certified products across the country (aguilar & cai 2010; veisten 2002, 2007). few studies compared regional differences between consumer preferences regarding forest-certified products in china, although studies regarding non-forest products showed that consumer behavior differed significantly amongst chinese cities, and suggested that marketing segmentation strategies could compensate for the imbalance caused by urban economic development and cultural diversity. for instance, paproski’s (2011) assessment of 12 product categories (e.g., household cleaners, bottled waters, etc.) found that purchasing intentions tan et al. — consumer price premiums for fsc-labeled wood flooring: a comparison of five chinese cities 15 of consumers in beijing, shanghai, guangzhou, and chongqing differed significantly, including consumer inclinations to try new products, brand loyalty, the use of discount cards, and the willingness to buy substitute brands. cui & liu (2001) examine differences in consumer attitudes toward foreign brands in 41 chinese cities based on demographics, lifestyles, and media use. they recommended using a marketing segmentation strategy to adapt to local markets. the study aims to assess the regional differences between consumer preferences for fsc-certified wood flooring amongst major chinese cities. specifically, the study aims to (1) estimate consumers’ pps for fsccertified wood flooring in the following five chinese cities: beijing, shanghai, guangzhou, tianjin, and chongqing; (2) identify the factors that influence consumers’ pps in each city, in terms of consumer knowledge, budget, environmental consumption awareness (eca), and socioeconomic status; and (3) estimate the market share for premium-priced fsc-certified wood flooring in each of those cities. this study’s findings will be important to forest policy makers and forest certification institutions in terms of expanding forest certification in china. also, these findings will help wood product manufactures to launch marketing segmentation strategies that might increase consumer intention to purchase forest-certified products in china. 2. methods 2.1 survey sites we surveyed beijing, shanghai, guangzhou, tianjin, and chongqing, located in northern, eastern, western, and southern china, respectively (figure 1). gross domestic product (gdp), income, education, and air quality differ amongst these cities (table 2). beijing is china’s capital and its second-largest regional economy. its employed workers earn china’s highest table 2. descriptive information of the five surveyed cities. city population (10,000) gdp (per 100 million cny) air quality index per capita education (years) average wage of employed persons (cny/year) beijing 1,359 28,015 106 11.50 131,700 shanghai 1,450 30,632 77 10.58 129,795 guangzhou 898 21,503 54 10.55 98,612 tianjin 1,050 18,549 117 10.20 94,534 chongqing 3,390 19,425 55 7.89 70,889 source: data are from the undp (2016), nbsc (2017), and china pm 2.5 (2019). average income—nearly double the nationwide average of 74,318 cny/year (nbsc 2017). according to the china sustainable cities report published in 2016, residents of beijing aged 25 and older averaged 11.5 years of formal education in 2017 (undp 2016) versus 9.02 years for china overall (zheng 2017). industrial development in northern china has precipitated serious environmental problems, most notably air pollution. the air quality index data of beijing is worse than those of shanghai, guangzhou, and chongqing (china pm 2.5 2019). shanghai is china’s most developed city by gdp (table 2). workers there earn china’s second-highest average income after beijing (nbsc 2017). a resident’s average education (10.58 years) exceeds the national average (undp 2016, zheng 2017), and its air quality surpasses that of beijing and tianjin (china pm 2.5 2019). guangzhou is the provincial capital of guangdong and a high-tech center. workers’ average income is below that of beijing and shanghai, but above the national average (nbsc 2017). its residents average 10.55 years of education, again, above the national average (undp 2016), and its air quality surpasses that of beijing, tianjin, and shanghai (china pm 2.5 2019). figure 1. map of study site locations throughout mainland china. 16 bioproducts business 5(2) 2020 tianjin is a major industrial city, but is the least developed amongst the five surveyed cities in terms of its gdp. on average, its residents earn 94,534 cny and have 10.2 years of education, both above the national average (nbsc 2017). near beijing, tianjin suffers serious air pollution, and its air quality is the worst amongst the five study sites (china pm 2.5 2019). inland chongqing has china’s largest urban population, but its economy is less developed than that of beijing, shanghai, and guangzhou. income (70,889 cny) is below the national average (nbsc 2017). residents have less formal education (7.9 years) than those of the other cities surveyed as well as the national average (undp 2016). air quality was rated better than that of beijing, shanghai, and tianjin (china pm 2.5 2019). 2.2 data collection the survey data were collected through an online questionnaire via a professional chinese survey website, wenjuanxing (www.wjx.cn). our respondents were registered users of the wenjuanxing website, each of whom received an e-mail with our questionnaire survey and a brief introduction to the survey enclosed. participants who were interested in the survey could complete it via a website interface. two hundred and ten samples were collected in each city during the time period between july 29, 2018 and august 6, 2018. of the total 1,040 responses, 46 were removed from the data due to lack of reliability. for example, a male respondent under 21 years of age reported that he was married, but he had not yet reached the legal age, based on the chinese marriage law. also, there were 45 respondents under 21 years of age who indicated that their educational level was bachelor’s degree level or above—which is most likely not possible. we ascertained the reliability of responses to survey questions only manually, considering a descriptive statistic check would create bias for data analysis. ultimately, a total of 1,004 valid responses were collected for the sample as follows: 208 from beijing, 205 from shanghai, 209 from guangzhou, and 191 each from tianjin and chongqing. table 3 summarizes the sample’s demographics. amongst the respondents, there were more male than female respondents in beijing, shanghai, and guangzhou; males and females replied in the same ratio in tianjin; and there were fewer males than females in chongqing. an analysis of the distribution of respondents by age showed that over 70% of the respondents were under 41 years of age in each of the cities. it also revealed that younger respondents were more interested in taking the online survey. kaplowitz et al. (2004) and stanton & rogelberg (2011) previously showed that population samples collected via the web, on average, skewed younger than those collected with paper-based samples. in terms of education, over half of the respondents held a three-year college certification or above. this means that the respondents demonstrated a higher education level than the average citizen in a city, where the average per capita education was between 8 and 12 years (table 2). moreover, the percentage of respondents that held bachelor’s degrees or above was higher in beijing, shanghai, and guangzhou than in tianjin and chongqing. that percentage accords with the data regarding educational attainment in china’s cities (table 3). finally, more than half of the respondents in each city reported incomes within the range of average household income in china. as reported by china’s national bureau of statistics (table 2), the annual household income based on marital status was 100,000 to 300,000 cny in beijing and shanghai, 100,000 to 200,000 cny in guangzhou and tianjin, and 50,000 to 200,000 cny in chongqing (nbsc 2017). 2.3 questionnaire design to limit the sample to respondents that planned to buy wood flooring, we first asked prospective participants whether their household currently planned to buy wood flooring. if so, we ascertained that they, not their family or friends, would make that decision. only respondents who answered “yes” to both questions received questionnaires. the survey was divided into three sections. the first section established respondents’ pre-purchase information and environmental concerns, specifically regarding the following factors: (1) type of wood flooring, (2) budgets, (3) purchase amount, (4) eca, and (5) satisfaction with urban environmental quality (sueq). the second section displayed the fsc label and asked respondents to rate their familiarity with it as “known,” “seen before,” and “unknown.” it then asked of their intention to buy fsc-labeled wood flooring. respondents that intended to buy were asked to further indicate the pp that they were willing to pay, in increments from 0 to 100 per 10 cny/m2. the final section gathered basic demographic information, such as gender, age, education, and household income (tables 3–5). there were several limitations to our study. first, the pp in this study was measured by a questionnaire; real tan et al. — consumer price premiums for fsc-labeled wood flooring: a comparison of five chinese cities 17 pp values given by consumers in actual purchases might differ (johansson 1987). however, nestor & podolsky (1998) and botelho & pinto (2002) showed that there were no significant differences between hypothetical and real pps when questionnaires and field observation study responses were collected from the same sample of respondents. second, this study used self-reporting measures to assess knowledge of the fsc label; thus, there may exist some degree of social desirability bias (groves et al. 2004). third, we did not measure consumers’ purchase experiences of forest-certified products—they may be associated with a pp (young et al. 2010). table 4. definitions and descriptions of items in the questionnaire. variable description purchase amount ranging from 30 to 120 at 10-m2 intervals. budget ranging from 100 to 500 in 100 cny/m2 intervals. solid wood flooring 1 = intend to buy; 0 = intend not to buy. engineered wood flooring 1 = intend to buy; 0 = intend not to buy. laminate flooring 1= intend to buy; 0 = intend not to buy. environmental consumption awareness (eca) consumer’s perceived importance on the purchase of an eco-labeled product: 1 = not at all important; 2 = slightly important; 3 = somewhat important; 4 = very important; 5 = extremely important. satisfaction with urban environmental quality (sueq) 1 = dissatisfied; 2 = somewhat dissatisfied; 3 = neutral; 4 = somewhat satisfied; 5 = satisfied. known respondent partly knew or was familiar with fsc label: 1 = yes, 0 = no. seen before respondent had seen only, but did not know that label stood for fsc label: 1 = yes, 0 = no. unknown respondent had neither seen nor knew fsc label: 1 = yes, 0 = no. purchase intentions respondent had an intention to buy fsc labeled flooring: 1 = yes, 0 = no. price premium (pp) a price premium for fsc ranging from 0–100 at 10 cny/m2 intervals. table 3. summary of demographic variables. variables frequency (%) beijing (n = 208) shanghai (n = 205) guangzhou (n = 209) tianjin (n = 191) chongqing (n = 191) gender male 64 57 53 50 42 female 36 43 47 50 58 age under 21 years old 1 2 0 11 13 21–30 years old 47 37 63 28 41 31–40 years old 36 44 32 31 18 41–50 years old 8 13 4 17 20 over 50 years old 8 4 1 12 7 education high school certification or below 6 10 3 18 35 three-year college certification 15 18 15 23 22 bachelor’s degree 67 58 75 50 37 master’s degree or above 12 15 7 9 6 household income (cny/year) below 50,000 7 6 4 14 24 50,000–100,000 16 15 12 31 28 100,001–200,000 45 36 45 34 30 200,001–400,000 26 35 27 16 13 over 400,000 7 8 11 5 5 18 bioproducts business 5(2) 2020 2.4 data analysis using analysis of variance (anova), following malhotra & birks (2007) and paproski (2011), we cataloged respondents’ descriptive statistics and assessed differences in their purchase amounts, budgets, types of flooring, eca, sueq, knowledge of the fsc label, purchase intentions, and pp in each surveyed city. following newey (1987), we used tobit regression analysis with continuous endogenous regressors (iv-tobit model) to identify factors influencing the pp for each city. the tobit model is a censored regression model in which the range of the dependent variable (pp value) is constrained in one way, either above or below. in this particular case, censoring was affected from below, with the threshold set to zero, meaning that values below zero were constrained (tobin 1958). in cases of a continuous variable with a relatively large number of zero values, tobit regression models using maximum likelihood estimations were preferred to ordinary least squares (ols), as they predict only positive rational pp values (maddala 1983, tobin 1958, greene 1981). explanatory variables included knowledge of the fsc label, budget, purchase amount, type of wood flooring, eca, sueq, gender, and income rate. income rate measured the proportion of respondents’ indicated income to the average urban income, which provided a balanced representation of the city’s income level. assuming income correlated positively to both education and age, we adopted the income rate as an endogenous variable, leaving education and age as instruments in the iv-tobit model. to identify potential markets for the development of premium-priced fsc-labeled wood flooring products, we estimated the relationship between market share and pp in each city. equation (1) defines market share: table 5. summary of variables and significant differences between surveyed cities. variable mean anova beijing shanghai guangzhou tianjin chongqing f sig. purchase amount 66.11 64.88 65.69 63.35 67.02 0.70 0.589 budget 271.15 291.71 280.86 258.12 257.07 3.94 0.004 solid 0.49 0.57 0.47 0.38 0.63 7.32 <0.001 engineered 0.45 0.40 0.49 0.55 0.27 9.17 <0.001 laminate 0.06 0.02 0.04 0.07 0.10 3.10 0.015 eca 4.05 4.07 3.98 4.32 4.09 3.48 0.008 sueq 3.09 3.53 3.54 3.18 3.67 18.72 <0.001 known 0.31 0.29 0.37 0.24 0.32 2.21 0.066 seen before 0.20 0.22 0.34 0.23 0.16 5.15 <0.001 unknown 0.49 0.49 0.29 0.53 0.52 8.22 <0.001 purchase intentions 0.74 0.77 0.85 0.67 0.72 4.94 <0.001 price premium 41.95 39.30 36.63 48.36 44.93 3.53 0.007 note: eca measures respondents’ environmental consumption awareness. sueq indicates their satisfaction with urban environmental quality. 𝑀𝑀𝑀𝑀𝑐𝑐 = { 1, if 𝛽𝛽𝑐𝑐 × 𝑃𝑃𝑃𝑃 + 𝜇𝜇𝑐𝑐 > 1 𝛽𝛽𝑐𝑐 × 𝑃𝑃𝑃𝑃 + 𝜇𝜇𝑐𝑐 0, if 𝛽𝛽𝑐𝑐 × 𝑃𝑃𝑃𝑃 + 𝜇𝜇𝑐𝑐 < 0 (1) where nc is the number of respondents in city c, and p is the value of pps; nc,p is the number of respondents that indicated their value p for pp in city c. we then used the tobit model to relate market share and pp as expressed in equation (2): (2) where ms stands for an estimated market share, c represents a city, β is the coefficient for pp, and μ is a constant. student’s t-test determined any significant differences between the highest and lowest market shares for each level of pp. 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑠𝑠ℎ𝑀𝑀𝑀𝑀𝑀𝑀𝑐𝑐,𝑝𝑝 = 𝑛𝑛𝑐𝑐,𝑝𝑝 + 𝑛𝑛𝑐𝑐,(𝑝𝑝+10) + 𝑛𝑛𝑐𝑐,(𝑝𝑝+20) … … + 𝑛𝑛𝑐𝑐,100 𝑛𝑛𝑐𝑐 . tan et al. — consumer price premiums for fsc-labeled wood flooring: a comparison of five chinese cities 19 3. results 3.1 estimated pp in each city the mean pps for fsc-labeled wood flooring were 42, 39, 37, 48, and 45 cny/m2 for respondents in beijing, shanghai, guangzhou, tianjin, and chongqing, respectively. those premiums accounted for 15%, 14%, 13%, 18%, and 17% of respondents’ reported budgets in each city, respectively (figure 2). anova testing showed significant differences in pps among the five cities (table 5). 3.2 factors influencing pp by city table 6 shows the results for the iv-tobit model. the wald test for exogeneity accepted the null hypothesis for beijing, shanghai, guangzhou, and tianjin and rejected it for chongqing. this suggests that the income rate is an exogenous variable for beijing, shanghai, guangzhou, and tianjin, while it is an endogenous variable for chongqing. according to the results, there was a statistically significant relationship between pp and respondents’ table 6. results of tobit regression with continuous endogenous regressors (iv-tobit model). variable coefficient (s.e.) total of five cities (n = 756) beijing (n = 154) shanghai (n = 158) guangzhou (n = 178) tianjin (n = 128) chongqing (n = 138) known 8.932*** (2.985) 19.652*** (6.211) 19.162*** (5.609) 5.791 (5.733) 6.205 (8.192) −3.944 (8.748) seen 5.806* (3.214) 7.646 (7.417) 13.818** (6.234) 9.731 (5.975) 0.214 (8.660) −3.991 (9.629) budget 0.043*** (0.013) −0.008 (0.025) 0.018 (0.025) 0.106*** (0.023) 0.024 (0.032) 0.126*** (0.038) amount 0.212*** (0.058) 0.178 (0.121) 0.160 (0.111) 0.155 (0.120) −0.051 (0.166) 0.309** (0.151) solid wood flooring 12.184** (6.119) 9.748 (13.203) 28.422 (17.530) 4.761 (12.520) 3.447 (16.950) 14.299 (13.325) engineered wood flooring 11.496* (6.126) 14.627 (13.247) 23.489 (17.704) 8.358 (12.923) 5.454 (16.069) 12.946 (14.251) eca 3.498* (1.380) 7.306** (2.885) 5.641** (2.836) −4.191 (2.550) −2.385 (4.244) 3.980 (3.620) sueq 2.042 (1.490) 2.696 (2.887) 1.898 (3.008) 7.335** (3.196) 6.748* (3.913) 0.208 (4.800) gender −2.543 (2.481) −5.677 (5.644) 0.810 (4.969) −5.844 (4.134) 0.602 (7.337) 3.056 (7.321) income rate −51.401* (30.348) −2.539 (110.305) −34.923 (56.737) 20.411 (97.086) 49.566 (71.609) −110.533** (51.061) constant −9.861 −24.668 −37.298 −27.361 −0.932 27.047 wald test of exogeneity χ2 2.12 1.75 0.52 0.64 0.38 4.89 sig. 0.145 0.186 0.471 0.424 0.536 0.027 log likelihood −2579.274 −446.920 −468.525 −592.268 −408.776 −476.434 notes: *, **, and *** indicate significance at 10%, 5%, and 1%, respectively. eca measures respondents’ environmental consumption awareness. sueq indicates respondents’ satisfaction with urban environmental quality. figure 2. consumer pp for fsc-labeled wood flooring in five cities. 20 bioproducts business 5(2) 2020 knowledge levels of the fsc label and eca in beijing and shanghai. the positive coefficients of knowledge levels indicated that consumers in beijing who knew the fsc label were willing to pay more for fsc-labeled wood flooring than who did not know the label, while consumers in shanghai who either knew or had seen the fsc label before were more willing to pay a higher pp, compared to who did not comprehend the label. also, the positive coefficients of eca indicated that consumers who perceived a higher importance to the purchase of environmentally friendly products were more willing to pay a higher pp in those two cities. in guangzhou, a statistically significant relationship existed between pp and budget and sueq. the positive coefficients of both the budget and sueq variables indicated that consumers with higher budgets and higher sueq were more willing to pay a higher pp than consumers with a lower budget for wood flooring and lower sueq. in tianjin, there was statistically significant relationship between pp and sueq. the positive coefficients of sueq also indicated that consumers’ pp in tianjin positively correlated with their sueq. in chongqing, a statistically significant relationship existed between pp and budget, purchase amount of wood flooring, and income level. the positive coefficients of both the budget and purchase amount variables indicated that consumers in chongqing with higher budgets and larger purchase quantities were more willing to a pay higher pp than consumers with lower budgets and smaller purchase quantities. the negative coefficients of income level suggested that consumers in chongqing with higher incomes were less willing to pay a higher pp for fsc-labeled wood flooring. 3.3 estimated market share in each city table 7 displays study results for the tobit model. as market share percentage of fsc-labeled wood flooring table 7. results of tobit model. coefficient (s.e.) variable beijing shanghai guangzhou tianjin chongqing price premiums −0.007*** (0.000) −0.008*** (0.001) −0.008*** (0.001) −0.006*** (0.000) −0.006*** (0.000) constant 0.703*** (0.027) 0.729*** (0.032) 0.784*** (0.043) 0.670*** (0.020) 0.685*** (0.022) note: *** indicates significance as 1%. table 8. estimated market share of fsc-labeled wood flooring in five surveyed cities. price premium (cny/m2) market share (%) student’s t-test result beijing shanghai guangzhou tianjin chongqing significance between two cities with the highest and the lowest market share 0 70 73 78 67 69 2.330** 10 63 65 70 61 62 2.225** 20 56 58 61 54 56 2.076* 30 49 50 53 48 49 1.684 40 42 42 44 42 43 0.742 50 35 35 36 36 36 0.460 60 28 27 28 29 30 1.380 70 21 19 19 23 23 1.289 80 14 12 10 16 17 1.780** 90 7 4 2 10 10 1.978* 100 0 0a 0a 4 3 0.848 notes: * and ** indicate significance at 10% and 5%, respectively. 0%a indicates that the estimated market share was −4% in shanghai and −6% in guangzhou. tan et al. — consumer price premiums for fsc-labeled wood flooring: a comparison of five chinese cities 21 declined, pp increased (table 8). student’s t-test showed significant differences between the highest shares in guangzhou and the lowest shares in tianjin when pp spanned 0 to 20 cny/m2. the same was true between guangzhou and chongqing when pp spanned 80 to 90 cny/m2. no significant difference appeared when pp spanned 30 to 70 cny/m2 or at 100 cny/m2. 4. discussion and conclusions this study estimated consumers’ pp for fsc-labeled wood flooring in five major chinese cities and examined influencing factors. based on the results, pps for each city ranged between 13% and 18%, which were higher than the previous findings of liu et al. (2007), wang et al. (2011), and wang (2013) (table 1). however, our results are consistent with those of recent studies conducted by luo et al. (2017) and tan at al. (2019). one explanation for this study’s high pp estimates is that there has been growth in disposable personal income in china (nbsc 2018), which enables consumers the ability to indicate a higher pp for environmentally friendly products. another explanation is that enhanced consumer knowledge of the fsc label motivates consumers to pay a higher pp for such products (mceachern & warnaby 2008, rashid 2009, shoji et al. 2014, tan et al. 2019). approximately 30% of survey respondents knew about the fsc label, a higher percentage than previously estimated. for instance, wang (2013) found that only 2% of respondents in zhejiang province and jiangsu province knew about the fsc label. luo et al. (2017) and tan et al. (2019) reported that 19% of respondents throughout china and 21% in chongqing knew the fsc label, respectively. based on the results of the iv-tobit model, the factors that influenced consumers’ pp for fsc-labeled wood flooring differed amongst the five cities. two factors were identified as influencing consumers’ pps in beijing and shanghai: knowledge of the fsc label and consumers’ eca. this finding confirmed shoji et al. (2014)’s that awareness of fsc certification enhanced consumers’ willingness to pay more for fsc-labeled wood products. mceachern & waranby (2008) and daugbjerg et al. (2014) also linked knowledge of eco-labels and purchase of eco-labeled products to higher pps. daugbjerg et al. (2014), liu et al. (2007), and tan et al. (2019) suggested that consumers’ trust of the label was as important as the knowledge in consumers’ pp for eco-labeled products. it should be noted that consumers in shanghai who had seen the fsc label before were willing to pay a higher pp for the labeled products. this suggests that manufacturers and retailers could make the fsc logo clearly visible to consumers in order to promote the forest-certified products there. pps were associated with consumers’ environmental consumption awareness; this follows wee et al. (2014) and diddi & niehm (2016), whose studies showed that consumer perceptions of environmentally friendly goods influenced purchasing behavior. consumer budgets were examined in terms of their influence on pp in guangzhou and chongqing. these findings indicated that manufacturers should target consumers who had a greater intention to buy high-pp fsc-labeled wood products there. it was noteworthy that lower-income respondents in chongqing were also willing to pay a higher pp. usually income correlates positively with pp for environmentally friendly products (lin & kim 2017, wan et al. 2015, wang et al. 2017). our research showed the potential to increase the consumption of fsc-labeled products amongst low-income consumers in chongqing. a possible explanation is that despite a lack of recognition of forest certification, consumers considered such products as branded and hoped to gain social status by purchasing them. ram (1994) and li & su (2007) attributed such a result to confucius face culture. xia et al. (2014) showed that chinese consumers had a strong preference for luxury brands because displaying prestigious products that signaled one’s wealth and social status was a convenient way of enhancing face. jap (2010) showed that confucius face culture has a greater influence on less-educated consumers. this might explain why income rate correlated negatively with pp in chongqing, where respondents’ average education was the lowest amongst the five surveyed cities (tables 1 and 2). also, the purchased amount of wood flooring was examined to influence consumer’s pp in chongqing, following tan et al. (2019). the results indicated that the consumers who demanded more flooring intended to spend more money on the forest-certified product. hence, targeting cities that have apartments with larger floor areas seems to be an effective way for manufacturers to expand fsclabeled wood products in china. the sueq was identified as influencing consumer’s pp in guangzhou and tianjin. this suggests that consumers with high sueq were motivated to pay a higher pp for forest certification. this finding follows boztepe (2012) and larashati et al. (2012), who suggested that consumers’ environmental concerns influenced purchasing behavior 22 bioproducts business 5(2) 2020 for environmental goods. therefore, targeting consumers motivated by environmental concerns seems to be an effective strategy for fsc-labeled wood products there. previous studies have shown that women pay a higher pp for environmental goods than do men (cha et al. 2009; lee at al. 2007; veisten 2002, 2007). however, no statistically significant gender effect on pp was found in our study. a possible explanation is that our surveyed item was wood flooring, which is used to improve the living environment for the entire family. gender, therefore, was not considered a key factor on consumer pp for certified products. based on the results of market share estimates, guangzhou exhibited the highest percentage of respondents who intended to buy certified wood flooring, with pps below 40 cny/m2, amongst the five cities. we concluded that knowledge of the fsc label influenced the purchase of fsc-labeled products with a low pp. this finding implies that manufacturers of fsc-labeled wood products with lower pps should prioritize markets where there is greater knowledge of the fsc label. when pp exceeds 70 cny/m2, more than 25% of stipulated budgets, market share in the five surveyed cities was below 25%. to our surprise, chongqing had high market shares for high-premium wood flooring, despite having the lowest average education and gdp among the five cities. confucius face culture apparently affects purchasing behavior in less educated cities (jap 2010). perhaps consumers in less educated environs accept a higher pp for fsc-labeled products because they regard them as luxury brands. by appealing to social culture, related manufacturers may gain higher premiums by promoting forest certification in less educated cities. however, pp may decline along with an enhanced knowledge of forest certification amongst consumers. in conclusion, this study assessed consumers’ pps for fsc-labeled wood flooring in five major cities of china. it also examined the regional differences in consumers’ price premiums and related influencing factors and provided marketing segmentation strategies to expand familiarity with such products. further, the study explored the effect of pp on product market share. the findings of this study have significant implications for wood products manufacturers to develop their business strategies regarding the promotion of premiumpriced forest-certified products in china. first, a high degree of knowledge regarding the fsc label and high pp estimates indicated that chinese consumers in major cities have an increased awareness of forest certification and a high intention to purchase such products. to meet consumer demand, wood product producers should adopt forest certification and consider the widespread promotion of certified products as a business strategy. second, consumer motivation regarding pp for 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http://kns.cnki.net/kcms/detail/detail.aspx?dbcode=cdfd&dbname=cdfd1214&filename=1013045848.nh&v=mdy5odv4wvm3rggxvdnxvhjxttfgcknvujdxzlp1wnvgaxjsvzdytfzgmjziyk84rzlusxa1rwjqsvi4zvgxthu= abstract due to concern over climate change, there is an increasing desire to limit new carbon dioxide emissions and to reduce atmospheric carbon dioxide levels. specific efforts include taxing carbon emissions, capping carbon emissions and selling emissions allowances, and rewarding activities that avoid new carbon emissions or that capture and store carbon from the atmosphere. crosslaminated timber (clt) is a relatively new product that enables mass timber construction to replace traditional construction materials in mid-to-high-rise buildings. wood materials offer substantial “carbon benefits” by storing carbon in the product and by avoiding the large amounts of new carbon emissions associated with the use of fossil carbon-intensive material options (e.g., concrete and steel). in this analysis, we propose that the carbon benefits of mass timber construction could be valued as a carbon offset, much in the same way that the carbon savings of building a wind farm or solar power plant are currently being marketed for avoiding fossil-fuel electricity generation, or how additional forest growth is being sold as carbon storage. using a range of carbon prices, we calculate the potential carbon offset values of some mass timber construction projects located in the united states. the estimated total carbon benefit, including avoided emissions and carbon storage in wood materials from those mass timber construction projects, averaged 0.38 tco2e/m2 of floor space, representing carbon values for projects ranging into the millions of dollars. future trends in carbon prices will greatly affect the practical implications of any carbon offset program for mass timber construction. keywords: mass timber building, cross-laminated timber, carbon offset, carbon credit, avoided emissions, carbon sequestration, carbon storage carbon credits for mass timber construction 1 professor, university of tennessee, knoxville, tn. 2 research forest products technologist, usda forest service forest products laboratory, madison, wi. 3 research economist, usda forest service forest products laboratory, madison, wi. 4 supervisory research wood scientist, usda forest service forest products laboratory, madison, wi. * corresponding author. email: adamtaylor@utk.edu declaration of interest: no potential conflict of interest was reported by the authors. bioproducts business 8(1), 2023, pp. 1–12. issn 2378-1394 https://doi.org/10.22382/bpb-2023-001 1. introduction there is interest in increasing the use of low-carbon footprint, renewable, and sustainable wood products in construction. such interest is driven in part by concern over climate change; almost 13% of global greenhouse gas (ghg) emissions result from materials for buildings and infrastructure construction (united nations environment programme 2022). to mitigate climate change related to the building industry, new building materials and new building practices are being investigated, including crosslaminated timber (clt) and mass timber construction (dawson et al. 2022). cross-laminated timber is manufactured by joining solid pieces of wood (structural lumber) in alternating layers. the resulting large panels have good properties and can be used as the primary structural elements in building construction (ding et al. 2022, karacabeyli & gagnon 2019). cross-laminated timber is a relatively new product that joins other wood products such as gluedlaminated timbers (glulam) and heavy timbers under the general category of “mass timber” construction adam taylor 1 *, hongmei gu 2, prakash nepal 3, richard bergman 4 2 bioproducts business 8(1) 2023 als, combined with their carbon storage role, suggest that increasing wood use in buildings would result in substantial carbon benefits. the carbon benefits of mass timber construction specifically (including clt) have been documented in multiple reports (bowers et al. 2017, buchanan et al. 2012, chen et al. 2019, liang et al. 2020, milaj et al. 2017, pasternack et al. 2022, puettmann et al. 2021, puettmann et al. 2019). to achieve climate mitigation goals, policy makers around the world are introducing different carbon pricing mechanisms to promote activities that encourage reductions in greenhouse gas (ghg) emissions and/or increase carbon removal from the atmosphere (carbon sequestration and storage). carbon pricing allows the external costs of ghg emissions (e.g., cost of damages related to climate change) to be internalized by those who are responsible for it, usually in the form of a price on the carbon dioxide (co2) emitted. the three common types of carbon pricing mechanism include (i) carbon taxes, (ii) emissions trading systems, and (iii) carbon offsets (world bank 2021). carbon taxes are paid by the carbon emitter/ producer (e.g., companies that use fossil fuels), and thus encourage switching to alternative technologies or products that emit less carbon. many countries have implemented some form of a carbon tax, with prices (tax rates) in 2021 ranging from as low as us $ 0.08 (poland) to as high as $137.24 per ton of co2 (world bank 2021). under emissions trading systems (ets), regulators establish emission targets for polluters, who can then either reduce their emissions to comply with the target or purchase unused emissions allowances from other polluters. thus, an ets establishes a market price of carbon by creating a demand and supply for emissions allowances (environmental defense fund 2021). a cap-and-trade system is a common type of ets, where a cap or an absolute limit on emissions is specified. the total amount of such cap is then split into allowances and distributed to emitters, usually for free or through auction. the given allowance sets the limit to what an emitter can emit, and penalties are imposed for any violations. the cap typically declines over time, providing an incentive for emitters to reduce their emissions efficiently and cost effectively (environmental defense fund 2021). entities that emit fewer emissions than materials (fernholz et al. 2022, jakes et al. 2016, stark & cai 2021). prior to the development of clt panels, wood was excluded from use in mid-to-highrise (greater than four story) construction (stegner & fotheringham 2022). because of its unique structural capabilities, the advent of clt has opened the possibility of using wood for midto high-rise buildings, which are currently dominated by steel and concrete (ahmed & arocho 2020, brashaw & bergman 2021, united nations environment programme 2022). for example, the international building code of 2021 allows mass timber use in buildings up to 18 stories (icc 2021). a life-cycle assessment (lca) is an internationally accepted method to evaluate the environmental impacts of a product, process, and service (iso 2006a, 2006b). a large body of lca literature has shown that wood products consume much less fossil-based energy to produce than functionally equivalent, nonwood products (sathre & gonzález-garcía 2014, werner & richter 2007). this means that using wood materials in construction avoids large amounts of fossil-based emissions – the substitution with wood reduces the co2e emissions that would result from the production of the fossil-based and fossil fuelintensive materials, such as concrete and steel. in addition, biogenic carbon, which was sequestered from the atmosphere during tree growth, is stored in durable wood products (bergman et al. 2014; nepal et al. 2016, skog 2008). the avoided emissions associated with wood products substitution for other materikey policy insights • mass timber construction offers potential carbon benefits through both carbon storage and avoided carbon emissions. • carbon offsets from mass timber construction would provide permanent, non-leaky, and additional carbon benefits. • a carbon offset credit for mass timber construction would recognize the dual carbon advantages of mass timber and would incentivize the transition to midto high-rise construction based on renewable materials. taylor et al. — carbon credits for mass timber construction 3 their allowance permit can save their “surplus allowances” for future use or can sell to other companies that emit more than their allowances. example of ets include the joint implementation (global), eu emissions trading system (regional), china national ets (national), and california cap-and-trade program (sub-national). some ets also allow use of carbon offset credits to meet the regulated entities’ emissions reduction targets. carbon offsets are issued for activities such as renewable energy projects, e.g., wind or biomass; energy efficiency improvements; reduction of methane emissions from a landfill site; reduction of industrial process emissions; and forestry or other practices to store carbon, e.g., afforestation or reforestation (fernholz et al. 2021). credits from carbon offset mechanisms can be sold or bought to comply with regulations or to meet voluntary ghg reduction goals by industry or businesses (world bank 2021). in the united states, the most popular (reported volume) and valuable (total dollar value) carbon offset credits are those involving forests, with consideration of the carbon storage in standing trees (forest trends’ ecosystem marketplace 2021). these programs usually do not award credits to harvested trees or resulting wood products (climate action reserve 2019). several countries, states, and local governments around the world have already implemented or are considering policies that directly or indirectly recognize mass timber as a means of mitigating building sector emissions. for example, the 2017 buy clean california act requires the department of general services to set the maximum acceptable global warming potential (gwp) for various construction materials (california department of general services 2021). this provision will reward manufacturers of wood materials that have lower levels of embodied carbon emissions or the carbon emissions from materials manufacturing, transportation and construction (thinkwood 2021). similarly, the australian government is planning to invest $300 million in a program to encourage mass timber construction, with an aim to finance eligible projects that use low-carbon impact engineered wood products in nonresidential and residential buildings (pfa 2022). recently, the u.s. government has announced funding for millions of dollars to advance climate-smart mass timber construction and expand wood products markets through the u.s. department of agriculture’s partnership for climate-smart commodities program (usda 2022, neff 2022). recently, the carbon benefits—higher carbon storage and lower embodied carbon emissions— of using wood in place of other materials (figure 1) are being recognized. for example, voluntary credits for the carbon benefits of using wood in place of other materials are currently being sold as “co2 removal certificates“ (corcs) through puro.earth (puro.earth 2022). the u.s. state of georgia passed house bill 1015 that, when fully implemented, will enable developers to generate carbon offsets from using wood in buildings, for both the carbon stored in the wood and the embodied carbon emission savings from using wood in place of other materials (totten 2020). the purpose of this study is to illustrate the potential value of such carbon offsets, using available data on the summarized carbon benefits from some existing mass timber projects within the united states and a range of carbon prices on the current market and policy indicated. 2. methods we used publicly available data from mass timber projects located in the united states to quantify the total carbon benefits, including the carbon stored in the wood materials and the avoided fossil-fuel carbon emissions from using mass timber in place of traditional construction options. we then calculated the value of these carbon benefits, using a range of carbon prices. finally, we put these carbon values into perspective by comparing the carbon values to the project construction cost. simonen et al. (2017) collected the embodied carbon emissions values from over 1,000 building projects. they reported a range of 0.200 to 0.500 tco2e/m2 of embodied carbon for commercial office buildings, with a median of 0.384 tco2/m 2 for traditional concrete and steel buildings. a recent, multipart series of lcas on mass timber buildings reported reductions in the embodied carbon emissions varying between 22% and 50%, when compared to functionally equivalent buildings made with traditional materials (gu et al. 2021, pasternack et al. 2022, puettmann et al. 2021). we chose the midpoint of this range (36%) as a single, simple reference value to calculate the avoided emissions from the clt 4 bioproducts business 8(1) 2023 figure 1. a simplified illustration of the dual potential carbon benefits of mass timber construction: (1) storing sequestered carbon in the wood building materials and (2) avoiding carbon emissions associated with production of alternative materials. buildings included in this study. this simplification fails to capture the range of possibilities for specific projects, but it did allow us to include and compare many projects. based on these reference points, the calculation we developed was as follows: [1] avoided emissions (tco2e) = emission reduction factor (36%) × traditional building embodied carbon per unit area (0.384 tco2e/ m2) × building floor area (m2) carbon storage by these mass timber products in the buildings during their service life used a simple calculation based on the reported volume of wood materials: [2] carbon storage (tco2e) = volume of wood (m3) × density of wood (t/m3)a × carbon content of woodb × molar ratio of co2 to cc sixteen case studies of recent mass-timber buildings designed or built in the united states were included in this study because they contained consistent and sufficient data for the calculations (gu et al. 2021, hemmati et al. 2022, liang et al. 2020, woodworks 2021). the case studies chosen are identified by their project name in table 1. for a subset of five of the case studies, the total project costs data were reported (table 2); for those five projects, the cost data were compared with the potential carbon offset values calculated in this study. the price of carbon offsets around the world ranges widely and is very dynamic. in this analysis, we chose a few values to represent a possible range, but we recognize that the specific values chosen will be out-of-date soon, even by the time of publication of this work. in their most recent review of global forest carbon offset prices, forest trends’ ecosystem marketplace (2021) report 2019 prices as high as $21.74/tco2e for compliance credit in the new zealand ets. the mean voluntary price was $4.33/tco2e, but ranged to values as low as $0.56. a assumed to be 480 kg/m3, an average density value for oven-dried douglas-fir, with volume measured at 12% moisture content (senalik & farber 2021). douglas-fir is commonly used in clt in the united states; however, the wood species used in the projects was not consistently reported. b assumed to be 50% (shmulsky & jones 2019). c 44/12. taylor et al. — carbon credits for m ass tim ber construction 5 table 1. carbon benefits and offset value of some mass timber projects. building project location reference building floor area (m2) * volume of mass timber (m3) avoided carbon emissions (tco2e) carbon storage (tco2e) total carbon benefit total carbon value ($) at specified carbon price avoided + storage (tco2e) by floor area (tco2e/m2) low ($4.33/ tco2e) medium ($49.80/ tco2e) high ($137.00/ tco2e) 1 8-story mass timber building u.s. northeast gu et al. (2021) 9,476 3,519 1,310 3,124 4,434 0.47 19,201 220,833 607,513 2 12-story mass timber building u.s. northeast gu et al. (2021) 14,214 5,729 1,965 5,087 7,052 0.50 30,537 351,208 966,176 3 18-story mass timber building u.s. northeast gu et al. (2021) 23,321 7,324 3,224 6,503 9,727 0.42 42,119 484,418 1,332,635 4 university of arkansas adohi hall fayetteville, ar hemmati et al. (2022) 18,768 4,082 2,595 3,625 6,220 0.33 26,931 309,732 852,075 5 framework portland, or liang et al. (2020) 8,361 2,376 1,156 2,110 3,266 0.39 14,140 162,625 447,382 6 candlewood suites hotel redstone arsenal, al woodworks (2021) 5,824 2,208 805 1,961 2,766 0.47 11,976 137,738 378,916 7 catalyst spokane, wa woodworks (2021) 15,236 3,310 2,697 2,939 5,636 0.37 24,405 280,685 772,167 8 crescent terminus atlanta, ga woodworks (2021) 25,548 7,316 3,532 6,497 10,028 0.39 43,423 499,413 1,373,886 9 franklin elementary school franklin, wv woodworks (2021) 4,199 1,932 580 1,716 2,296 0.55 9,942 114,345 314,564 10 hacker district office portland, or woodworks (2021) 8,398 2,342 1,161 2,080 3,241 0.39 14,031 161,377 443,949 11 nez perce-clearwater national forests supervisor’s office kamiah, id woodworks (2021) 1,486 379 205 336 542 0.36 2,346 26,977 74,213 12 stella marina del rey, ca woodworks (2021) 60,428 5,424 8,354 4,817 13,170 0.22 57,027 655,879 1,804,327 13 the bullitt center seattle, wa woodworks (2021) 4,831 695 668 617 1,285 0.27 5,564 63,993 176,045 14 the crossroads madison, wi woodworks (2021) 4,831 400 668 355 1,023 0.21 4,430 50,947 140,156 15 the long hall whitefish, mt woodworks (2021) 452 148 62 131 194 0.43 839 9,655 26,561 16 university of massachusetts design building amherst, ma woodworks (2021) 8,129 2,190 1,124 1,945 3,069 0.38 13,287 152,815 420,396 averages 13,344 3,086 1,882 2,740 4,662 0.38 20,012 230,165 633,185 *as reported. not specified whether this represents gross floor area or net leasable area, etc. 6 bioproducts business 8(1) 2023 table 2. carbon benefits and values for projects with reported areas and construction costs. project and location project cost ($) building floor area (m2) volume of mass timber (m3) total carbon value ($) at specified carbon price potential carbon offset values (%) relative to project cost at specified carbon price low ($4.33/ tco2e) medium ($49.80/ tco2e) high ($137.00/ tco2e) low ($4.33/ tco2e) medium ($49.80/ tco2e) high ($137.00/ tco2e) the long hall, whitefish, mt 705,135 452 148 839 9,655 26,561 0.12% 1.37% 3.77% stella, marina del rey, ca 65,000,000 60,428 5,424 57,027 655,879 1,804,327 0.09% 1.01% 2.78% the bullitt center, seattle, wa 30,000,000 4,831 695 5,564 63,993 176,045 0.02% 0.21% 0.59% university of massachusetts design building, amherst, ma 36,000,000 8,129 2,190 13,287 152,815 420,396 0.04% 0.42% 1.17% university of arkansas adohi hall, fayetteville, ar 79,600,000 18,768 4,082 26,931 309,732 852,075 0.03% 0.39% 1.07% the most recent review of global generic carbon prices (including emissions trading and carbon taxes) reports an even wider range: up to more than $137/ tco2e in the case of sweden’s carbon tax (world bank 2021). however, the most important market segment, in terms of volume and value, is the european union’s ets, which has generated $22.5 billion at $49.80/tco2e. the current estimate for the “social cost of carbon” in the united states (gao 2020), is $50/tco2e, which is similar to these carbon tax and emissions trading values in europe. based on the range of values identified in these references, we chose to use values of $4.33/tco2e (low), $49.80/tco2e (medium), and $137/tco2e (high) for our analysis. these correspond to the average forest carbon offset value globally in 2019, the eu’s emissions trading value in 2021, and sweden’s carbon tax in 2021, respectively. we recognize that a carbon tax is not practically equivalent to a carbon credit, but we include it as a reference value because it implies a value for carbon. 3. results and discussion the added value attributed to estimated carbon benefits of mass timber construction can be substantial (table 1). the size and type of the building, of course, drives the quantity of wood used, which in turn affects the quantity of carbon stored in the wood materials and the amount of non-wood, fossil fuel-intensive alternative materials whose use is avoided. the total carbon benefit (avoided carbon emissions and carbon storage) per unit floor area averaged 0.38 tco2e/m2. because of the range of building sizes and potential carbon values, the calculated value of carbon offsets from the projects included in this study range from hundreds to millions of dollars. the avoided carbon emissions by substituting mass timber products for the non-wood option was generally less than the carbon stored in the mass timber materials (table 1). the avoided carbon emissions averaged 40% of the total carbon benefit, but ranged from 25% to 65%, indicating that building area (the basis for the avoided emissions calculation) does not necessarily correspond to the volume of mass timber used (the basis for the stored carbon calculation.) the current wide range of carbon prices means that the potential value of the carbon benefits in these projects also ranges widely; however, at a high carbon price, the carbon savings of these projects could be about 1% to 4% of the total cost of the project (table 2). this suggests that, if carbon prices increase, the potential carbon offsets from taylor et al. — carbon credits for mass timber construction 7 mass timber construction could make a modest but meaningful contribution to a project’s financing. mass timber construction that includes clt is relatively new, and thus the cost of this construction type, relative to traditional options, is uncertain. reports vary, suggesting that mass timber construction may be either more expensive than, similar in price to, or less expensive than existing alternatives (ahmed & arocho 2021; gu et al. 2020, kremer & ritchie 2018). as the use of mass timber becomes more common in the united states, and the domestic manufacturing of clt components increases, it is expected that mass timber construction costs will decrease, relative to conventional options. given the uncertainty of the cost of mass timber relative to traditional options, it is difficult to predict if or at what carbon price a carbon payment would provide sufficient financial incentive to steer a developer toward choosing wood. future research could explore the use of scenarios to examine this uncertainty. it may be that in many cases, the choice to use mass timber will be motivated by other considerations than the potential value of carbon credits (e.g., speed of construction, aesthetics, renewable resource use); however, this is difficult to predict, given that clt has only recently become building code-approved and commercially available. the choice of mass timber may also be discouraged by real or perceived disadvantages, such as lack of established supply chains and personnel familiar with the material (ahmed and arocho 2020). mass timber buildings must satisfy the same requirements for safety (e.g., fire, seismic) and comfort as other buildings and are expected to provide similar service life; however, the true performance characteristics of mass timber are not yet known, given that it is a new technology (ahmed and arocho 2020). potential carbon payments may help offset reluctance to try what is currently a less common material choice. where carbon payments help make mass timber more attractive, we argue that constructing buildings with mass timber can result in additional carbon benefits. the carbon benefit of mass timber construction projects, as calculated in this study and expressed on a per-floor area basis, averaged 0.38 tco2e/m2. as noted above, we assumed single, average values for the embodied carbon emissions of traditional building types and for the avoided emissions factor associated with the substitution of mass timber. as average values, they will be overor under-estimates for most specific projects. these assumptions could also vary if they are meant to account for structural elements only or for the whole building (e.g., including trim and flooring), by the choice of baseline of comparison, and by the assumed reduction in embodied carbon emissions by using mass timber. furthermore, some of our examples are hypothetical designs (e.g., projects 1-3 in table 1) and thus do not reflect the actual construction practices. our assumption of baseline embodied carbon emissions (0.384 tco2e/m2) is low, compared with some other estimates, e.g., up to 0.720 tco2e/m2 (carbon leadership forum 2017), thus our estimates of avoided carbon emissions are potentially conservative. likewise, skullestad et al. (2016) reported a range of embodied carbon emission savings for mass timber structures of from 34 to 84%; using the midpoint of this range (59%) would greatly increase the calculated avoided-emissions carbon benefits, compared to our assumption of a 36% reduction. furthermore, the methods for calculating embodied-carbon baselines, and the savings associated with mass timber, are under continuing development (e.g., carbon leadership forum 2022) the law in the u.s. state of georgia requires the use of u.s. department of energy’s commercial prototype building models for baseline comparison; however, the embodied carbon estimates of these models are still being developed (georgia forestry association 2022). clearly, any program that seeks to develop carbon credits with mass timber buildings would have to specify the scope of the building materials included and the baseline building embodied-carbon reference, based on the most current data. if the carbon benefits of mass timber projects were to be sold as offsets, calculations of carbon savings would be needed, which could require a precise and project-specific lca study that is compliant with the internationally recognized standards. fortunately, several whole building lca tools already exist that could assist with carbon benefits quantification (e.g., tally, the athena impact estimator for buildings, oneclick lca, and ec3). to date, the carbon storage and avoided carbon emissions benefits of wood construction have not been monetized in the form of carbon credits. however, most carbon offset programs provide opportunities to develop new protocols for their review and approval. this 8 bioproducts business 8(1) 2023 suggests that, if there were interest in the concept, there is a pathway for carbon offsets generated from substituting mass timber products for non-wood materials in buildings to be certified and traded in the marketplace. the potential carbon benefits of increased use of mass timber in buildings should be evaluated in the context of additionality, permanence, and leakage, three common criteria that are used by carbon offset programs to judge the overall effectiveness of a carbon offset project (beane et al., 2008). the carbon savings of mass timber buildings could be additional because – assuming the building were to be built and the value of the carbon credits resulted in the choice of mass timber – the only other material options (i.e., steel and concrete) do not sequester carbon and are associated with much greater fossilcarbon emissions. similarly, the carbon savings due to substitution would be permanent – the emissions avoided by not using steel and concrete would last forever. the carbon stored in the mass timber materials would be “durable” but not truly permanent; rather they would last for the many decades of the service life of the building (skog 2008). the carbon offsets for carbon storage in forest growth are of similar scales of permanence, e.g., 100 years (climate action reserve 2019, ghg management institute and stockholm environment institute 2021). the carbon storage benefit of mass timber construction could be extended, depending on the reuse or disposal options at the end of the buildings’ life (liang et al. 2021, skog 2008). therefore, it may be that the temporary nature of carbon storage in mass timber buildings could disqualify it from consideration in some programs. similarly, if the sequestration had already been credited during forest growth, it may be necessary to exclude the storage benefit of mass timber to avoid double-counting. finally, the carbon benefits (avoided emissions) of using wood in place of non-wood materials in these buildings would not result in leakage – greater carbon emissions elsewhere, as an unintended consequence – because the demand for other materials would be reduced. the carbon storage benefit could result in a leakage effect, depending on how the use of mass timber is assumed to impact forest harvests and growth. in this analysis, we assume sustainably sourced wood products from net-neutral forest carbon stocks. this is a common, but controversial, assumption (law & harmon 2011, lippke et al. 2011). the united states is the largest source of wood products in the world, at the same time that its forests are continually increasing in wood volume (fao 2021, oswalt et al. 2019). this suggests that u.s. forest carbon stocks can be a sustainable source for building materials that store carbon and avoid fossil carbon. a recent study by nepal et al. (2021) suggested that even a very large increase in demand for mass timber globally (leading to about 4% increase in global timber harvest, compared to the baseline case, by 2060) would reduce global timber inventory only slightly (less than 0.3%), because most of the depleted forest inventory would be recovered over time, due to forest regrowth. some studies have modelled very long “payback times” for the carbon benefits of harvested wood products (more than 100 years) because of the carbon emissions in the forest due to harvest disturbance. these carbon “debits” could be included in calculations of forest products’ carbon credits; however, there is much uncertainty about payback times (bentsen 2017, hurmekoski et al. 2020, nabuurs et al. 2017). in addition, carbon debt analyses related to forests tend to be limited because they do not take a broader system perspective, where these changes, if any, in forest carbon stock can be seen in context (mckinley et al. 2011, skog et al. 2014). thus, we chose to assume net neutrality for forest carbon stocks for this study. carbon neutrality is not the only indicator of sustainable or responsible forestry, and a potential carbon credit program could include requirements relating to the wood supply chain, such as forest certification or verification of legality. this may be particularly important in circumstances where local forest resources are threatened, or where imports are required to meet local wood product demand. it is unlikely that the potential carbon sequestration value of mass timber could ever lead to the perverse situation of providing an incentive to use excess mass timber in a structure simply to earn carbon credits. at the highest carbon value considered in this paper ($137/tco2e), the sequestration value of the carbon in wood would be about $250/m3, while taylor et al. — carbon credits for mass timber construction 9 current clt prices are on the order of four times that amount (personal communication with reinhart sauter, owner of sauter timber, 2022). this analysis shows the dominant role of carbon price on the potential value of a carbon credit for mass timber use. the great range, and future uncertainty, of carbon prices makes it difficult to predict if carbon credits could play a substantial role in motivating a shift to mass timber construction. however, carbon prices have been trending upwards in the recent past. in addition, the higher cost of mass timber construction, relative to the non-wood alternatives, can be expected to decline if the use of mass timber increases. these two trends, which would narrow any upfront price premium for mass timber, could ultimately make the role of a carbon credit for mass timber construction more important (gu et al. 2020, liang et al. 2021). wood-based construction is dominant in residential housing in the united states, while mass timber use has the potential to increase in non-residential and mid-to-high-rise construction, due to favorable building codes, coupled with the availability of clt and other mass timber materials. to date, carbon offset programs do not reward the carbon benefits of using this carbon-storing and energy-efficient material. issuing carbon credits for mass timber construction could provide the incentive to avoid the use of steel and concrete construction and increase carbon storage in buildings. there are many important details and assumptions to consider when developing a carbon offset program for buildings, and methods that include such consideration are being developed (srubar et al. 2022). 4. conclusions the advent of mass timber is opening new opportunities to use wood in the built environment. this can provide two carbon benefits: storing sequestered carbon in long-lived wood products and avoiding the carbon emissions associated with the use of other materials. in this analysis, we quantified these carbon benefits in several actual mass timber buildings and determined their monetary value, using a range of carbon prices. this analysis used average values taken from the literature to estimate carbon benefits. future analyses, making use of whole-building lca tools, could be more specific and detailed to provide more precise carbon benefits values. the carbon storage and avoided carbon emissions benefits of mass timber buildings are large and could be of significant value, depending on the price of carbon. some carbon credit programs for building with wood exist or are in development; however, it is uncertain whether such carbon offset programs could provide sufficient financial reward to overcome resistance to working with a relatively new building method or its potentially higher costs. carbon credits for mass timber have the potential to provide additional, durable, and non-leaky carbon benefits; however, many uncertainties exist that policymakers should consider. 5. references ahmed, s., & arocho, i. 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(2021). state and trends of carbon pricing 2021. washington, dc: world bank.https://openknowledge.worldbank.org/handle/10986/35620. abstract the wood products industry faces increasing pressure to attract the interest of young consumers and potential employees, such as the millennial generation. this study was designed to illuminate perceptions held by the millennial generation towards the wood products industry. the millennial generation or “millennials” are defined in this study as individuals born from 1980 to 2000. in february 2018, an online survey was distributed to over 1,500 millennial-aged individuals and 1,479 usable survey responses were returned. results from this study indicate that the respondents have neutral perceptions towards the wood products industry and over half of them (65%) were familiar with the industry before taking this survey. certain topics, such as clear cutting and forest damages, received stronger attitude reactions from respondents. approximately, 71% of millennials agreed with the statement, “it makes them sad to see cleared forest lands.” responses also indicated millennials possess weak overall knowledge regarding industry practices. demographic groups that held significantly stronger attitudes were millennial females, all millennials ages 18-20, and all millennials who identified as caucasian. this information can be beneficial for developing future marketing strategies, public awareness campaigns, engineering product designs, and improving overall industry success. keywords: millennial attitudes, industry perceptions, social media, millennial females, wood products industry millennial generation perceptions surrounding the wood products industry 1 marketing associate, timber products company, springfield, or 97477 2 research forester, usda forest service northern research station and forest products marketing unit, starkville, ms 39759 3 department head, department of sustainable bioproducts, starkville, mississippi 39759 * corresponding author. email: kassystout123@gmail.com; tel: (716) 517-1137 acknowledgement: this work was made possible with the support of u.s. department of agriculture (usda), research, education and economics (ree), agriculture research service (ars), administrative and financial management (afm), financial management and accounting division (fmad), grants and agreements branch (gamb), under agreement no. 58-0204-6-001. any opinions, findings, conclusion or recommendations expressed in this publication are those of the author and do not necessarily reflect the view of the u.s. department of agriculture. kassandra stout1*, iris montague2, rubin shmulsky3 bioproducts business 5(3), 2020, pp. 25–36. issn 2378-1394 https://doi.org/10.22382/bpb-2020-003 1. introduction over the past several years, the wood products industry has begun to recognize a need to improve industry rapport with young consumers. special interest in improving relations comes as the industry faces a growing situation of employees retiring faster than empty positions fill. this trend has spurred industry discussion into what can be done to reach younger generations in terms of consumer support and employee recruitment. the millennial generation, or “millennials,” is the up-and-coming generation, soon to outnumber baby boomers in the workforce and consumer fields in the u.s. (fry 2018b). the millennial generation is comprised of individuals born from the early 1980s to late 1990s/early 2000s. there is no current unified age range agreed upon by scholars regarding the millennial generation. age range estimates date from 1979-1994, 1982-2004, 19802000, and beyond (levenson 2010, myers & sadaghiani 2010, hartman & mccambridge 2011, raphelson 2014, devaney 2015, holmberg-wright et al. 2017, fry 2018a). millennials have received enormous attention from the press regarding their cultural norms compared to previous generations (myers & sadaghiani 2010). news stories feature differences in behaviors, values, work habits, spending power, and view of life. millennials are described as idealistic, environmentally conscious, 26 bioproducts business 5(3) 2020 entitled, optimistic, and self-absorbed, among others (pew research 2015, devaney 2015). millennials have been exposed to multiple financial difficulties including the u.s. stock market crash in 2008 and increasing amounts of student loan debt coupled with low income jobs or unemployment/underemployment (levenson 2010, holmberg-wright et al. 2017). compared to previous generations, millennials are one of the most racially diverse generations in history (drake 2014). millennials also have over double the college-level credentials than early gen x individuals and late baby boomers (levenson 2010). millennials’ relationship with technology, specifically social media, is a possible source for a variety of generational and consumer differences. millennials have been nicknamed “digital natives” because of their technological savviness (yeaton 2008, noble et al. 2009). their generation rose alongside social media platforms and sites such as myspace (2003), facebook (2004), youtube (2005), and twitter (2006) (van dijck 2013). the advent of these new online, interactive sites allowed for the growth of a new type of communication, networking, and online shopping. millennials believe that internet and social media sites have a positive impact on society (jiang 2018). stewart et al. (2017) notes millennials have a distinction for placing technology as a defining characteristic of their generation. in partial credit to social media use, millennials value two-way communication rather than one-way (holmberg-wright et al. 2017). open communication enables millennials to build relationships with their supervisors, peers, and mentors in the workplace (myers & sadaghiani 2010). compared to previous generations, millennials are likely to “job hop” rather than stay in a position for a long period (myers & sadaghiani 2010, devaney 2015, stewart et al. 2017). some reasons for millennial turnover are a lack of promotional opportunities, an inability to form relationships with mentors and coworkers, a lack of job satisfaction, or conflict with their values on worklife balance (myers & sadaghiani 2010, devaney 2015, stewart et al. 2017). it is important for the wood products industry to keep external and internal environmental factors in mind when considering how best to engage with millennials as consumers or future employees. compared to other industries that mine materials below the earth’s surface like metals (steel) and fossil fuel sources, the harvesting of forests is more visible (bowyer et al. 2007). pushback from environmental organizations, such as the sierra club, against both the industry and governmental agencies, can stir negative reactions from the public toward industry practices (mater 2005, portuese et al. 2009). both climate change and the conservation of forest biodiversity are of growing importance to the public (mcfarlane 2005, winkel 2013). the public’s education, or lack thereof, may be one of the more significant reasons for current misperceptions of the industry. two studies previously revealed that the public held little factual knowledge concerning the industry and the maintenance of u.s. forestlands (polzin & bowyer 1999, uhrig 1999). more recently, ter-mikaelian et al. (2008) found evidence that non-factual or incorrect information still exists that feeds public misperceptions regarding industry forest management. however, there is promise that public opinion can be changed to support the industry and support industry practices to mitigate climate change (st-laurent et al. 2018). a lack of public knowledge could stem, in part, from the u.s. education system not covering material sufficiently or at all concerning the wood products industry. universities and colleges with forest resource programs often report low student enrollment as well as a lack of diversity in terms of race and gender (sample et al. 2015). pätäri et al. (2017) indicated that university students’ opinions (positive or negative) on the industry were dependent upon their current knowledge. improved educational outreach and industry promotions from leading scientists could help mitigate false information and increase positive perceptions (mater 2005, ter-mikaelian et al. 2008) a final cause for misperceptions may be the industry working against itself to promote better perceptions. according to baldwin (2004), the industry has lingered in a state of denial regarding there being a possible perception problem. however, certain companies have begun to take measures towards bettering their public image and recruiting a more diverse set of employees (henderson 2014). whether singular or combined, these factors present plausible reasons for current perceptions held by millennials towards the industry. thus, the main objective of this study was to determine the current knowledge millennials possess regarding the wood products industry, and especially whether millennials held positive or negative views towards the industry in terms of its practices and relationship with the environment. stout et al. — millennial generation perceptions surrounding the wood products industry 27 2. methodologies 2.1 questionnaire creation survey questions were created based on information found in research articles and from informal conversations with industry leaders. there have been no studies conducted thus far (to the author’s knowledge) that have surveyed the millennial generation to understand their perceptions of the wood products industry or wood products. thus, both general and specific questions were created to gauge millennials’ individual perceptions. the questions covered several topics related to different sectors of the industry. the questionnaire consisted of 40 questions. there were multiple formats for the questions including multiple choice, five-point rating scale, open-ended, and categorical (ranking). demographics, including age, education level, race/ethnicity, and state of residence, made up 7 of the 40 questions. the age question was critical, given our focus on millennials. the age range chosen to define the millennial generation herein consist of those aged 18 to 38 years old in 2018 (born 1980-2000). half of the questions focused on the wood products industry, and the other half focused on wood products. industry-specific questions requested respondents’ opinions regarding topics such as general knowledge, industry reputation/credibility, and the industry’s relationship with the environment. in addition, questions were provided regarding respondent use of social media applications and respondent self-perception of their own generation. the survey was programmed online with the qualtrics platform. every question was formatted according to dillman’s tailored design method (dillman et al. 2014). 2.2 data collection the online survey was distributed nationally in the u.s. by research now survey sampling international (ssi)1, a company providing data collection services for marketing research studies. research now ssi serves both large and small businesses, colleges/universities, healthcare providers, market research agencies, and other advertising-related agencies (research now ssi 2018a). research now ssi conforms to the quality and ethical standards required of research organizations set by the european society of marketing research (esomar), the insights association, the american marketing association, and many more (research now ssi 2018c). research now ssi uses panel-based sampling to identify respondents for surveys. the panels are comprised of people who have voluntarily agreed to take the survey and provide answers. the panel to which each survey is distributed depends upon the clients’ study requirements. the number of responses requested plus specific demographics constitute some of the possible study/ panel requirements. survey respondents are allowed only a one-time, single response, and when the total number of needed responses is met, the survey is closed. in order for research now ssi to provide a sample reflective of the target population, they use multiple quality control techniques. ssi uses “a three-stage randomization process in matching a participant with a survey they are likely to be able to complete. first, participants are randomly selected from ssi’s panels to be invited to take a survey, and these participants are combined with others entering ssi’s dynamix™ sampling platform after responding to online messaging. a set of profiling questions is randomly selected for them to answer (these are methodologically correct questions, never affirmation questions) and upon completion, participants are matched with a survey they are likely to be able to take, using a further element of randomization” (research now ssi 2018). other examples of quality control measures include, “digital fingerprinting that flags duplicate respondents,” and “pattern recognition software identifies fraudulent respondents” (research now ssi 2018b, 2018c). in addition, ssi “works to optimally blend proprietary sample sources by conducting comparability tests and modeling the blend that will achieve the closest match to census and social benchmarks” (research now ssi 2018). methods of surveying populations using the internet have evolved because of increasing demand. the methods research now ssi has implemented to ensure data quality follow with those described by baker et al. (2010). an increasing number of industries have begun to rely on online panel services for research purposes. according to callegaro et al. (2014), online surveys have become the leading approach for conducting market research. reasons for this increase relate to lower costs, faster response time, higher levels of response than with other methods, and issues regarding the reach of different modes (baker et al. 2010). the value of on1 the use of trade or firm names in this publication is for reader information and does not imply endorsement by the u.s. department of agriculture of any product or service. 28 bioproducts business 5(3) 2020 line panel sampling also goes beyond lower costs and quicker response times. there is evidence of a reduction in measurement error in online surveys versus other modes (farrell & petersen 2010). 2.2.1 bias potential given the implementation of an online panel company to distribute the survey, measuring non-response bias can be a potential issue (sharp et al. 2011). however, as this study had two “waves” of responses, non-response bias was tested by comparing the early versus late responses. other studies have used this approach in calculating nonresponse bias in online surveys whereby the number of non-respondents is unknown (aguilar & cai 2010, lesser et al. 2011, montague et al. 2016). two questions were tested for bias. the first asked respondents if they had heard of the wood products industry before taking this survey (binary response variable with levels of “yes” or “no”). the second question asked respondents if their original perceptions of cross-laminated timber (clt) changed after being presented with more information regarding its safety. the kolmogorov-smirnov test (k-s test) was calculated to compare early versus late response for both questions. the k-s statistic indicated the samples (#1 k-s = 0.99, #2 k-s = 0.97) came from the same distribution, meaning respondents who completed the survey later were not statistically different from those who completed it early. coverage bias is another area to consider. coverage bias occurs when there is a disconnect between the targeted population and the sample drawn (couper 2000, blair & zinkhan 2006). couper (2000) finds that coverage error is the largest threat to online surveys in regards to its inability to reach respondents outside of the internet. in an attempt to reduce coverage error, this study focused on a single generation and defined the age range to incorporate all of the possible millennial age ranges previously published. the required use of the internet to access the survey would allow only those with the ability to do so. however, this was not viewed as a major limitation, as one of the focuses of this study was respondent use of social media. to access social media, respondents must have access to the internet in some function. millennials have shown to be prodigious users of the internet compared to older generations. their heavier presence in the online world supports the idea of this study reaching its targeted population. therefore, it is anticipated that there is a reduced coverage error as its targeted sample is in line with the targeted population. 2.2.2 pre-testing the survey one round of pre-testing was conducted with the questionnaire before the final version was distributed. pretesting of questionnaires is a recommended method to resolve previous undetected issues and to reduce measurement errors with questions before full testing begins (dillman et al. 2014). for this questionnaire, the pre-test method of choice was to conduct a pilot study of a small number of people from the desired sample population before mass distribution (dillman et al. 2014). the pre-test occurred with the aid of the panel sample company research now ssi. the questionnaire was administered to a group of respondents for a pre-test prior to the full launch. the requirements for the pretest follow those previously described: the age range was set from 18-38 years old, all other demographics were random, and it was national. the pre-test was conducted on march 7, 2018. feedback was collected from respondent comments in the open-ended box at the end of the survey. there were 184 responses collected. of those 184 responses, 40 were discarded because those respondents did not fall in the age range or did not complete the questionnaire. thus, the pre-test yielded 144 usable responses. based on the comments provided in the open-ended box of the 144 responses, two questions were altered to ease the answer process of the respondent. the first question altered (#2) had the number of answer choices reduced, while the other question (#10) had the format changed altogether. only the reduced list for question two was used for analysis. as a result of the altered format for question 10, the 144 usable pre-test responses were withheld from final data analysis for that question. 2.2.3 sample collection the only sampling criterion for this study was a specific age range of those born from 1980 to 2000. all other demographics were random. research now ssi distributed the survey to a random sample of individuals from an online panel. the target number of responses was 1,500 and responses were collected until the target number was met. the pre-test responses were included in the total target of 1,500. testing for the first wave occurred from march 14, 2018 to march 28, 2018. the first wave incurred 1,234 usable completes, including the 144 usable pre-test responses. a second wave was launched in an attempt to attain the 1,500 responses goal. the second wave occurred from april 18, 2018 to april 25, 2018. the second wave incurred 101 stout et al. — millennial generation perceptions surrounding the wood products industry 29 usable responses. the overall total number of responses from both waves was 1,818. however, approximately 339 responses were removed because those respondents did not fall in the age range or did not complete the questionnaire. this filtration resulted in a total of 1,479 usable responses. 2.3 data analysis measures the sas analytics software program was utilized to analyze the survey data. descriptive statistics such as frequencies, means, and modes were calculated for all of the questions. further analysis included parametric tests performed on yes-or-no, multiple choice, and all of the five-point rating scale questions. the kruskal-wallis non-parametric, rank-based test was used to assess the likelihood that the distributions of responses to questions that used the 5-point scale were similar for different groups of respondents (based on age group, gender, education, race, etc.). when the kruskal-wallis indicated significance, a pairwise comparison test was conducted to determine which groups were different. the significance level for this study was at α = 0.05. 3. results and discussion 3.1 demographics the demographic breakdown from the 1,479 usable questionnaires revealed that 54% of respondents were female (n = 796) and 46% were male (n = 672). the gender makeup for this study is similar to the entire u.s., with 51% female and 49% male (howden & meyer 2011). the majority of respondents lived in the south (35%) and midwest (23%), while 22% were from the west and 20% were from the northeast. in terms of race/ethnicity, 79% of the respondents identified as caucasian (white), 10% as african american, 8% as asian and 2% as other. the racial makeup of this study is on par with the 2010 u.s. census (u.s. census 2010). approximately, 45% of respondents identified as married, 38% as single, 15% as living with a partner, and 3% as divorced/separated. the current level of education completed by respondents indicated 39% held college/ advanced degrees, 26% held a high school degree or less, 22% had some college (no degree), and 13% held technical/associates degrees. the educational attainment is similar to the u.s. millennial population, where 31% hold college/advanced degrees, 29% hold high school degrees, 19% have some college (no degree), and 10% hold associate degrees (u.s. census 2017). table 1. age group percentage of survey respondents. a age group percent (%) 18–20 9 21–23 10 24–26 14 27–29 17 30–32 18 33–35 18 36–38 14 a percent values are rounded to the nearest whole number. perhaps most importantly, the number of survey respondents was relatively equal among age groups (table 1). 3.2 self-perception when asked their opinion about the label “millennial generation,” approximately one third of respondents (37%) indicated a neutral attitude (“3” value). only 32% of millennials indicated a positive association (“4 or 5” value) with the label. respondents were asked to further describe their generation by choosing between two opposing adjectives, for example (1) ambitious versus (2) lazy. millennials described their generation as expressive (86%), innovative (82%), selfish (66%), and passionate (65%). respondents also view their generation as independent (52%). in comparison, the pew research center (2015) found that millennials described their generation as self-absorbed (59%), wasteful (49%), and idealistic (39%). millennials appear to describe their own generation in a positive light. however, 58% of respondents indicated the millennial generation was unprofessional. this negative attribute indicates some possible cognitive dissonance within the millennial mindset. the outside attention millennials receive may be a reason for this dissonance between being ambitious and passionate, yet unprofessional. the media is quick to ascribe negative traits to millennials, thus possibly infusing the negative thoughts within them (pew research center 2015). 3.3 social media millennials indicated they are more comfortable using email (75%) and text messaging (78%) compared to faceto-face conversations and phone calls. approximately, 94% of respondents currently use social media applications and check them daily (62%) or hourly (24%). millennials ranked the top three most relevant social 30 bioproducts business 5(3) 2020 media apps as facebook (71%), instagram (45%), and youtube (44%). these findings are consistent with a similar study (smith & anderson 2018). the increasing popularity of the social media platform instagram should be noted. millennials and the subsequent generation are moving away from the “first” social media platforms to others like instagram (smith & anderson 2018). one of the reasons young generations are doing so is the increase in older generational participants joining sites such as facebook (zickhuhr & madden 2012). in order to distance themselves from the eyes of older relatives, millennials are turning to different platforms (sweney 2018). every industry, including wood products, should perhaps be aware of the shifts in popularity of social media platforms. it is likely that platform popularity will continue to change as technologies evolve and social media will play a more pivotal role in employee recruitment and public interaction. respondents were asked to indicate on a five-point rating scale (where 5 = strongly agree and 1 = strongly disagree) their opinion surrounding a series of statements about company use of social media (table 2). millennials agreed (73% rated at 4 or 5) that using social media helps build strong brand identity. females and all millennials ages 18–20 were more likely to strongly agree, while all millennials with a high school degree were more likely to answer neutral “3” for that statement. over half of millennials (71%) agreed that social media can help promote corporate social responsibility. millennial females were more likely to strongly agree, and all millennials with a high school degree held a neutral attitude (“3” value) towards that statement. overall, millennials hold positive views towards companies that use social media to engage with consumers. the views millennials hold towards social media may result from their familiarity and positive associations with it. compared to previous generations, millennials believe social media has had a positive impact on society (jiang 2018). 3.4 general industry several general ideas concerning the wood products industry were presented to respondents. questions revolved around respondent interaction with forests (recreation, etc.), their attitudes toward the industry’s relationship with the environment, and their attitudes towards industry’s relationship with consumers. when asked if respondents knew of the wood products industry before the survey, 65% said “yes.” millennials who identified as caucasian (68%) or other (72%) were significantly more likely to answer “yes”, compared to african americans (51%). there appears to be room to improve awareness of the wood products industry, especially within certain racial groups. a reason that millennials who identified as caucasian may be more likely to know of the industry stems from the fact that it has traditionally been a caucasian-dominated field. this aligns with the findings of sample et al. (2015) indicating there is a continued lack of racial diversity in the industry, as well as in university or college programs associated with wood products. it table 2. millennials’ attitude towards company use of social media apps.a statement mean (mode) proportion (%) assigning a rating of 5 (strongly agree) 4 3 2 1 (strongly disagree) social media is an effective tool for companies to use 4.04 (4) 39 39 14 5 3 social media keeps companies relevant 4.00 (5) 33 41 17 5 2 i have learned of companies through social media 4.01 (4) 40 34 16 6 4 social media can help promote company corporate social responsibility 3.91 (4) 31 40 22 5 2 using social media helps to build a strong brand identity for a company 3.96 (4) 35 38 19 5 3 social media helps to personalize company marketing efforts to the individual 3.86 (4) 29 39 23 6 3 i like to follow companies on social media for news and updates 3.65 (4) 28 35 20 11 6 i feel more engaged with companies who have a social media presence. 3.66 (4) 25 34 27 8 6 i respond to/interact with companies through social media 3.44 (4) 21 33 24 12 10 a values are based on a five-point scale, where 5 = strongly agree and 1 = strongly disagree. proportions are rounded to the nearest whole number. stout et al. — millennial generation perceptions surrounding the wood products industry 31 may be beneficial for the industry to conduct further research into how best to attract a more diverse audience and/or workforce. respondents who answered “yes” to knowing of the industry were further asked to indicate where they learned about it from a list of 11 choices (including other). respondents indicated that they learned about the industry mostly from family (35%), friends (25%), and online (23%). in addition, 23% of millennials indicated they learned of the industry from a college/university. respondents were least likely to learn about the industry from a career center (6%). the industry should note that only 23% of millennials indicated learning of the industry via a college/university. previous studies have revealed forest resource programs (forestry, forest products, etc.) have low enrollment and popularity on campuses (sample et al. 2015). improving relations with college/university programs may help to strengthen industry awareness among young generations that plan to pursue higher education. to determine millennials’ attitudes and perceptions on the importance of various elements/services provided by forests, respondents were asked to rate six forest elements or uses from most important (5) to least important (1) (figure 1). the top three most important forest resources chosen by the respondents were oxygen (4.37/5), animal habitat (4.21/5), and water (4.05/5). wood products was lowest in importance (3.38/5) as a forest resource. the results from figure 1 indicate millennials are perhaps a more environmentally conscious group, placing survival and natural elements (oxygen, animal habitat, and water) as the most important reasons for forest existence. possible reasons for why millennials are more environmentally conscious relate to the atmosphere in which they grew up. new environmental policies were created or amended by the u.s. government and internationally from 1980 to 2000 (u.s. epa 2017, u.s. epa 2018). while these policy changes did not have an immediate impact on millennials, they may have influenced their beliefs and values as millennials became active spending consumers. there have been studies that indicate experiences during a young individual’s life can have a lasting impact on their consumer and personal behavior (holbrook & schindler 1994, parment 2013). the promotion of environmentally charged movies or tv series such as ferngully: the last rainforest (1992) and the reboot of the lorax (2012) may have imbued certain beliefs into absorbent young millennial minds (ayers 2012, tattoli 2017). studies have shown that documentaries about social concerns can alter public perception and influence companies to change under public pressure (jones 2011). in addition, respondents were asked to indicate their attitude towards general statements regarding the wood products industry with a five-point rating scale (where 5 = strongly agree and 1 = strongly disagree) (table 3). sixty-three percent of millennials agreed with the statement “i think the wood products industry damages our forests,” rating it a 4 or 5. for all of the statements in table 3, there were certain demographic factors for which tests indicated significantly different opinions among groups (α = 0.05). females and millennials ages 18-20 were more likely to strongly agree with the statement related to forest damage. millennials ages 18-20 may be more inclined to strongly agree with that statement because of their current education level. older millennials (over 21) have perhaps learned from their life experiences about wood products industry practices that younger millennials have yet to be exposed to. the negative reaction shown by millennials from this statement reveals the continuation of a public belief that the industry does more harm than good to the environment. however, 56% of millennials agreed that the wood products industry is important to their daily life. millennials with technical/ associate degrees were more 3.38 3.59 3.69 4.05 4.21 4.37 1 1.5 2 2.5 3 3.5 4 4.5 5 wood products recreation medicinal water animal habitat oxygen importance rating im po rt an ce m ea ns figure 1. millennials’ mean rating of the importance of forest existence. (values are based on a five-point scale, where 1 = least important and 5 = most important. means are rounded to the nearest hundredth. the 144 pre-test responses were not included for the analysis of this question, as the question format was altered for the final questionnaire.) 32 bioproducts business 5(3) 2020 likely to agree with that statement. a little over half (52%) of millennials agreed there is opportunity for young people in the industry, and males were more likely to strongly agree with this statement. a possible reason may be related to the idea of the industry as a traditionally male-dominated field. only in recent decades has there been recognition of a need to increase gender diversity (hansen et al. 2016). thus, millennial females may be less inclined to agree because of the gender bias that has historically been associated with the industry. millennials ages 27-29 (41%) were more likely to agree there is opportunity for young people in the industry, versus those ages 18-20 (24%). this may result from younger millennials (ages 18-20) lacking knowledge about the industry at the college/university level and beyond. as mentioned previously, only 23% of millennials said they learned of the industry at college/university. the small industry presence in this area may help explain why younger millennials (ages 18-20) do not see opportunity in the industry for themselves. in addition, 31% of millennials strongly disagreed with the statement, “i have an interest in joining the wood products industry.” again, millennial females (39%) were more likely to strongly disagree with that statement than males (22%). all millennials with a high school degree held a neutral attitude towards having an interest in joining the industry. 3.4.1 relationship with the environment respondents were asked to consider topics concerning the relationship between the industry and environment (table 4). again, respondents were given statements to indicate their attitudes/perceptions with a five-point rating scale (5 = strongly agree, 1= strongly disagree). certain demographic factors for all of the statements in table 4 indicated statistical significance (α = 0.05). approximately, 71% of millennials agreed that it makes them sad to see forest lands cleared (table 4), rating this statement at 4 or 5. females (45%) were most likely to strongly agree versus males (32%) and all millennials with a college/advanced degree were more likely to agree with that statement. previous studies have shown emotional responses, whether positive or negative, have lasting influences on consumer attitudes and beliefs towards different organizations (lerner et al. 2015). some studies have indicated that females, in particular, may be more willing to express stronger negative responses to situations versus males (barrett et al. 2000, trampe et al. 2015). the willingness to express negative responses may be a reason why the females in this study have stronger views than males. however, future research should be conducted to discover why females had stronger reactions to certain statements. in addition, 41% of millennials believed the industry does not replant after clearing forests (table 4). males were more likely to strongly disagree with that statement. although there was no statistical significance, it is important to note that more than half of the respondents (56%) were also more likely to agree with the idea that the industry harms the environment. 3.4.2 relationship to the consumer additional questions asked respondents to indicate their attitudes towards statements about wood products industry advertising with a five-point rating scale (5 = strongly agree, 1 = strongly disagree). certain demographic factors indicated statistical significance (α = 0.05) for all the statements in table 5. table 3. millennials’ attitude towards general statements about the wood products industry. a proportion (%) assigning a rating of statement mean (mode) 5 (strongly agree) 4 3 2 1 (strongly disagree) i think the wood products industry damages our forests 3.71 (4) 24 39 26 8 3 i think the wood products industry is important to my daily life 3.54 (4) 18 38 30 10 4 i think there are opportunities for young people in the industry 3.51 (4) 16 36 35 10 3 i rarely think about where wood products originate 3.20 (4) 16 30 23 20 11 i think the wood products industry is an ageing workplace 3.37 (3) 13 29 42 13 3 i think the wood products industry has kept up with society cultural changes. 3.24 (4) 11 28 40 16 5 i have an interest in joining the wood products industry 2.51 (1) 8 16 25 20 31 a values are based on a five-point scale, where 5 = strongly agree and 1 = strongly disagree. proportions are rounded to the nearest whole number. stout et al. — millennial generation perceptions surrounding the wood products industry 33 seventy-one percent of millennials agreed with the statement that the industry should continue to promote their environmental friendliness (table 5), rating it 4 or 5. females (41%) were most likely to strongly agree, compared to males (28%), and all millennials ages 33-35 were most likely to agree with that statement. the significance of females being more likely to agree could relate to a desire to support industries that care about the welfare of all livings things. pätäri et al. (2017) and panwar et al. (2010) indicated females have a preference for responsible and environmentally conscious businesses. older millennials ages 33-35 may also possess a greater desire to support environmentally conscious industries. millennials holding a college/advanced degree and those who identified as caucasian were most likely to agree that wood products companies should promote their environmental friendliness. millennials with higher education levels may agree with this notion due to their knowledge and value of working to protect the environment. over two thirds of millennials (68%) agreed that consumers benefit from knowing wood products companies are environmentally friendly (table 5). millennial females were more likely to strongly agree with that statement. a potential reason for millennial females agreeing with this need for consumer education relates to their economic power as consumers. females have influence in over half of all purchases, which can influence what their children, spouses, and friends might purchase in the future (silverstein & sayre 2009, king 2017). in addition, 33% of millennials disagreed with the statement, “i do not think wood products marketing needs to be improved,” assigning it a value of 1 or 2. millennial females and all millennials with college/advanced degrees were more likely to disagree with that statement. millennials who identified as caucasian were more likely to disagree with that statement as well. 4. study limitations limitations apply to the results obtained from this study, as is the case with surveys in general. data for this study relied on respondents’ own report of their behaviors, beliefs, or attitudes. people are often biased when they report on their own experiences, and table 4. millennials’ perceptions towards the wood products industry’s relationship with the environment. a statement mean (mode) proportion (%) assigning a rating of 5 (strongly agree) 4 3 2 1 (strongly disagree) it makes me sad to see cleared forest lands 3.99 (5) 39 32 20 7 2 i understand why wood products are important to our world 3.78 (4) 22 45 25 6 2 the wood products industry harms the environment 3.61 (4) 19 38 31 9 3 i do not think the wood products industry replants trees they cut down 3.22 (3) 15 26 35 16 8 i think wood products contribute to improving our environment 3.15 (3) 12 25 36 20 7 a values are based on a five-point scale, where 5 = strongly agree and 1 = strongly disagree. proportions are rounded to the nearest whole number. table 5. millennials’ attitude towards the wood products industry marketing. statement mean (mode) proportion (%) assigning a rating of 5 (strongly agree) 4 3 2 1 (strongly disagree) i think wood products companies should create awareness of their environmental friendliness 3.99 (4) 35 36 23 5 1 i think knowing how wood products benefit the environment would be beneficial to consumer opinion 3.92 (4) 32 35 28 4 1 i think wood products marketing is mainly business to business 3.47 (4) 14 37 35 11 3 wood products marketing does not focus on the consumer 3.21 (3) 10 24 48 14 4 i do not think wood products marketing needs to be improved 2.86 (3) 6 18 43 23 10 * values are based on a five-point scale, where 5 = strongly agree and 1 = strongly disagree. proportions are rounded to the nearest whole number. 34 bioproducts business 5(3) 2020 caution must be used when interpreting data (devaux & sassi 2016). the nature of the data collection also prevented the authors from obtaining a clear response rate. the authors know the survey was sent to 4,900 individuals on a panel. however, we do not know if all 4,900 had an opportunity to see or complete the survey because collection was stopped once the target of 1,500 responses was met. stating that the response rate is 30% is deceiving because of this uncertainty. yet, if the response rate of 30% is taken at face value, it is similar to response rates of other forest products studies (bumgardner et al. 2017). as a result, one should be cautious in generalizing the findings of this study, given the lack of an accurate response rate. 5. conclusion the millennial generation does not appear to have strong knowledge regarding the wood products industry, lacking general concepts of industry practices and values. across the study, educational levels indicated significant differences of opinion between individuals with a high school degree versus those with a college degree or higher. respondents with a high school degree were more likely to indicate neutral opinions (value of “3”) versus respondents with a college degree who indicated stronger positive or negative opinions (all other values). this differentiation suggests further research should be conducted to understand how education level affects opinion towards the wood products industry. traditionally, the industry does not market directly to consumers. however, future efforts to provide more information about the industry and products may be beneficial. based on the results of this study, there are two potential audiences the wood products industry should consider for future marketing campaigns. the first audience is millennial females. designing advertisements and structuring campaigns to engage millennial females could open a new avenue for the industry in terms of awareness and popularity. millennial females held stronger opinions, both positive and negative, towards posed questions than did males for this study. yet, this gender significance was seen in a previous study by panwar et al. (2010), where women had stronger opinions towards the industry. it could be beneficial for the industry to focus on millennial females as an audience because of their consumer power and opinion leader influence within many families (silverstein & sayre 2009, fromm & garton 2013, brennan 2018). across generations and continents, females are the most powerful economic driving force (silverstein & sayre 2009, brennan 2018). attaining their interest could benefit the wood products industry in heightening awareness of industry practices, values, and their environmental responsibility. altering perceptions held by females currently could positively influence the perceptions of future generations. the second audience the industry may consider focusing on is millennials ages 18-20. this group also held stronger overall opinions towards the industry in this study. these young millennials could be a great audience with which to engage, as they are just beginning their adult lives. some may be starting college and others their work careers. communicating with them at ages 18-20 may allow for their future perceptions and opinions to be more positive towards the wood products industry. improving online campaigns and industry relationships with college programs may serve as great ways to interact with them. there are a variety of potential avenues the wood products industry could use to engage with and reach millennials. traditional sources of information remain viable, but the internet has become a popular way for people to get information. millennials have a close relationship with social media platforms and the industry could use this to their advantage. it may be unreasonable and difficult for the industry to change the visibility of its work in harvesting wood. yet, there is potential for this assumed weakness to be turned into strength for the industry. possible marketing campaigns could be created to educate and emphasize the sustainable initiatives that the industry has taken. large promotional boards could be placed near harvested forest sites explaining where the trees went, what products they are destined to create (lumber, etc.), and how the cleared site will recover in a short time. millennials agreed they would like to know more about the environmental friendliness of the industry, and this is a potential avenue to educate them. the results of the study can serve both industry and academia in a variety of functions. the wood products industry can use the results to build positive relationships with these current and future consumers. the results could also be used to strategize on how to create effective marketing campaigns or design relevant products the consumer will purchase. other industries related to wood products may also find value in the results of this stout et al. — millennial generation perceptions surrounding the wood products industry 35 study. in the academic world, these results can function as a foundation for future studies 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2012. older adults and internet use. retrieved from https://www.pewinternet.org/2012/06/06/ older-adults-and-internet-use/. about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank about:blank abstract this study compares the discourse surrounding bioenergy with carbon capture and storage (beccs) and sustainable aviation fuel (saf) across two media: social media and academic literature. through an automated content analysis of twitter/x posts (n = 11,314) and peer-reviewed articles (n = 140), we identified significant differences in the prevalence of techno-optimism, techno-skepticism, and engagement with critical issues related to socio-environmental impacts and technological uncertainty for these bioproducts. the findings reveal that social media content is generally more optimistic and less critical of these technologies compared to the academic literature, with a notable lack of discussion on the potential social and environmental consequences. furthermore, our analysis highlights a greater polarization of views in relation to beccs, with both techno-optimism and techno-skepticism being more prominent across both media. the study emphasizes the importance of effective science communication, balanced evaluations of risks and benefits, and closer collaboration between academia and businesses to foster a more informed and nuanced discourse on disruptive technologies in the bioeconomy. our findings also emphasize the need for scholars and businesses operating in the biomaterials and bioproducts industry to adopt a critical approach to media literacy. keywords: bioenergy, sustainable aviation fuels, bioenergy with carbon capture and storage, social media, twitter/x. bioenergy discourse: a comparison across media and technologies 1 department of wood science, faculty of forestry, university of british columbia. 2900 2424 main mall, vancouver, bc canada v6t 1z4. email: relnur17@mail.ubc.ca; ph. +1-604-822-4142. 2 department of wood science, faculty of forestry, university of british columbia. 4644 2424 main mall, vancouver, bc canada v6t 1z4. email: hamish.vanderven@ubc.ca * corresponding author acknowledgements: this research was funded by the social sciences and humanities research council of canada (430-2021-00261). bioproducts business 9(3), 2024, pp. 39–52. issn 2378-1394 https://doi.org/10.22382/bpb-2024-003 able. bioenergy involves the creation of energy from organic materials (biomass) that have a lower carbon footprint and can be regenerated more quickly than fossil fuels. amongst the different forms of bioenergy, two have emerged as potentially critical for addressing greenhouse gas emissions from energy production and transportation: bioenergy with carbon capture and storage (beccs) and sustainable aviation fuel (saf). beccs is a mode of energy production that involves, first, converting biomass (such as wood chips or agricultural residues) into energy through combustion, gasification, or anaerobic digestion. during bioenergy production, carbon dioxide (co2) emissions are captured and then transported and stored underground in geological formations where they are permanently sequestered. beccs has been called a negative emissions technology (net) insofar as it involves the active removal of co2 from the atmorawie elnur 1 and hamish van der ven 2 * 1. introduction efforts to create energy without fossil fuels have emerged as central pillars of humanity’s effort to mitigate climate change impacts (hanssen et al., 2020). bioenergy production is one of the most promising means of producing energy for applications where wind, solar, and other renewable sources are not vimailto:relnur17@mail.ubc.ca mailto:hamish.vanderven@ubc.ca 40 bioproducts business 9(3) 2024 at the core of all of these challenges are issues of public perception (bellamy et al., 2019). public preferences form the bedrock upon which policymakers can provide support and incentivization needed to upscale these technologies (gössling & lyle, 2021). absent widespread public agreement that beccs and saf are safe and sustainable, decision-makers lack the foundation of political legitimacy necessary to incentivize their development and deployment (mccormick, 2010). increasingly, public perceptions of bioenergy and other disruptive technologies are shaped by dominant discourses on social media (løkke et al., 2021). platforms like twitter/x serve as media through which industry boosters, skeptics, scientists, and the lay public exchange ideas about the risks and benefits associated with saf and beccs. for example, environmental groups have taken to twitter/x to call for the uk government to scrap plans to pay billions in subsidies to a drax power plant burning wood pellets in north yorkshire (ambrose, 2024). for its part, drax has responded on social media by touting its role in decarbonizing the uk’s heavy industry. thus, it is vitally important to understand which ideas are shared on social media and how social media content aligns with the prevailing expert consensus on the advantages and disadvantages of these technologies. to this end, this study explores public perceptions of beccs and saf in comparative context. our objectives were to, first, understand how beccs and saf are discussed on social media in comparison to the academic literature, and second, gauge the variation in levels of optimism and skepticism across technologies and media. we addressed these objectives through an automated content analysis applied to a novel dataset of historical twitter/x posts (n = 11,314) and peer-reviewed academic articles (n = 140) related to beccs and saf. we begin by identifying two opposing narratives on bioenergy – techno-optimism and techno-skepticism – and explaining how they are applied to beccs and saf. next, we address key differences between social media and academic literature in discussing bioenergy. following this, we explain our data and methods before diving into our results and explaining how they relate to extant literature. we conclude by discussing the implications of our findings for scholars and bioenergy businesses. sphere. nets are critical to limiting global average temperature increase to no more than 1.5 degrees celsius by the end of the century, as stipulated under the paris climate agreement. saf encompasses biofuels made from biomass like agricultural residues or other renewable feedstocks (sacchi et al., 2023). saf is considered a “dropin” fuel insofar as it can be blended with conventional jet fuel without requiring modifications to aircraft. saf helps mitigate co2 emissions from aviation through the absorption of co2 by biomass during its growth phase, which offsets emissions produced when the fuel is burned. by some estimates, the use of saf could reduce the life cycle emissions of jet fuel by 25% in comparison to fossil fuel (gonzalez-garay et al., 2022). addressing emissions from aviation is critical, given that the sector accounts for 2.5% of global carbon emissions (friedlingstein et al., 2019). both beccs and saf can be usefully conceptualized as disruptive biotechnologies insofar as they are intended to disrupt well-established businesses, products, or services, principally, the fossil fuel sector (taeihagh et al., 2021). similar to other disruptive technologies (e.g., generative artificial intelligence, cryptocurrencies, autonomous vehicles, etc.), beccs and saf offer both advantages and disadvantages. both offer the prospect of reducing carbon emissions from emissions-intensive sectors of the economy while making better use of waste products. however, both also come with enormous risks related to cost, scalability, and implications for land use change to supply adequate biomass (uludere aragon et al., 2023; zhao et al., 2024). while many technological barriers remain, the primary barriers to broader utilization of beccs and saf are political. both beccs and saf depend upon the creation of favourable market conditions by governments and international organizations. both technologies require large outlays of new capital to build infrastructure like carbon capture facilities and refineries. both technologies are also less costefficient than conventional fossil fuels, thus market instruments like subsidies and carbon pricing are critically important to increasing uptake. lastly, both technologies are also accompanied by considerable amounts of regulatory uncertainty about underground storage or international production standards (stenström et al., 2024). elnur and van der ven — bioenergy discourse: a comparison across media and technologies 41 2. theoretical background 2.1 the tension between techno-optimism and skepticism related to beccs and saf the discourse surrounding beccs and saf in the academic literature and on various social media platforms has become a battleground for contrasting viewpoints. at the heart of this discourse is a fundamental debate between techno-optimists and technoskeptics. this is a debate that harkens back to the industrial revolution in late 18th century europe, but has resurfaced in recent years as advances in artificial intelligence, gene editing, and autonomous vehicles have prompted renewed public discourse about the role of technology in human society. in academia, techno-optimism and skepticism have emerged as useful concepts for illustrating the tension between different perspectives on technology and sustainable development (buchanan, 2024). techno-optimists champion beccs and saf as beacons of hope, lauding their potential to not only curb carbon emissions but also usher in a new era of sustainable energy production. they envision a future where beccs can achieve negative emissions, while saf revolutionizes the aviation industry, providing a viable alternative to fossil fuels (asayama & ishii, 2017; azar, 2011; fuss et al., 2014; jaschke & biermann, 2022). both technologies are viewed by optimists as having the potential to decouple economic growth from environmental impacts, thereby skirting thorny debates about flying less or reducing energy consumption (king, 2021). conversely, techno-skeptics approach beccs and saf with a discerning eye, raising concerns about the feasibility, scalability, and unintended social and environmental consequences of these technologies. techno-skeptics can be usefully divided into those with technological concerns and those with broader social or environmental concerns. for saf, technological uncertainties are focused on the scale and pace of infrastructure development, including retrofitting existing facilities and building new ones (chiaramonti, 2019). for beccs, technological concerns centre around how securely co2 can be stored underground, the potential for leaks, and the long-term monitoring of storage sites (anderson & peters, 2016; low & schaefer, 2020). in terms of broader social and environmental concerns, both technologies have the potential to be major contributors to food insecurity insofar as they require harvesting biomass from arable land (calvin et al., 2021; hasegawa et al., 2020; smith et al., 2013). the large-scale cultivation of bioenergy crops for both technologies could compete with food production and leave marginalized individuals dependent on expensive and unreliable food imports. there are concerns that the increased attractiveness of certain bioenergy crops could drive down local food production, significantly increase food prices, lead to the eviction of poor people from their lands, and even destroy rainforests and other sensitive ecosystems to make way for bioenergy plantations (arevalo et al., 2014; gamborg et al., 2012; kline et al., 2017). both technologies also face scrutiny for contributing to land-use change, particularly in the global south, where the majority of biomass is projected to be harvested (jaschke & biermann, 2022). despite the potential for bioenergy feedstocks coming from sustainable sources like industrial residues and waste products, increased use of forest products or land use change for bioenergy might indirectly intensify the demand for natural forests and drive higher harvest rates globally (popp et al., 2014). as one author notes: “the global land areas needed for the deployment of beccs by 2100 have been estimated to range from 380 to 700 mha. the upper bounds correspond to three times the world’s harvested land for cereal production, twice the current water use for agriculture and 20 times the current us annual fertilizer use” (jones & albanito, 2020). a key aim of this study is to advance understanding about how the debate between techno-optimists and techno-skeptics plays out across different media and technologies and what implications this discourse holds for the future of bioenergy writ large. to this end, we utilize the extant literature on techno-optimism and skepticism to code content across social media and academic literature. 2.2 differences between social media and academic content social media and academic publishing are both media through which research on beccs and saf is shared with the wider public. however, as modes of scientific communication, they are vastly different. academic journal articles, books, and other scholarly publications are targeted at an audience 42 bioproducts business 9(3) 2024 that is both smaller and better informed on the topic than the lay public (shapin, 2005). the textual format for such content is longer and allows greater room for nuance and substantiating evidence. the lag time in scientific publishing often means that academic content is behind the pace of discourse on emergent technologies (dong et al., 2006). by contrast, social media reaches a broader and more diverse audience, encompassing both experts and non-experts. the format of social media content is shorter (especially on twitter/x) and allows for a diversity of communication formats, including audio, video, and imagery (zeng et al., 2021). the lag time on social media is virtually nonexistent and content often skews towards immediate reactions to topical phenomena (park & rim, 2020). taken together, the differences in the mode of scientific communication mean that we might expect to see different types of content related to beccs and saf on social media versus in academia. however, the differences in media extend beyond just format. there are also marked cultural, sociological, and political differences that separate social media from academic publishing. first, the criteria for what information is widely seen differ in meaningful ways. academic content is more likely to be read when it upholds the highest standards of scientific rigour and makes well-substantiated claims on knowledge. content is primarily disseminated by its authors. conversely, social media algorithms promote content that creates feelings of anger or contention (berger & milkman, 2012; cinelli et al., 2021). often, this content is shared or re-posted without the original author's knowledge or consent. these differences create incentives for different types of content in each medium. second, the two media differ in their incorporation of concepts and debates associated with environmental justice. past research has found that some academic literatures, particularly those focused on emerging technologies, take a piecemeal approach to incorporating environmental justice issues (clark & miles, 2021). by comparison, social media platforms, and twitter/x in particular, have been linked to increased discourse about environmental justice issues related to energy and climate change (capoano et al., 2024; fang et al., 2023). thus, we may expect to observe some variation in the nature and amount of content related to environmental justice issues. third, there are significant differences in who produces content across both media and the extent to which powerful interest groups can monopolize content production. social media content (and twitter/x in particular) tends to be dominated by a handful of very prolific users (hughes, 2019). moreover, since the business model of the most widely used social media platforms depends on advertising sales, content produced or promoted by businesses tends to be algorithmically favoured. by contrast, there is less evidence to suggest that corporate interests dominate the production of academic content in the same way. while well-resourced researchers are certainly more prolific, they are not necessarily more widely read or cited. the differences between these two media inform our analysis of the data. broadly, we seek to reify, refute, or add nuance to existing conceptions about how social media differs from academic publishing. 3. methods 3.1 data we drew data from two sources: safand beccsrelated posts on twitter/x and relevant academic literature. we focused on twitter/x in lieu of other social media platforms for two reasons. first, twitter/x is the most commonly used platform focused on news and current events (robertson, 2023). thus, we expected it to be the most active network in terms of discourse about bioenergy. second, twitter/x is a public, text-based platform as opposed to more private, visual platforms like instagram and tiktok, where user videos and images are often unavailable to researchers. practically, this makes twitter/x more conducive to content analysis. to obtain twitter/x data, we used a third-party scraping service named tweetbinder. we chose a 10-year time period for analysis to allow for enough variation in content and volume of tweets related to the topic. the search parameters for the twitter/x scraping process consisted of the following guidelines: 1. tweets must include a combination of “beccs” and “carbon” or tweets must include “sustainable aviation fuel.” 2. tweets must exclude $ccs and $saf. this was done to avoid financial market-related tweets and unrelated ticker names. elnur and van der ven — bioenergy discourse: a comparison across media and technologies 43 table 1. twitter/x data collection search terms total tweets (n) original contribs. (n) likes of mostliked tweet (n) earliest tweet tweets per user most active poster (stakeholder category) top hashtag ((beccs) and (carbon)) or (bioenergy carbon capture and storage) 5,657 2,462 2,517 03/07/2012 2.3 @draxgroup (industry) @biofuelwatch (ngo) @peters_glen (academic) @empathiser (activist) @ddwg (industry) #beccs sustainable aviation fuels (saf) 30,192 11,641 3,517 02/17/2012 2.59 @biofuelsmag (industry media) @biofuelscent (industry media) @poandpo (media) @biomassmagazine (industry media) @50skyshades (industry media) #aviation 3. the chosen date range for tweets must fall between 12/31/2011 and 12/31/2022. 4. only original tweets are included (no retweets). we did so to minimize the amount of bot activity skewing our data, since bots are known to retweet content with little audience but other bots (han et al., 2022). 5. only tweets in english are included. data was gathered on feb. 1 2024. this search strategy yielded n = 5,657 tweets related to beccs and n = 30,192 tweets related to saf. to ensure parity between beccs and saf, we randomly selected 5,657 tweets from the saf search results for inclusion in our analysis. descriptives are presented in table 1. we gathered academic literature related to beccs or saf through a search on the web of science core collection database. web of science was utilized for its coverage of high-quality peer-reviewed academic literature. to maintain a fair comparison between platforms, the search terms used for twitter/x and web of science were identical, with the same specified date range, between 12/31/2011 and 12/31/2022. academic journals were then sorted by top citations, and the top 70 articles were downloaded as pdfs. citation counts were specifically considered as they could serve as a reliable indicator of a publication’s influence and relevance within the academic community. a python script was then used to convert the pdfs into a homogenous digital format (i.e., text files) which made the articles easily readable for the automated content analysis. descriptives are presented in table 2. 3.2 analysis the analysis of historical twitter/x data and academic articles was made using automated content analysis calibrated on an assessment framework used to identify discourse related to techno-optimism and techno-skepticism (and sub-variables) in social media posts about beccs and saf. the content analysis was implemented with ctrlfindr, a natural language processing and content analysis toolkit written in python (scartozzi, 2024). first, the text was preprocessed and cleaned. next, we created a taxonomy using an inductive and deductive approach. drawing on relevant literature, we created a list of 20 variables related to different components of techno-optimist/ techno-skeptic arguments about beccs and saf. the variables and proxies chosen ranged from the socioeconomic and environmental implications of technology adoption, to techno-economic feasibilities, to a range of equity and justice considerations, to strings of regions and communities associated with technology development and feedstock sourcing. finally, relevant content was identified and sorted table 2. web of science data collection search terms: sorted by: number of documents bioenergy carbon capture and storage highest number of citations 70 sustainable aviation fuels highest number of citations 70 44 bioproducts business 9(3) 2024 into variables using ctrlfindr’s rule-based algorithms, which run on this predefined taxonomy using a list of search strings compiled by the researchers. the content analysis evaluated each sentence individually to determine if a document or tweet contained one of the 20 predefined variables or the 73 proxy variables in the assessment framework. each variable and proxy was associated with a unique search string. for instance, sentences in an academic journal or a tweet mentioning land-use changes (variable 2) could include a search string falling under proxies such as: (2.1) deforestation; (2.2) soil degradation; (2.3) land-use change; or (2.4) land-use implications. a full list of the variables, proxies, and search strings used in the content analysis is available upon reasonable request from the corresponding author. the search strings for each proxy were developed using two methods. first, gpt-4 aided in generating lowercase words or n-grams relevant to each variable. we consistently used a prompt for all search strings in the taxonomy, with the only modification being replacing the variable in question with another one. an example of the gpt-4 prompt is as follows: “i am developing a taxonomy for a natural language processing (nlp) content analysis algorithm. the taxonomy is about emerging technologies in the bioenergy space. more specifically, the content analysis investigates the implications of using biofuels in sustainable aviation and the application of bioenergy to carbon capture and storage. make an exhaustive list of lowercase words or n-grams that can be used by my algorithm to find words related to <variable>.” second, we employed a corpus analysis toolkit called antconc to analyze the corpus of tweets and documents related to beccs and saf. antconc facilitated the identification of word clusters and n-grams highly associated with the search strings in my taxonomy. additionally, it helped us include co-occurrences in our taxonomy of words commonly found in clusters with the search strings we provided. the presence of a proxy was evaluated by searching for specific constructs, namely the presence of particular words or co-occurring words. through this approach, the content analysis generated a codebook indicating the extent to which documents engaged with 20 variables: (1) biofuels; (2) land-use changes; (3) conflict; (4) policy and regulation; (5) equity and justice; (6) environmental impacts; (7) technology development; (8) economic costs; (9) feedstock availability; (10) techno-skepticism; (11) techno-optimism; (12) regional impacts of biofuel production; (13) food vs. fuel debate; (14) technological uncertainty; (15) climate change; (16) technology development discussed in relation to social, economic, political, or environmental impacts; (17) heat and power generation; (18) social implications; (19) civil society activism opposing biofuels; (20) corporations engaged in biofuel production. given that both the data and the code used to run the analysis are open source, the method aims to be fully replicable (scartozzi, 2024). we then compared the prevalence of different variables between media and technologies. prevalence was measured as the percentage of tweets/academic documents that contained a variable or its proxies. we used this comparison of variable prevalence to draw distinctions between beccs and saf within and across social media and academic literature. 4. results 4.1 social media differs markedly from academic content across both technologies both technologies demonstrated a marked disjuncture between social media and academic content (see figures 1-4). for beccs, the potential for climate change mitigation was one of the only variables equally present across both datasets. most other topics barely overlapped. for example, equity and justice concerns were discussed in 66% of beccsrelated academic literature, whereas those considerations were only echoed in a mere 1% of tweets (n = 49). of those tweets, energy access accounted for 40, while indigenous rights, disproportionate impacts, and environmental justice were discussed in the remaining 9 tweets. a similar pattern distinguished social media and academic content related to saf. the food vs. fuel debate (variable 13) appeared in a mere 0.2% (14) of 5657 tweets, whereas the same variable appeared in nearly 50% of saf-related academic literature. another stark contrast is the discussion of technology development in relation to social, economic, political, and environmental impacts (variable 16). this topic was present in 54% of saf-related academic literature, compared to only 0.19% (11) tweets. elnur and van der ven — bioenergy discourse: a comparison across media and technologies 45 figure 1. academic content related to beccs by variable figure 2. academic content related to saf by variable. 46 bioproducts business 9(3) 2024 figure 3. social media content related to beccs by variable. figure 4. social media content related to saf by variable. elnur and van der ven — bioenergy discourse: a comparison across media and technologies 47 the paucity of mentions about the food vs. fuel debate on twitter/x stands in stark contrast to its abundance in academic documents related to beccs and saf, with beccs documents engaging with the issue in 72% of documents, and saf literature discussing it in 48% of documents. this suggests a shared concern among scholars over the potential trade-offs between using biomass for energy production and its implications for food security. regarding land-use changes (variable 2), both beccs and saf-related literature devoted considerable attention to this topic. in beccs documents, land-use changes were discussed in 85% of documents, with deforestation and broader land-use implications accounting for 46% and 72% of documents, respectively. literature related to saf similarly addressed land-use changes in 64% of documents, with deforestation mentioned in 17% of documents and broader land-use implications in 34% of documents. another notable similarity found between social media corpora was the conspicuous absence of technological uncertainty discussions for each technology. only 4 tweets discussed technological uncertainty for saf and only 16 mentioned the variable in beccs-related tweets. given the prominence of retrofitting challenges discussed in academic literature surrounding saf and the long-term storage and monitoring challenges associated with beccs, it is interesting to note the absence of these topics on twitter/x. one potential source of the disparity in topical focus pertains to who is involved in bioenergy discourse on twitter/x in comparison to academia. as table 1 illustrates, 4/5 of the most active twitter/x posters on saf were industry media with strong financial ties to the industry; 2/5 of the most active posters on beccs were industry sources. the remainder was a mix of ngos, individual activists, and academics. the increased presence of industry voices on social media may, in part, explain the paucity of technoskepticism on twitter/x. it may equally explain some of the variation in skepticism between beccs and saf discussed in the next section. taken together, the results illustrate the dearth of techno-skeptic content on twitter/x and the extent to which social media is largely decoupled from the academic literature in terms of discourse. the prominent critiques of both technologies that are extensively covered in academic articles are scarcely present in social media content. 4.2 beccs content is both more optimistic and skeptical, across media a notable difference between the academic literatures on beccs and saf was the relative presence of techno-skepticism (variable 10) in beccs and its comparative lack of representation in the saf literature. variable 10 occurred in 39% of the documents on beccs and only 10% of documents on saf. similarly, techno-optimism (variable 11) appeared in 86% of beccs-related documents, whereas saf-related documents only mentioned it in 54% of documents. however, the disparity widens significantly when considering the frequency of the variable (how many times it was mentioned as a whole across a corpus). techno-optimism was mentioned 1143 times across beccs-related academic documents, over 10 times more frequently than the 108 times it appeared in saf-related academic documents. this potentially indicates a much greater degree of optimism for the outcomes and benefits of technological developments within the beccs research community. a similar pattern existed in social media content related to beccs and saf. on twitter/x, there was more optimism about beccs as a technology than saf. in total, techno-optimism (variable 11) appeared in 108 saf-related tweets, compared to 885 beccs-related tweets. this discrepancy suggests a greater degree of confidence regarding the outcomes of technological developments within the beccs community when compared to saf. similarly, the examination of techno-skepticism (variable 10) revealed a notable contrast. sustainable aviation fuel tweets rarely discussed techno-skepticism, with only 1 mention, in comparison to the prevalence of the variable in 14 beccs-related tweets. this, in addition to similar patterns with respect to land use change and technology development in relation to social, economic, political, or environmental impacts, suggests that both optimism and skepticism co-exist in greater frequency within the discourse on beccs. 5. discussion this study has a number of implications for scholarship on beccs and saf, social media as a mode 48 bioproducts business 9(3) 2024 of scientific communication, and discourse about disruptive biotechnologies more generally. in brief, our findings echo previous literature in finding discourse on social media dominated by a relatively small number of prolific users. however, contra existing research, we also found that twitter/x does not necessarily amplify negative or controversial posts and contains a surprising sparsity of discourse on environmental justice issues related to beccs and saf. we also add nuance to past scholarship by illustrating significant variation in how different technologies are communicated across media. we elaborate on these and other points in the subsections below. 5.1 lack of contention about bioenergy on social media many scholars have suggested that social media creates more polarization and that social media algorithms promote content that creates feelings of anger more than nuanced debate (berger & milkman, 2012; cinelli et al., 2021). our findings generally contradict the past findings that social media exacerbates polarization or promotes anger-based content. despite the high prevalence in the academic literature of contentious techno-skeptic topics such as resource conflict, land-use change, and biodiversity loss, these topics were scarcely discussed in saf and beccsrelated tweets. across both technologies, there was more techno-optimism than techno-skepticism in social media discourse. these findings align with past research, which has found that twitter/x discourse can be dominated by a relatively small number of prolific users (hughes, 2019). in this case, it would appear that the bioenergy industry and its supporters have been far more prolific content creators on social media than their critics. the findings illustrate that twitter/x is far from an equal public square; rather, some interests are better positioned to monopolize the discourse (labonte & rowlands, 2021). 5.2 dearth of environmental justice content related to the global south across media past research has found that academic literature often marginalizes environmental justice issues, whereas social media is a fertile domain for environmental justice discourse (clark & miles, 2021; fang et al., 2023). our findings suggest that neither medium comprehensively represents the environmental justice issues associated with beccs and saf. both academic literature and social media frequently contained references to the “global south,” a region that stands to be disproportionately affected by the need to produce biomass to scale-up beccs and saf. paradoxically, mentions of the global south were not accompanied by discourse on the issues that disproportionately affect it, namely, land grabbing, food insecurity, land rights disputes, agricultural land conversion, deforestation, water consumption, pollution, and impacts on indigenous, rural, and marginalized communities. the global south was mentioned, but the issues that affect it were not. apart from food security, which appeared in 66% of beccs academic literature and 45% of saf academic literature, the remaining variables appeared in less than 20% of academic documents, with some, such as land grabbing in indigenous communities, appearing in none. the figures were even lower for social media. the fact that the discourse about the global south omitted most environmental justice issues suggests a striking lack of skepticism about the socio-environmental impacts of beccs and saf that transcends media and technologies. 5.3 discourse is mediated by technology and not just medium there is a tendency in the literature to treat bioenergy technologies as fundamentally similar. after all, both face challenges with respect to technological uncertainty (uludere aragon et al., 2023; zhao et al., 2024). both also confront socio-environmental challenges with respect to sourcing biomass (azar, 2011; løkke et al., 2021). however, our findings illustrate that these concerns are mediated by the nature of the technology, as well as the medium of discourse. on the whole, beccs discourse was characterized by more techno-optimism, potentially due to the centrality of the integrated assessment model (iam) research community on both social media and in academia. at the same time, beccs discourse also contained significantly more skepticism across media. variables related to tech skepticism appeared in 39% of the academic documents on beccs and only 10% of documents on saf. the disparity in the discourse between technologies suggests that other variables, beyond the medium of communication, play an important role in shaping discourse. while elnur and van der ven — bioenergy discourse: a comparison across media and technologies 49 understanding the cause of this variation is beyond the scope of this research, one possibility is that beccs is at a different stage of technological and market maturity compared to saf. hence, there is more uncertainty and contention about its positive and negative impacts. whatever the cause for variation, our findings illustrate the need to treat emergent biotechnologies as distinct phenomena, with each one provoking distinct discourses in the academic literature and on social media. 6. conclusion bioenergy has emerged as one of the leading solutions to an escalating climate crisis. yet, the fate of technologies like beccs and saf hinges on public opinion and how these technologies are discussed and portrayed in academic literature and on social media. optimistically, discourse that foregrounds the promise of negative emissions technologies (beccs) and highlights the ability to decarbonize the hard-to-abate aviation sector (saf) could create grounds for greater technology deployment. governments and investors may be more inclined to build the infrastructure needed to scale up these technologies if they believe they enjoy broad public support. skeptically, discourse that highlights the serious environmental and social consequences of bioenergy production, including biodiversity loss, threats to food security, and increased deforestation, could sour public opinion and severely restrict the deployment of these technologies. in short, discourse is important for the future of bioenergy. our findings highlight a serious disjuncture between academic discourse on bioenergy and social media discourse on the same topic. briefly, our findings illustrate the degree to which social media can misrepresent key issues about disruptive technologies and privilege certain discourses over others. whereas academic discourse grapples with the technological uncertainties and socio-environmental challenges that accompany beccs and saf, this same techno-skepticism is largely absent on twitter/x. this is problematic given the larger audience of social media vis-à-vis academic work and the growing influence of social media over policy-makers and investors (ceron & negri, 2016; sul et al., 2017). if key decision-makers are being presented with an overly sanguine perspective on bioenergy – one that ignores major concerns about the technological uncertainties, land-use, and social justice impacts of these technologies – then they risk making misinformed decisions. from a scholarly perspective, the lack of engagement with critical issues such as equity, justice, and the food vs. fuel debate on social media platforms like twitter/x highlights the need for more effective science communication strategies. academics must find ways to bridge the gap between their research findings and public discourse, ensuring that the broader societal implications of these technologies are not overshadowed by techno-optimism. from a business standpoint, the findings suggest that companies operating in the bioeconomy must be cautious when relying on social media as a barometer for public opinion or as a source of information about these technologies. the disconnect between social media and academic discourse could lead to misguided business decisions if not properly contextualized. instead, businesses should actively engage with the academic community to gain a more comprehensive understanding of the complex issues surrounding beccs and saf. the prominence of techno-optimism in beccsrelated content across both media indicates a potential opportunity for businesses to capitalize on the positive sentiment surrounding this technology. however, companies must also be prepared to address the concerns raised by techno-skeptics and ensure that their operations prioritize sustainability, social responsibility, and environmental justice. to navigate these challenges effectively, businesses in the bioeconomy should foster closer collaborations with academia, policymakers, and civil society organizations. by working together to develop evidence-based strategies and communicate the benefits and risks of these technologies to the public, businesses can help create a more informed and balanced discourse around beccs and saf. 7. study limitations and future research there are a number of limitations to our approach that warrant mentioning. first, the decision to focus on one social media platform, twitter/x, likely conditions our results. social media platforms have unique user demographics, norms, and cultures. the unique demographics of twitter/x users – predomi50 bioproducts business 9(3) 2024 nantly affluent, urban, american, and male – likely condition the types of discourse we identify on the platform. second, there are challenges to attaining search strings in the taxonomy suitable for a content analysis applied to both an academic corpus and a social media corpus. the challenge lies in finding lay terms for more technical words found in academia that would also be commonly used on social media. thus, we may underrepresent some topics on social media due to an inability to locate a counterpart to a more technical, academic term. third, there is a possibility of sample bias in our selection of academic literature. we included only the top 70 most-cited articles for both saf and beccs, inferring these to be the most read or influential sources of information. however, using citation counts could introduce bias towards which types of articles are included in our dataset, given that institutional affiliation, sex, nationality, and race have all been shown to influence citations (ray et al., 2024). hence, there is a risk that our sample excludes important, but under-cited, research on beccs and saf. this paper opens up a number of avenues for future research. first, future research should move beyond cross-sectional analysis and examine changes to discourse over time. one way of doing this would be to use an event analysis to understand how important bioenergy developments (e.g., new regulations or specific controversies) affect the discourse on bioenergy on social media and in academia. another avenue for further research would be to apply the same research design to different social media platforms. this approach would enable researchers to explore differences in bioenergy discourse across platforms such as twitter/x, facebook, reddit, and instagram. a better understanding of the variables shaping bioenergy discourse will increase understanding of the critical role of public discourse in shaping the uptake and legitimacy of all forms of bioenergy. 8. references ambrose, j. 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(2024). trade-offs in land-based carbon removal measures under 1.5 °c and 2 °c futures. nature communications, 15(1), 2297. https://doi.org/10.1038/s41467-024-46575-3 abstract the implementation of automated solutions in manufacturing commonly involves substantial investments in terms of both human and financial resources, and it exposes the firms to the risk of substantial losses if the expected benefits fail to materialize. it is therefore important that decisions related to automated solutions are well supported. the maturity level differs across industry sectors, and the wood products industry is lagging behind in some respects. the purpose of this paper is to explore the potential challenges the wood products industry is facing related to automation decisions when designing manufacturing systems and suggest strategies that can support such decisions, with inspiration from another industrial sector. a multiple case study was conducted, involving a development project carried out in the wood products industry and another in the presumably more mature automotive industry. automation decisions were studied in the different phases prior to the implementation of the physical manufacturing system. the findings showed both similarities and differences between the development projects. for example, in both development projects, it was decided to reach out to automation suppliers for automation technology acquisition. however, the decision on to which degree to collaborate with the automation suppliers differed. based on the similarities and differences pointed out, ideas were put forward that might support the wood products industry. keywords: manufacturing system design, development project, manufacturing technology, decision-making, empirical research automation decisions in manufacturing system development projects: the wood products industry perspective 1 project manager, sogeti jönköping, sweden 2 department of industrial product development, production and design, school of engineering, jönköping university, sweden 3 jönköping international business school, jönköping university, gjuterigatan 5, box 1026, 551 11 jönköping, sweden * corresponding author. email: maag@ju.se acknowledgements: our thanks are due to anders johansson for contributing to the design of the empirical studies and the data collection. we also acknowledge the project prowood funded by the knowledge foundation and the participating companies. roaa salim1, kerstin johansen2, agostino manduchi3*, kristina säfsten2 bioproducts business 7(1), 2022, pp. 1–12. issn 2378-1394 https://doi.org/10.22382/bpb-2022-001 1 introduction the term “automation” has wide coverage in the manufacturing context. automation can in principle refer to automated solutions supporting the manufacturing system, such as advanced manufacturing technologies (amt), robotics, and computerized numerical control machines (cnc). investments in automated solutions are commonly undertaken to enhance manufacturing performance and are becoming increasingly critical to surviving global competition (díaz-reza et al., 2019). such investments are ideally preceded by a manufacturing system development project, which includes the design and industrialization of a manufacturing system (bellgran & säfsten, 2010). a well-designed manufacturing system can greatly benefit the competitive position of a manufacturing company (bennett, 1986). the design process entails several coordinated decisions related to areas such as automation, organization, product planning & control, facility location, human resources and quality management (salim, 2021), which should all be based on the company’s manufacturing strategy (hill & hill, 2009; jonassen, 2012; miltenburg, 2005). the quality of the decision process has a great impact on the results of investments in automated 2 bioproducts business 7(1) 2022 tential challenges that the wood products industry is facing in connection with the design of automation manufacturing systems and suggest possible solutions. the paper considers the implementation of two manufacturing automation projects, carried out in the wood products industry and in the automotive industry. the automotive industry is viewed as a valuable source of possible ideas due to the greater experience in the area of automation that the firms in the sector have accumulated in the past few decades, also under the pressure of strong workers unionization and high wage levels (pavlínek, 2020). 2. theoretical background 2.1 manufacturing system design the design of manufacturing systems must be approached from a holistic perspective. the reason is that changes in one part of the manufacturing system can affect other parts (bauer et al., 2020). this situation substantially increases the complexity of the task of designing manufacturing systems, since it often requires the involvement of multiple functions within the company. structured and inclusive processes aimed at designing manufacturing systems are thus of primary importance (bellgran & säfsten, 2010; bennett & forrester, 1993). in general, manufacturing system design can be presented as a generic stage-gate process, involving several phases and related activities (bellgran & säfsten, 2010). although the accounts of the process of manufacturing system design that can be found in the literature present some differences in their structures and in the terminology used, it is possible to identify some common elements. for example, the literature agrees that the design process includes, among others, a development plan, the statement of the requirements specification, and the generation of a system solution (andersen et al., 2017). in the case of the wood products industry, the deliveries from the log yard are also an important element of the process (trzcianowska et al., 2019). bellgran & säfsten (2010) present a structure for the design process consisting of five phases: (1) background study, (2) pre-study, (3) design of conceptual manufacturing systems, (4) evaluation of conceptual manufacturing systems, and (5) detailed design of chosen manufacturing system. figure 1 summarizes some typical solutions (abdel-kader et al., 2018). considering the large investments typically required by the implementation of automation projects and the extensive bearing of such projects, it is then critical to provide adequate support to such decisions (bai & sarkis, 2013). the literature nevertheless shows that in practice, automation decisions often follow unstructured processes and are often based on ad hoc criteria and on sheer intuition (lindström & winroth, 2010). the wood products industry, defined as the industry that refines wood and transforms it into products such as furniture (sandberg et al., 2014), as virtually all industry sectors, could benefit from the opportunities offered by automated solutions under the “industry 4.0” paradigm (culot et al., 2020; atzori et al., 2017), possibly also in the context of coordinated efforts such as the initiative industry 4.0 in germany (gilchrist, 2016; kagermann et al., 2013). initiatives of this type have led to a massive digitalization of production processes and to the diffusion of the technologies related to the (industrial) internet of things, which can affect multiple areas besides automation, such as virtualization, integration, traceability, flexibility, and energy efficiency (frank et al., 2019). the pace of the innovative process related to the transition to industry 4.0 has not been uniform across industry sectors. for example, in the health, automobile, and transportation sectors, both already established firms and start-ups firms have been heavily engaged in innovative activities and production processes (bongomin et al., 2020; koh et al., 2019). by contrast, the wood products industry is still characterized as a labor-intensive sector (ratnasingam et al., 2019), due also to limited experience from manufacturing system development initiatives (abu et al., 2019). from a manufacturing system perspective, the wood products industry, with its production layouts, also differs substantially from the hardwood sawmill industry, which is more similar to process industries and in which technologically advanced and automated solutions have been used for many years (sandberg et al., 2014; young & winistorfer, 1999). studies that provide examples of how other industries have pursued automation investments can greatly help the structural transition of the wood products industry to a more up-to-date model (de boer et al., 2019; landscheidt & kans, 2016). the purpose of the present paper is to explore the posalim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 3 figure 1. some typical activities in the manufacturing system design process. 4 bioproducts business 7(1) 2022 table 2. items to be inspected in the interior of the building. # evidence of deterioration 0 1 2 comments 1 clt panels exposed to natural elements 2 clt panels exposed to condensation 3 lack of finishing (plain, varnish, stain, paint, etc.) rating scale: no evidence (0), some evidence (1), very evident (2). activities in each phase during the design process; each phase is dependent on the completion of the previous one (bellgran & säfsten, 2010; wu, 1994). the activities in the design process often require the involvement of different human resources, both internal and external to the firm. three main approaches to manufacturing system design are identified in the literature (bellgran & säfsten, 2010): (1) the concept-generating approach; (2) the conceptdriven approach; and (3) the supplier-driven approach. in the concept‐generating approach, the manufacturing company is involved, and thus, responsible for all activities in the different phases prescribed in the general manufacturing system design process (figure 2a). in the concept-driven approach, the manufacturing system design is carried out by the manufacturing company (figure 2b). however, the design process is driven by external factors such as a pre-existing design or the interests of an actor (engström et al., 1998). in the supplier-driven approach, part of the design, or possibly most of the design of the manufacturing system, is handed over to automation suppliers (figure 2c). when the supplier-driven approach is so extensively used that all design activities are outsourced, the manufacturing system design process becomes a “black box” from the perspective of the manufacturing company. in these situations, the manufacturing company should still maintain certain in-house competencies to fully benefit from their interactions with the suppliers (von haartman & bengtsson, 2009). despite the importance of working in a structured manner and maintaining competence in-house, regardless of the approach to manufacturing system design, manufacturing companies are experiencing limitations when designing manufacturing systems. previous literature concludes that the design of manufacturing systems commonly is seldom a part of a long-term or strategic approach (bruch, 2012; rösiö, 2012). many companies find it challenging to coordinate the manufacturing system design process and to work in a structured and systematic way (bruch & bellgran, 2013; rösiö & säfsten, 2013). trial and error remain the most frequent way of designing manufacturing systems (european factories of the future research association, 2016). these shortcomings are claimed to be a consequence of the priority given to product design capabilities over manufacturing system design capabilities (bellgran & säfsten, 2010; cochran et al., 2001-2002). in the specific case of automation investments, frohm (2008) points out that one of the main reasons why these types of investments fail is the lack of clearly defined objectives. the success of the projects— which we understand as the perceived consistency with the goals set for them, as we clarify in section figure 2. the approaches to manufacturing system design from the manufacturing company’s perspective (säfsten, 2002). salim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 5 3 below—seems to be systematically related to the capability of planning, understanding the needs, and defining the requirements and objectives. figures 3 and 4 complement figure 2 by highlighting the key differences between the conceptgenerating and the supplier-driven approaches, from the point of view of the present paper. the conceptgenerating approach makes it possible to carry out an all-encompassing analysis of the company’s situation and of its link with the strategic goals, in connection with the exploitation of the opportunities offered by the project. by contrast, in the supplier-driven approach, the reactive mode and the typically limited breadth of the project team can allow the company to make faster decisions, once the decision process is underway; however, it can also hamper the identification of the opportunities offered by the project. adopting the concept-based approach and eliciting focused offers from multiple suppliers may also allow the company to find a better match between the specific requirements of the project and the features of the machinery and the equipment received (bellgran & säfsten, 2010). 2.2 decision-making many approaches to practical decision making exist in the literature. conventionally, there is a distinction between descriptive and normative models. descriptive models provide accounts of actual decision processes followed by people and committees. normative models indicate how the processes should be structured, based on the consistent development of requirements posited as axioms (lehto et al., 2012; davis et al., 2005). models created to provide guidelines that explicitly account for decision-makers’ cognitive and informational limitation are sometimes viewed as a distinct category and labeled as prescriptive (french et al., 2009). the cognitive and informational limitations of human decision-makers are especially relevant in the case of complex decisions (simon, 1955). in situations of this type, decision-makers are likely to resort to formalized routines and/or heuristics, reflecting criteria used to make previous decisions in environments perceived as similar to the one they face on any given occasion (gilboa et al., 2015). such routines may incorporate relatively complex inferential and decisional criteria, suitably adapted to the constraints faced by the decision-maker (gigerenzer et al., 1999). however, they may also incorporate biases that can lead to predictable errors and thus to sub-optimal decisions, even if the account is taken of the decision maker’s informational and computational limitations (kahneman, 2011; tversky & kahneman, 1974). even if we do not impose strong rationality assumptions, a structured decision process of a normative nature can satisfy minimal requirements related to the informational support available for the decisions and the consistency of the decisions made with the company’s overall strategic plans. for example, the process can impose the use of templates and manuals and require the participation of representatives of the different units of a company and thereby guarantee the systematic activity of information-gathering and a more accurate assessfigure 4. an illustration of the supplier-driven approach. figure 3. an illustration of the concept-generating approach. 6 bioproducts business 7(1) 2022 ment of the opportunities and the risks potentially related to a decision. the prescriptive analysis could thus produce an interactive process in which the conclusions based on a given set of assumptions are explored and refined, and the model itself is adjusted and modified as new evidence emerges (french et al., 2009). 3. research methods and material to study automation decisions during manufacturing system design, a multiple case study was carried out (yin, 2018). the unit of analysis was a manufacturing system development project, with automation decisions as an embedded unit of analysis. two development projects of high strategic value were selected, both aiming at new manufacturing plants.1 the first development project, project wood, was carried out at a large swedish wood products company (company wood). company wood consists of several business segments. project wood was initiated to create a new business segment, expanding the company’s range of products. its goal was to endow the company with manufacturing solutions designed to add processing value to sawn timber. the second development project, project auto, was carried out at a large automotive company (company auto). company auto is a manufacturer of heavy vehicles for transportation purposes. project auto was part of the strategic roadmap, focused on introducing new products and radically new solutions to customers, in line with the developments of customer needs and technology and market dynamics. 3.1 data collection semi-structured interviews with open-ended questions served as the main tool for data collection, allowing investigations to be based on, but not limited to, predefined questions (yin, 2018). this procedure provides a reasonable level of flexibility to gain understanding on a complex topic such as decisionmaking. the interviews started with questions about the development project’s purpose and were then narrowed down to questions on the activities and decisions made related to automation, with focus on the challenges of such decisions and how they were supported. in total, 17 face-to-face interviews 1 our confidentiality agreements do not allow us to reveal the identities of the companies. were carried out, each lasting between 31 minutes and 78 minutes. the interviews were conducted with members of both the steering group and the project group, representing different functions within the company (see table 1 for an overview). the same interview guide was used for all respondents. each interview was recorded and transcribed for analysis. the interviews were carried out by two researchers. most of the interviews were performed individually, except for one that was carried out at company auto with two manufacturing representatives simultaneously. in addition to the interviews, data was collected through project documentation, such as project description and motivation, meeting protocols, activity time plan, and automation supplier quotations. the information achieved from the documents provided a solid understanding of the context of both projects. 3.2 data analysis a within-case analysis (merriam, 2009) was carried out first. the procedure suggested by miles et al. (2019) was used, and the data was then analyzed following the three phases: (1) data reduction, (2) data display, and (3) conclusion-drawing and verification. in the first phase, data reduction, the transcripts and notes from the interviews and the project documentation were reviewed. we only considered types of documents to which we were granted access on equal footing at both companies. such documents included project descriptions, organizational charts, activityand timeplans, multiple meeting protocols and requests for quotations. in total, this documentation amounted to approximately 600 pages of written text. the data was then arranged in accordance with the manufacturing system design process prescribed at each company, and the data related to automation decisions were sought. in the second phase, data display, the data was organized in a matrix, which made it easier to draw conclusions. the third phase was based on the patterns identified in the collected data, as well as relating the findings to the literature. afterwards, a cross-case analysis (merriam, 2009) was performed, which enabled the comparison of data between the studied development projects. the data was then arranged in accordance with the manufacturing system design process prescribed at each company, salim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 7 4. research findings in this section, the findings from project wood and project auto are presented. the description of each project includes the activities carried out, decisions made, challenges encountered, and tactics used to support automation decisions made during manufacturing system design. 4.1 project wood the product to be manufactured was a high-volume product with a relatively high level of customization. to manufacture this product, company wood needed to invest in a new manufacturing plant, including automated solutions. during the development process, the management decided to divide project wood into parts: plant 1 and plant 2. plant 1 would serve as a pilot plant, aimed to increase the knowledge on the raw material, finished product, and manufacturing system before the company continued with an investment in a full-scale plant (plant 2). the present study mostly focuses on the design of plant 1. in project wood, a project model was used to guide the development project. it consisted of three phases prior to the implementation of the physical manufacturing system: (1) pre-study, (2) development and verification, and (3) pre-project, described below. 4.1.1 project wood: pre-study a small group was initially formed to explore the activities forward. the group’s focus was the analysis of market opportunities and the exploration of manufacturing system concepts and solutions, including the identification of suitable automation suppliers. the identification of required automated solutions was challenging due to limited knowledge about the manufacturing system to be developed. the ideas were often based on previous knowledge from existing manufacturing systems within company wood, rather on proactive investigation. similarly, the search for suitable automation suppliers was based and the data related to automation decisions were sought. in the second phase, data display, the data was organized in a matrix, which made it easier to draw conclusions. the third phase was based on the patterns identified in the collected data, as well as relating the findings to the literature. afterwards, a cross-case analysis (merriam, 2009) was performed, which enabled the comparison of data between the studied development projects. for the purposes of the present paper, we identify the success of decisional processes with the consonance between the goals and the outcomes of the automation projects, as assessed by the subjects who were interviewed and from whom information was gathered. special attention was paid to clarifying to what extent the initial goals were revised and adjusted in the light of new information and to the involvement of participants in the projects, which plays a key role in the processes of value co-creation related to innovation (barile, et al., 2021). 3.3 research quality the validity of the present study was increased by the joint planning and implementation of it, which helps to reduce researcher bias (denzin, 2009). two researchers collected and examined the data separately and then compared their perspectives. validity was further reinforced through triangulation, utilizing various data collection techniques, including interviews and document analysis. all interviews were audio recorded and transcribed, a measure that allows revisits to the empirical data and reduces the risk of misunderstanding (saunders et al., 2012). detailed descriptions of both cases were provided to ensure external validity (yin, 2018). however, one must note that the findings of a qualitative study might not always be replicable, due to different circumstances. reliability in a qualitative study should rather be based on whether others can see that the findings can be justified by the data collected (merriam, 2009). table 1. respondents from project wood and project auto. steering group project group members project wood six steering group representatives project manager, two marketing and sales representatives, one purchasing representative, one manufacturing representative project auto one steering group representative project manager, one finance and cost control representative, two manufacturing representatives 8 bioproducts business 7(1) 2022 on previous knowledge and experience. moreover, during the pre-study phase, it was decided to hire an external project manager, due to limited resources and lack of in-house competences. when the external project manager was appointed, a formal project organization was created, with a project manager, a steering group and a small project group including people from manufacturing and marketing. the external members were mostly experts of project management. however, their awareness of the product and manufacturing system to be developed, including the aspects related to automation, was described as generally low. one of the respondents said that “since none of the project organization had previous experiences with either the product or the manufacturing system to be developed, we had to gain knowledge about both as the development project progressed.” to gain information about suitable manufacturing system designs featuring automated solutions, automation suppliers were contacted. another activity carried out during the pre-study phase was to develop a requirements specification. in general, there was no formal approach to this activity. multiple respondents observed that important decisions about relevant aspects of the project, such as the location and the size of the building hosting the activities and the product range, had been made by the management team before the project was officially initiated, often to reduce the investment cost. one of the respondents said, “we found out that we were expected to build a new manufacturing system that could handle a fixed volume per year. each shift should be staffed by a given number of operators. it was not much more information than that.… and we had access to a sum of money… and an existing building that we could use to save money.” the decision to use an existing building resulted in constraints on the structure of the manufacturing layout. the process of requirements specification was described as “very poor”; one respondent noted that “i wish we had better support to achieve more satisfactory requirements specification.” the limited size of the project team and the lack of a holistic perspective on automation were also indicated as major challenges by multiple participants. the main outcome of the pre-study analysis was the decision to purchase a complete manufacturing system concept. company wood had made the same decision in previous development projects. in the case at hand, this choice was described as even more obvious, due to the lack of resources and knowledge about the product and manufacturing system to be developed. reaching out to external sources was perceived as beneficial, since they probably would have relevant experience. it was also highlighted that working with one main automation supplier was preferred, since the involvement of multiple sources could imply challenges regarding compatibility in the manufacturing system. a further decision aimed at reducing the cost of the project was to implement relatively low levels of automation in plant 1. according to one respondent, this would also provide better opportunities for “learn by doing”, possibly also by reducing the risks associated with the process. 4.1.2 project wood: development and verification one of the main activities carried out during the development and verification phase was to develop and send the request for quotation to the automation suppliers that the project group had established contact with. the requirements specification developed in the pre-study phase served as input material for the request for quotation. project wood fully relied on automation suppliers since there were no development activities carried out in-house. to follow up the development work, the project manager and another project member from manufacturing were in close contact with the automation suppliers. through this, the project group could observe the ongoing activities and have continuous discussions with the automation suppliers. another activity carried out at the concept development and verification phase was that the automation suppliers arranged visits to similar manufacturing systems with similar automated solutions for some of the project group members. during the concept development and verification phase, the automation suppliers presented a complete concept for the new manufacturing system each. in total, two concepts were presented. the project group reviewed and evaluated the proposed concepts. the evaluation was based on which concept met the requirements specified and was within the project’s budget. the comparison was based on informal discussions within the project group. one salim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 9 of the respondents said that “we had to choose one of the concepts. it was an easy choice since only one of them was within the project’s budget”. the project group chose what was perceived as the most suitable option and recommended it to the steering group. the lack of in-house competence about the manufacturing system design, including automated solutions, was emphasized as a challenge in the concept development and verification phase. one respondent said that the “total reliance on automation suppliers together with insufficient requirements specification meant choosing to receive a manufacturing system that was a black box, which we know nothing about and cannot change. how can we then be competitive”? another respondent added that the automation suppliers would probably offer similar automated solutions for them as they do for their competitors. the respondent referred to this way of working as seeking “copy-paste” solutions which would limit the company’s opportunities to utilize the competitive advantages of the automated solutions implemented. another challenge emphasized during this phase was that the purchasing function was involved relatively late. the purchasing function was from an external business segment within the company and stated that they had standardized protocols that could have been beneficial to include at earlier phases of the development process. being involved late meant limited flexibility for change. an additional challenge that was brought forward was the lack of information needed to evaluate the concepts presented. this was described to be a result of insufficient requirements specification and lack of documentation from previous phases in the development process. moreover, although automated solutions were considered early in the development process, the objectives for automation were not specified. the unclear objectives were stressed as another source of challenge when evaluating the different solutions. 4.1.3 project wood: pre-project during the pre-project phase, the manufacturing system concept recommended to the steering group was selected. some respondents mentioned that deciding on the final solution was tough but also easy in a way. it was tough due to the scarce information but easy due to the limited options. the respondents further agreed that the steering group was presented with scarce information about suitable final solutions. when the decision regarding the final solution was made, details regarding the selected manufacturing system concept were finalized together with the selected automation supplier and the planning for realization started. a further major decision, made by the management at company wood, during the pre-project phase was to accelerate the development of plant 2 before plant 1 was fully developed and its automation solutions and mechanics were explored in detail. the reason for rushing the process was that a competitor was starting a similar manufacturing plant in sweden. since the plans of initiating plant 2 were accelerated, the project organization expanded at this phase of the development process. various resources from different functions within company wood were involved. many of them were newly employed specifically to join the development of plant 2. it was also decided to hire a new project manager for plant 2. the reason was that the plant 1 and plant 2 would run simultaneously and having a project manager for each plant was perceived as more beneficial. this confused some members in the project organization that questioned the aim of plant 1. the findings from three studied phases prior to the implementation of the physical manufacturing system in project wood are displayed in table 2. 4.2 project auto the product to be manufactured was a high-volume product with a relatively high level of customization. to manufacture this product, company auto needed to invest in a new manufacturing plant, including automated solutions. the requirements of such development project were specified in terms of time-horizons within which new products and product concepts should be developed, tested and brought to the market. in project auto, a project model was used consisting of five phases prior to the implementation of the physical manufacturing system: (1) background study, (2) pre-study, (3) requirements specification, (4) quotation and (5) procurement, described below. 4.2.1 project auto: background study project auto was initiated at the management level as a consequence of a product development project. 10 bioproducts business 7(1) 2022 at the background study phase, the development process was described as informal and included a small number of people involved in exploring ideas and following up the development of ongoing activities. it was described as a source of challenge for supporting automation-related decisions where a holistic perspective is included. a research and development manager at company auto was assigned as the main project manager. during the background study phase, the main effort was placed on activities related to product development. however, manufacturing representatives were assigned to participate early from the start and were assigned to explore innovative ideas outside current manufacturing system set-up with emphasis on cutting-edge automated solutions. automation of manufacturing was described to have a central role in project auto. at this phase of the development process, it was decided to implement relatively high levels of automation. one respondent said that “our vision was to automate to as high level as we could as far as it still was profitable”. the reason for this was the company’s strategy on having a manufacturing system that would become world-class within the industry. since automation had a central role in project auto, it was also stressed as important to set clear goals early on, which could be followed up during the development process. 4.2.2 project auto: pre-study in the pre-study phase, a formal project organization was assigned. the project organization included a steering group; a main project manager; multiple sub-project managers responsible for different areas, including automated solutions; and project group members chosen to represent a wide variety of functions within company auto. the involvement of multi-skilled project group members was stressed as important to support decision-making in the detable 2. findings from project wood. main activities related to automation main automation decisions challenges related to automation decisions tactics used to support automation decisions pre-study • identify automation suppliers • gain knowledge about automated manufacturing systems • contact automation suppliers • develop requirements specifications • divide the development project in two sub-projects • buy a complete automated manufacturing system • start with low levels of automation to reduce costs and exploit learning by doing • use an existing building for the new automated manufacturing system, to reduce costs • lack of in-house competence regarding automated solutions • lack of support for the definition of the requirements • lack of a holistic perspective on automation due to limited involvement of human resources • increase in-house knowledge about automated solution by starting with a pilot plant • increase in-house knowledge about automated solutions by hiring an external project manager • secure knowledge about automated solutions through automation suppliers development and evaluation • elicit offers from automation suppliers • continuously benchmark and discuss with automation suppliers • visit related automated manufacturing system setups • review and evaluate automation suppliers manufacturing system concepts, recommend the most suitable automated manufacturing system concept to the steering group • high reliance on automation suppliers due to lack of specific in-house competence • late involvement of purchasing unit • insufficient requirements specification • lack of documentations from previous phases • lack of objectives for automated solutions • rely on suppliers to increase knowledge about automated solutions pre-project • decide about the proposed manufacturing system • finalize details regarding the system • build the system • select the most suitable automation supplier • start with plant 2 earlier than planned – with only limited feedbacks from the pilot plant. • scarce information salim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 11 velopment process. company auto had established a template used in large development projects to assure the creation of multi-skilled projects teams. the template included a description of the different functions within the company that needed to be involved, to which extent, and in which phase of the development process. during the pre-study phase, different ideas on manufacturing system concepts, including automated solutions, were explored. activities such as analyzing current manufacturing solutions and future needs were carried out. moreover, technology profiling was performed to identify the type of automated solutions required. a template established at company auto was used to support technology profiling. the template included the identification of the type and level of automation needed, the usage mode, etc. since product and manufacturing system development activities were carried out in parallel, continuous analysis of the impact the product changes could have on the manufacturing system were performed. moreover, some decisions were made during the pre-study phase. one of the main decisions related to automation concerned what to buy and what to make in-house. another decision made was that all automated solutions implemented in the new manufacturing system must be known to the company. therefore, it was decided that all new automated solutions would be installed in advance in an existing manufacturing system before project auto was finished so the operators had access to training. two main challenges of making decisions related to automation were pointed out. the first one was that various activities related to product and manufacturing system development were carried out simultaneously. thus, various decisions were interdependent and needed to be compatible. the second challenge of making decisions, including automation decisions, was the coordination between the different internal and external sources that were involved in the development project. 4.2.3 project auto: requirements specification in the requirements specification phase, the main activity related to automation was the development of a requirements specification. the requirements specification was developed based on the input from the different activities that were carried out previously, as well as a handbook that, for example, included different standards relevant for the manufacturing system. the handbook used was developed by company auto to support large development projects. the aim of the requirements specification was to serve as input material for the request for quotation that would be presented to the automation suppliers. 4.2.4 project auto: quotation during the quotation phase, the focus was placed on creating a suitable manufacturing system concept, including automated solutions. some development activities were carried out in-house with a focus on customized solutions, while others were developed in collaboration with automation suppliers. to secure external skills in automated solutions, company auto chose to invite automation suppliers simultaneously to a workshop for open negotiation. based on the requirements specification, a request for quotation was developed and presented to the automation suppliers. the automation suppliers were also presented with other necessary information, including a handbook on manufacturing standards that need to be followed. in total, eight automation suppliers were selected to proceed in the development project. due to the large extent of the development project, the automation suppliers were encouraged to collaborate. the selected automation suppliers worked in pairs and presented, in total, four different manufacturing system concepts. the main challenge related to automation decisions at this phase was described in terms of coordination between the different internal and external resources involved in the development project. the key activity carried out when manufacturing system concepts were presented was evaluation of the concepts. the evaluation was performed by the project manager together with the project group members who reviewed the proposals. to evaluate the proposed manufacturing system concepts, risk analysis on each concept, including automated solutions proposed, was performed separately. in addition, documentation from earlier phases of the development process was used as the basis for evaluation to review how well the concepts fulfilled the objectives and scope of the development project. the different manufacturing system concepts were, among others, viewed in terms of how well they ful12 bioproducts business 7(1) 2022 filled the requirements specification, including the objectives set for the manufacturing system, the goals set for the automated solutions, and the project’s budget. the different concepts were presented to the steering group, and the most suitable one was recommended by the project group. 4.2.5 project auto: procurement the procurement phase in project auto was similar to project wood. in both development projects, the most suitable manufacturing system concept recommended to the steering group was selected. the steering group trusted that the project group was the most knowledgeable regarding the choice of the final solution. however, one aspect that was highlighted as critical was the project budget that had to be taken into consideration. when the decision regarding the final manufacturing system concept was made, details regarding the selected concept were finalized, together with the automation supplier, and the planning for realization started. at the end of the procurement phase, checklists were developed by the project group and shared with the automation suppliers to be used during the implementation phase as a tool to follow up on how well the agreements are fulfilled. 5. discussion the findings show that although the project models used in the development projects studied did differ, they included some shared phases, in accordance with previous literature on manufacturing system design (bellgran & säfsten, 2010): background study, pre-study, design of the conceptual manufacturing system, evaluation of the conceptual manufacturing system, and detailed design of the chosen manufacturing system. comparing the key activities performed in the different phases in project wood and project auto to the literature presented in figure 1, similarities can be found. a comparison between a general development process presented in literature and the project models used in company wood and company auto is provided in figure 5. in the following sections, project wood and project auto are compared, in terms of the challenges and tactics used, for automation-related decisions in the five different phases of manufacturing system design presented in the literature. 5.1 background study in both development projects, the background study phase was rather informal, and the project organization only included a few people, mostly from the management level. the consequence of this was described in terms of the lack of a holistic perspective when automation decisions were made. the main aspects to which attention should be paid are human resources and the skills available (kumar et al., 2017), the organizational culture (mellor et al., 2014), process compatibility (scannell et al., 2012), and the relationships with the supply partners (caimon, 2009). to guarantee a holistic perspective, a multi-skilled project group was created during the pre-study phase in project auto, based on an established template used for a large development project in the company. this could have been useful in project wood to identify the late involvement of the purchasing function as a challenge for automation related decisions. a complementary strategy tool that can be used to pursue the same goal is the definition of structured guidelines on what needs to be considered in the different phases of the manufacturing-system design process when different decisions, including automation decisions, are being made (bruch, 2012). another challenge identified in project wood throughout the different phases of manufacturing-system design process was the lack of in-house competence regarding automated solutions. this challenge is described as prevalent in the wood products industry by previous literature (sowlati & vahid, 2006). the wood products industry is characterized by a low education level in the workforce (ratnasingam, 2015; teischinger, 2010). companies operating in the industry are struggling to meet their growth prospects (kozak, 2005), and skills and knowledge are emphasized as a big impediment (delong et al., 2007). however, lack of in-house competence is not specific to the wood products industry but is also addressed in different industrial sectors in relation to investments in automated solutions in manufacturing (nujen et al., 2018). improving on this state of affairs requires investments in qualified human resources. in project wood, a step in this direction was made by hiring an external project manager with experience in manufacturing systems and automated solutions. in project auto, a salim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 13 project manager was assigned to be responsible specifically for automated solutions. an additional way to deal with the lack of in-house competence was by securing knowledge through automation suppliers, which was done in both development projects. this is a common approach utilized in manufacturingsystem development projects that can be seen in various industrial sectors (ahlskog et al., 2015). the findings further show that in both development projects, it was decided to strengthen the competence by testing all automated solutions that were new to the company in advance of the implementation of the new manufacturing system. the aim was to learn more about automated solutions and enable training for operators prior to the change. in the wood products industry, training is emphasized as essential to support the implementation of new automated solutions (wiedenbeck & parsons, 2010; pirraglia et al., 2009). previous literature, including from various industries, also indicates that training is critical in order to utilize the full benefits of investments in automation of manufacturing (kumar et al., 2017). 5.2 pre-study a major challenge identified in project wood during the pre-study phase was the specification of the requirements for the solutions, which represents a critical part of the process (bruch et al., 2009; granlund & friedler, 2012). this might result from poor in-house competence regarding automated solutions in the wood products industry (salim et al., 2020). the findings of this paper show a need to support the development of requirements specification, which can be done through investing in human resources. the development of requirements specification could be supported through working in a structured manner, such as in project auto, by providing, for example, handbooks and templates supporting the decision-makers. 5.3 concept development in the concept development phase, automation suppliers were reached for automation technology acquisition in both development projects. involving automation suppliers in manufacturing system design is common (reichstein & salter, 2006). the difference observed in the studied development projects was the extent to which the automation suppliers were involved. lee et al. (2009) divide automation technology acquisition into three broad categories: make, cooperate, and buy. in project wood, a full reliance on automation suppliers was observed, and the purchase of a complete manufacturing system concept, including automated solutions, was sought. the disadvantage of companies relying heavily on r&d outsourcing is that it might hurt their innovation performance, since they will acquire commercially available automated solutions that are probably less unique and thus more prone to imitation by figure 5. overview of the development processes studied. 14 bioproducts business 7(1) 2022 competitors (grimpe & kaiser, 2010). this concern was also expressed by a project group member in project wood. in project auto, the choice was to cooperate, which is defined as “various forms of cooperation with another firm with or without equity involvement such as joint venture, joint r&d and alliance” (lee et al., 2009). various automation suppliers were invited to the workshop for open negotiation. another tactic used was to encourage collaboration between automation suppliers, which aimed to increase innovation. the automation suppliers were also provided a handbook developed by company auto to follow up on standards for the manufacturing system, including automated solutions to be developed. by contrast, in project wood, working with multiple automation suppliers was avoided. this was explained to be due to problems regarding the compatibility of the equipment, as well as challenges with manufacturing certifications, which had to essentially be taken care of by the company. the disadvantage of involving few automation suppliers is that some relevant external knowledge might be lost. kang et al. (2015) state that by accessing a broader spectrum of external automation technology providers, firms enhance the possibility of gaining relevant technological knowledge. however, there is a point at which the breadth becomes disadvantageous. to avoid full reliance on automation suppliers, the findings show a need for investment in in-house competence and, instead of relying on few external resources, to widen the search for external knowledge. 5.4 concept evaluation in project wood, the evaluation of the proposed manufacturing system concepts, including automated solutions, by the automation suppliers was described as a source of challenge in decision-making, due to lack of information. the lack of information was described as a result of poor requirements specification, lack of documentation from previous phases, and lack of objectives for automated solutions. setting objectives early in the development project might be critical for the evaluation of final solutions, including automated solutions (frohm, 2008). more structured process routines would also be beneficial. through structured decision-making, a discipline on the decision-makers can effectively be imposed, for example, via templates and manuals. this is seen in project auto, where different activities were carried out, and templates and handbooks were used to support automation-related decisions during the evaluation process. 5.5 detailed design when choosing the final solution in project wood, the focus was shifted towards selecting the most suitable automation supplier. in project auto, on the other hand, the choice was directed towards selecting the most suitable manufacturing system concept. this is in line with prior research showing that companies selecting supplier-driven approaches tend to evaluate automation suppliers rather than proposed manufacturing system concepts (bellgran & säfsten, 2010). another observed difference was that in project auto, the planning for the realization of the physical manufacturing system included the use of checklists to assure that the agreements made with automation suppliers during the manufacturing system design are fulfilled during the implementation phase. this is another example of where a systematic approach to support decision-making was not sought for in project wood. last, in both development projects, it was decided that all new automated solutions to the company would be tested in advance. this was later deprioritized in project wood to speed up the time plan. 5.6 decisional structures through the analysis of the development projects, several specific issues related to the automation decision process followed by project wood are identified. from a broader point of view, it appears that the effectiveness of future automation investments would benefit from the implementation of systematic routines. the development of the organizational skills and the competencies required by the routines would require time, and the full benefits resulting from the organizational innovations should not be expected to immediately manifest themselves. however, as was argued in section 2, a systematic process involving the different functions of the organization could produce favorable effects on the decisions, at the very least by providing an adequate informational basis for the decisions (french et al., 2009). collecting information from different units and assessing the opportunities that automation pressalim et al. — automation decisions in manufacturing system development projects: the wood products industry perspective 15 ents for them—for example, because such activities are necessary to produce manuals of the type used within project auto—would help the company to formulate objectives and technical specifications for the automation investments. the company could thus avoid the extensive reliance on the automation suppliers, which was indicated as unfavorable. decisions organically linked to the overall strategic plan would also allow the company to follow a more proactive strategy (kahneman et al., 2013). the company could then limit the risk of being forced to craft decisions that are essentially conceived as responses to the competitors’ decisions, as was the case for the automation decision that we analyzed, thereby fostering its competitive position. table 3 summarizes measures that companies in the wood product industry could adopt to support automation decisions. 6. conclusions and implications this paper has identified some challenges related to automation decisions in the wood products industry. such challenges are typically related to decisionmaking regarding automation and are connected to the lack of objectives for automated solutions, lack of competence regarding automated solutions, and lack of structured approaches in the development process. as we noted in section 5, our findings are related to the findings of related studies in the extant literature, both in the wood industry and in manufacturing in general. for example, the importance of well-structured interactions with suppliers are highlighted in ahlskog et al. (2015) and reichstein & salter (2006), whereas pirraglia et al., (2009) and wiedenbeck & parsons (2010) emphasize the importance of human resources and competence development. table 3. summarizing identified challenges related to project phases, with tactics to support automation decisions in the wood products industry summarizing project phases challenges related to automation decisions in wood manufacturing tactics to support automation decisions background study • lack of holistic perspective • late involvement of key resources, such as purchasing • lack of in-house competences • organize a multi-skilled project team • develop a template for development projects • develop relationships with automation suppliers • hire an external project manager • test all automation solutions before implementing these in the manufacturing system as a training program for the operators pre-study • development of the requirement specification • invest in human resources • develop and provide handbooks and templates supporting decision-making design of conceptual manufacturing systems • risk to loosen knowledge if to high degree of external suppliers • the degree of involvement of an automation supplier in the development phase • the timing about when to involve an automation supplier • the ownership and control of innovations • compatibility between different equipment and machines • decide what to make internally • decide what to cooperate with a supplier about • decide what to buy as a turnkey solution • encouragement to collaboration between automation suppliers • invest in in-house competence evaluation of conceptual manufacturing systems • importance of proper requirement specification • defined objectives for automated solutions • develop and use templates and handbooks detailed design of chosen manufacturing system • the manufacturing system concept in combination with the right level of automation • secure to evaluate the manufacturing system and not the automation supplier • develop and use a checklist for the evaluation • test the automated solutions in advance 16 bioproducts business 7(1) 2022 the measures discussed in the paper could help the firms in the wood products industry to tackle these challenges. the direct implications of potential relevance for the managers, staff and specialists involved in automation decisions can be summarized as follows. (1) investment in automated solutions in manufacturing should not be focused only on benefits of more immediate relevance. rather, there should be clear strategic objectives for the automated solutions (frohm, 2008; thomas et al., 2008), and automationrelated decisions should be closely interconnected with these objectives. an approach of this type would presumably have allowed company wood to take a proactive stance in the automation investments. in general, it would also be helpful to better clarify the goals of the investment project, which were found to be quite opaque by the project participants; this conclusion is in line with the conclusions drawn by trzcianowska et al. (2019) relative to log-yard design and operations. (2) investments in greater in-house expertise related to automated solutions could be helpful to deal with future investment in company wood. on a related note, the impact of the automation investment should be considered on a company-wide basis. automation investments can have mostly favorable repercussions on most, if not all the functions involved in the company’s productive activities, from marketing to inventory management; such effects are likely to be ignored if the company exclusively focuses on the effects directly related to physical manufacturing. this is supported by a survey by thomas et al. (2008) that concludes that limitation from financial and human resources could be an obstacle for the adoption of technologically complex solutions, and that top management can have unrealistic expectations about the ease with which advanced solutions can be implemented. an essential feature that a decision process satisfying such requirements must possess is the involvement of human resources from all functional units in the project group, allowing them to assess the broad impact and the benefits of the investment. 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(1999). statistical process control and the forest products industry. forest products journal, 49(3): 10–17. abstract this study introduces a new approach to assessing the role of integrated rural tourism, including agritourism, ecotourism, and rural tourism, in sustainable rural development. going beyond the traditional “triple bottom line” approach based on economic, social, and environmental factors, this study adds elements of an expanded perspective that includes governance, technological innovation, and good health and well-being in assessing sustainable rural development. the result clarifies this field’s leading trends and interactions from 1990 to 2024. additionally, the research builds a knowledge framework to promote long-term sustainability and transformative growth in rural areas while clarifying challenges and future research directions. harmonizing these three types of tourism, agricultural development, and rural sustainability will lead to improvement. the findings contribute to our understanding of sustainable tourism practices and provide insights for policymakers and industry stakeholders striving to improve rural development initiatives. keywords: sustainable rural development; integrated rural tourism; agritourism; ecotourism; rural tourism. sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 1 school of hospitality and tourism hue university, 22 lam hoang, hue city, vietnam. e-mail: dtthao@hueuni.edu.vn. orcid: 0009-0008-8978-4652 2 school of hospitality and tourism hue university, 22 lam hoang, hue city, vietnam. e-mail: ntbngoc@hueuni.edu.vn. orcid: 0000-0001-8611-1235 3 department of economics -awkum, pakistan; postdoc research fellowship henan university, china. email: kamal@awkum.edu.pk 4 hue university of agriculture and forestry, 102 phung hung, thuan thanh ward, hue city, vietnam. e-mail: dvvinh@huaf.edu.vn.orcid: 0009-00078022-3456 * corresponding author: dtthao@hueuni.edu.vn bioproducts business 10(1), 2025, pp. 1–19. issn 2378-1394 https://doi.org/10.22382/bpb-2025-001 do thi thao 1 *, nguyen thi bich ngoc 2, muhammad abdul kamal 3, dang van vinh 4 1. introduction efforts to promote comprehensive sustainable rural development (srd) often emphasize the integration of three main types of tourism: agritourism (at), rural tourism (rt), and ecotourism (et), collectively known as “integrated rural tourism” or irt (roman & kawęcki 2024; yeager et al. 2024). this concept is gaining global attention because it optimizes resources and fosters a sustainable, multi-dimensional development model. irt is deemed an essential and meaningful model amid the depletion of resources and environmental degradation, which necessitates a tourism development model that balances economic, social, and environmental factors (belliggiano et al. 2020; gao & wu 2017; zhang et al. 2015). the irt approach is imperative for diversifying income sources and reducing dependence on a single economic sector. it aids in conserving cultural values and agricultural heritage while protecting the natural environment through green and sustainable tourism activities, organic farms, and smart villages (ciolac et al. 2022; hussain et al. 2023). moreover, it encourages local community participation and enhances the quality of life, contributing to comprehensive and sustainable socioeconomic development (hussain et al. 2023). post-covid-19, there has been a rise in technological innovations and wellness tourism types such as airbnb in rural villages, improving management and tourism experiences as well as the mental and physical health of residents and tourists (pesonen & komppula 2010; xue & shen 2022). notably, empowmailto:dtthao@hueuni.edu.vn mailto:ntbngoc@hueuni.edu.vn mailto:kamal@awkum.edu.pk mailto:dvvinh@huaf.edu.vn mailto:dtthao@hueuni.edu.vn 2 bioproducts business 10(1) 2025 ering women in tourism activities significantly contributes to community development reduces gender inequality, and encourages the active involvement of all members of society (quang et al. 2023). the trend toward digital technology innovation plays a vital role in managing and developing rural tourism. technologies such as the internet of things (iot), artificial intelligence (ai), big data, augmented reality (ar), and virtual reality (vr) help optimize management processes, promote tourism effectively, and enhance the authenticity of the tourist experience, thereby increasing satisfaction and loyalty (hussain et al. 2023; park & lee 2019). furthermore, wellness models are being integrated into the irt model, introducing new and unique types of tourism in rural areas and attracting many tourists. irt provides a serene space close to nature, enabling visitors to relax and rejuvenate. this model meets tourism needs while improving visitors’ mental and physical health (xue & shen 2022). irt diversifies the rural economy and fosters community participation, ensuring economic development is balanced with environmental protection. the active involvement of local communities guarantees that economic benefits are distributed fairly and sustainably, enhancing the quality of life and social stability (klakočar & pavić 2024; tiwari & nguyen 2024). to the best of the authors’ knowledge, this study is the first effort to integrate the three primary types of tourism, agritourism, rural tourism, and ecotourism into a cohesive irt model. this study is an extension beyond the conventional triple bottom line framework to explore the multifaceted impacts of irt, including innovations in digital technology, empowering policies, and improving quality of life. the research delves into emerging trends, international collaborations, and topic developments to identify future research prospects and explore existing gaps. additionally, it presents a concept knowledge framework that investigates the interactions among the three tourism types and their contributions to srd while assessing challenges and outlining future research avenues and scientific inquiries. the following are three research objectives for the work: (1) analyze the research progress of srd through collaboration, co-occurrence of keywords relationships, and trends and dynamics of key themes, providing a comprehensive, multidimensional view of the field’s development. (2) create a theory-based, new knowledge framework for this field that helps create a logical and unique understanding of how irt research impacts srd. (3) identify current challenges and future research directions, supporting future scholars in conducting more extensive research. the paper begins with an introduction and a theoretical background on srd. afterward, it presents the methodology, followed by the analysis of results, discussion, and conclusion. additionally, the paper addresses current challenges and future research directions, offering valuable insights and practical recommendations for policymakers and researchers in these fields. 2. theoretical background 2.1 triple bottom line theory and sustainable development the triple bottom line (tbl) theory, which measures the performance and sustainability behavior of companies by considering three aspects—economic, social, and environmental— is considered “a great and far-reaching metaphor” (elkington & rowlands 1999; henriques 2013). the tbl provides a tool to evaluate the performance and success of organizations by measuring their impacts in the economic, social, and environmental areas, which is considered a practical framework for sustainable development (nogueira et al. 2023). the tbl has expanded the traditional financial reporting framework to also address social and environmental impacts, reflecting a shift from focusing solely on profits to a more multidimensional view of sustainable development related to society and the environment in order to optimize the use of resources efficiently and sustainably and to support future generations (sala 2020). this includes maintaining long-term profitability while protecting natural resources and creating social value. the social dimension refers to the responsibility of organizations towards the community, including implementing fair labor practices, promoting community participation, and improving the quality of life for local populations (cheng & xu 2021). organizations that apply tbl are expected to deliver responsible thao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 3 and equitable operations. finally, the environmental dimension of tbl emphasizes minimizing the negative impact of economic activities on the environment through saving resources, reducing emissions, and protecting biodiversity (sala 2020). the tbl model has become an important tool in assessing sustainable development in many different fields. this is clearly demonstrated by the fact that before 1990, this term was not popular, but now, a simple search on google can return more than three million results related to tbl, a sharp increase from the 52,400 results found in 2004 (norman & macdonald 2004). however, in the current development trend, tbl has been expanded due to its limitations in addressing the complexity of sustainability in modern organizations. 2.2 srd and factors beyond the tbl model the original tbl model assessed sustainable development based on economic, social, and environmental factors, and it has been applied in many studies to assess sustainable development in different fields (elkington & rowlands 1999). however, in the context of srd, this model needs to be expanded to fully respond to factors affecting sustainable development in line with modern development trends and new global challenges. one of the necessary factors to expand tbl in rural development is tourism, especially when it integrates models such as agritourism, ecotourism, and rural tourism, which have become an indispensable part of sustainable development strategies in rural communities. additional factors, such as governance, technology, and public health, have been studied recently based on rapid social change and the need for comprehensive development (apostolopoulos et al. 2020). governance helps improve policy and community engagement, technology supports the optimization of tourism management and the protection of cultural heritage, while public health promotes sustainable development through irt models (mihai et al. 2021; yanan et al. 2024). many previous studies have shown that the expansion of tbl in tourism models such as agriculture, eco-tourism, and rural tourism promotes economic development, improves the quality of life, and preserves cultural values (an & alarcón 2020; tang & xu 2023; cheng & xu 2021). in particular, digital technology and public participation are important in enhancing management effectiveness and sustainable development (jiang et al. 2023). the current study has expanded the tbl model to link these elements with the typical sustainable development goals (sdgs) governance for sdg 16, technology for sdg 9, and public health for sdg 3, creating a more comprehensive rural development framework. based on recent studies and development trends, the study develops a theoretical framework for sustainable rural tourism development based on irt. 3. methodology 3.1 bibliometric approach the bibliometric is a quantitative method that uses bibliographic databases to analyze and predict research trends, while clarifying research structures and systems (donthu et al. 2021; merigó & yang 2017). the bibliometric method has become popular, as evidenced by an analysis of 18,432 scientific studies published between 1980 and 2023 that included bibliometric analysis (i̇ri & ünal 2024). this method allows for tracking research trends, evaluating academic results, and understanding scientific collaborations through quantitative information analysis for forecasting and decision-making (lazarides et al. 2023). this method applies mathematical and statistical techniques to analyzing scientific documents to explore the conceptual structure and development of research topics (pranckutė 2021). in order to meet the research objectives in this work, bibliometric analysis was chosen as an effective way to collect and identify basic information about publications in the field. this study identifies influential authors and publication sources and the most influential countries, which is especially meaningful for the direction and strategy of cooperation (valenzuela-fernández et al. 2018). notably, the study builds a visual map of the relationship between countries and international research collaborations, assesses the role of countries in the global scientific community, identifies important research centers, and discovers new cooperation opportunities. we conduct a co-occurrence analysis of keywords in scientific articles. this analysis helps to identify relationships between research topics and the connections between keywords in different research clusters. the term co-occurrence of keywords is the simultaneous appearance of two or 4 bioproducts business 10(1) 2025 more keywords in a research paper, indicating a connection or relationship between research concepts. through this, important research trends are clarified, helping to build an overview of the development of the research field over time. in combination, we use a thematic map construction tool, a powerful visualization method to describe the relationships between major research topics, highlighting centrality and community structure, to illustrate hot topics and their connections (nica 2024; rusydiana 2021). this map helps identify prominent topics and shows their distribution and changes in scientific publications. the topic map helps researchers easily identify key areas and major research trends in the field. in addition, current trends in research topics are analyzed to understand better the topics that are attracting attention and developing strongly over time, the basis for identifying challenges and potential research opportunities. staying abreast of current trends will help researchers stay updated on the latest developments and emerging challenges in their field and guide future research directions. 3.2 research design and data collection a reliable and complete dataset is a prerequisite for bibliometric research, as it ensures accurate analysis and visualization of publication trends (passas 2024; rogers et al. 2020). this study used a set of documents retrieved from the web of science (wos) for several reasons: (1) wos applies strict selection criteria, ensuring only high-quality, peer-reviewed journals are included, making the retrieved documents reliable, trustworthy, and highly relevant for academic research (pranckutė 2021) (2) the database offers a wide range of journals and articles, ensuring researchers have access to essential documents and stay updated on the latest developments (birkle et al. 2020). (3) wos is ideal for bibliometric analysis due to its compatibility with software like vosviewer, biblioshiny, citespace, etc. (jing et al. 2024). building on previous studies on bibliometric reviews and establishing a good keyword strategy ensures the representativeness of studies identified in bibliometric reviews, influencing the quality of the results (arici et al. 2023; harari et al. 2020). this study fully complies with the preferred reporting items for systematic reviews and meta-analyses (prisma) protocol guidelines to ensure transparency and quality in its implementation, presenting total systematic relations and comprehensive analysis (page et al. 2022). this study applied prisma to ensure transparency, systematization, and reproducibility in the document selection process (page et al. 2022). the use of prisma in bibliometric review is consistent with recent research trends when many researchers have applied this method to standardize the document screening process, minimize bias, and improve the quality of analysis (nica 2024; rusydiana 2021). each step, from data collection to data synthesis, ensures transparency, completeness, and accuracy. using the procedure, cleaning, checking for synonyms, and expanding keywords were performed thoroughly. specifically, the process consists of four steps: identification, screening, eligibility, and inclusion. step 1 – identification: we conducted multiple searches and tested many keyword strategies during november 2024, resulting in the selection of keywords for the study: (“integrated rural tourism” or “rural tourism” or “ecotourism” or “agritourism” or “agrotourism”) and (“sustainable rural development” or “sustainab* development”) and (“impact*” or “effect*” or “role”). after searching, 1130 relevant publications were found. step 2 – screening: in step 2, the 1130 documents from step 1 were screened, selecting only journal articles written in english to ensure consistency in the analysis (arici et al. 2023; harari et al. 2020). some documents were deemed irrelevant to the research topic, even though they were indexed in search engines. we conducted a manual screening to find documents relevant to the research topic. they relied on abstracts and titles to ensure they were relevant to the research scope and contained at least two keywords in the article. the results obtained 987 articles focusing on the research topic. step 3 – eligibility: the 987 articles collected from step 2 were subjected to a rigorous standardization process (taskin & al 2019), including the author’s name, journal origin, and the existence of the journal at present. this process resulted in 964 collected articles, which were retained for bibliometric analysis. to further support the analysis and build a knowledge framework on the impact of irt on srd, the research thao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 5 team continued to screen and select high-quality articles from reputable journals in the next step. step 4 – data synthesis: this process was conducted using the 964 articles retained from step 3 to perform a comprehensive bibliometric analysis. furthermore, these articles demonstrate precise research methods, convincing results, new contributions to theory and practice, structured presentation of ideas, and linkage to current research and have reliable references (chiu et al. 2014), and were structured coherently and relevant to the research topic (ting & cheng 2017). this process was carried out within a week. as a result, we narrowed the list to 31 articles that were the most relevant and used them for in-depth analysis in a cluster and knowledge framework, citation, and further clarification in the co-occurrence of keywords analysis. there are many tools to support bibliometric analysis, but each tool has different outstanding features. combining vosviewer and biblioshiny can enhance bibliometric analysis by leveraging the strengths of both tools. vosviewer is known to be superior in creating visual representations of complex bibliometric data, allowing researchers to map topics and track keyword evolution over time (contreras & abid 2022; van eck & waltman 2010). in parallel, the biblioshiny software in rstudio is used for bibliometric mapping, creating visual representations of data and trends in the evolution of topics over time, allowing for detailed and comprehensive bibliometric analysis (thangavel & chandra 2023). integrating these tools can provide a more robust analytical framework, allowing researchers to visualize complex data and perform in-depth reference reviews. 3.3 publication statistics the descriptive analysis shows that the total number of citations for 964 articles in 347 journal sources was 17,297. the average number of citations per article was 17.94, while the h-index was 75. figure 1 illustrates the publications and citations in studies on irt and srd from 1990 to november 2024. the slow publication growth from 1990 to 2009 shows that this research field had not yet received attention. since 2010, the number of publications has increased rapidly, especially in 2016–2024, with a peak in 2023. this trend reflects that irt research has become an area of great interest in the academic community, associated with the increasing awareness of sustainable development in rural areas in the context of globalization (figure 1). 3.4 most relevant authors/countries/sources: most relevant authors: these authors often have a significant number of scientific publications; their works are highly cited and significantly influence the scientific community. table 1 shows a picture of the distribution of influence and contribution of authors in the research community, from the number of papers published to the level of citation and the distribution of contributions in collaborative research. liu y has the most significant impact, with 8 articles and 105 citations, reflected in a collaboration index of 3.75. ciolac r and iancu t have a high number of 184 citations, but a low number of articles fractionalfigure 1. total publications and cumulative citations (1990–2024). 0 200 400 600 800 1000 1200 1400 1600 1800 2000 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 19 91 19 92 19 93 19 95 19 96 19 97 19 98 20 00 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 publication citations 6 bioproducts business 10(1) 2025 ized at 1.07. moreover, shen cc has 71 citations, but the articles fractionalized at 2.27. adamov t has 184 citations and records the lowest articles fractionalized at 0.97. they may be leaders or play important roles in large research projects and are the leading authors in research works. most relevant sources: the articles and the impact index show the importance of the current development of sustainable irt and how these sources are related through articles published in influential journals. the research results in table 2 show that srd is becoming increasingly important in the context of globalization and climate change. recent studies published in prestigious journals such as sustainability (h-index 29), journal of sustainable tourism (h-index 21), and land (h-index 7) show a strong focus on sustainable development through irt, especially in land resource management, environmental protection, and rural community support in line with the journal’s objectives. in addition, journals that tend to analyze the environmental impacts of rural tourism or are from the perspective of environmental protection and ecology in rural tourism, especially in sensitive areas of the ecological environment, are also of interest to many scholars. most cited countries and countries’ scientific production: knowing these countries will help researchers quickly identify important research topics and influential scientific areas. furthermore, it is a basis for international cooperation to promote the development of international research and participate in learning and applying advanced research methods. table 3 analyzes the relationship between scientific output and the level of influence through citations of the top five countries; the results provide insights into each country’s overall scientific output and its influence in the research field. countries’ scientific production: china ranked no. 1 with 287 published articles, a significant difference from other countries in the ranking. this shows that china is investing and focusing heavily on research and development activities, becoming a powerhouse in global scientific development. the united states ranked no. 2 with 53 articles, followed by spain, italy, and romania. the significant difference in the number of products between china and other countries reflects the great scale and influence of chinese science in this research field. most cited countries: regarding scientific capacity, china again affirmed its no. 1 position, followed by the united kingdom, usa, spain, and italy. however, despite the advantage in the number of publications, average article citations are much lower than those of the other countries in the top five rankings. this shows china’s strategy of investing and focusing heavily on research and development activities, becoming a powerhouse in global scientific development. other developed countries such as the usa, uk, spain, and italy are also in the leading group, demonstrating their traditional position in this field. 3.5 collaborations between countries figure 2 is a map that visualizes the network of scientific and academic collaborations between countries worldwide from 1990 to 2024. this shows that china is playing an increasingly important role in the global research ecosystem, becoming a key scientific collaboration center for the field of irt. besides china, countries like the usa, uk, germany, france, and italy emerged as significant branches in this network and developed early, before 2018. with their development advantages, these countries form densely connected clusters, reflecting the close cooperation between the table 2. refereed journals with most articles regarding integrated rural tourism. rank sources articles h-index publication year-start 1 sustainability 172 29 2015 2 journal of sustainable tourism 37 21 2011 3 land 26 7 2020 4 environment development and sustainability 20 7 2019 5 journal of environmental protection and ecology 19 3 2006 table 1. distribution and influence of five highly cited authors in integrated rural tourism research. rank authors articles citation average citation/ paper articles fractionalized 1 liu y 8 105 13.125 3.75 2 ciolac r 7 184 26.286 1.07 3 iancu t 7 184 26.286 1.07 4 shen cc 7 71 10.143 2.27 5 adamov t 6 184 30.67 0.97 thao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 7 world’s leading research centers and a long history of research on irt development in srt. in addition, malaysia, thailand, india, and vietnam have also appeared from 2021 to the present, showing the connection, diffusion, and globalization of scientific activities beyond traditional centers. 3.4 co-occurrence of keywords analysis using the software vosviewer (version 1.6.17), 131 keywords from 4060 were included, based on a threshold of 10 occurrences, meaning only keywords appearing 10 or more times were analyzed. this eliminates rare or irrelevant keywords, improving analysis accuracy. table 4 shows the keywords representing the clusters. the clusters in the co-occurrence of keywords analysis show the main topic groups and the relationships between the keywords in each group (figure 3 and table 4). the keyword network shows the formation of six main clusters representing the main themes in the study. each cluster consists of a group of closely related keywords, reflecting the trends and focuses in irt research. cluster 1 consists of 25 keywords, representing concepts such as community participation, livelihood improvement, cultural identity preservation, women’s empowerment, and social impact. cluster 2, with 23 keywords, table 3. most cited countries and countries’ scientific production on integrated rural tourism (1990–2024). countries’ scientific production most cited countries rank country publications rank country tc average article citations 1 china 287 1 china 3714 12.90 2 usa 53 2 united kingdom (uk) 1753 76.20 3 italy 51 3 usa 1533 28.90 4 spain 49 4 spain 1128 23.0 5 romania 38 5 italy 1012 19.50 figure 2. international research collaboration network in integrated rural tourism. 8 bioproducts business 10(1) 2025 table 4. summary of co-occurrence of keywords analysis. no. cluster label number of keywords representative keywords 1 integrated rural tourism and communities and social development 25 local community, community participation; livelihoods; social impact, employment; rural identity; power, community-based tourism (cbt); rural communities; rural tourism; traditional villages, social capital; heritage; cultural exchange, women’s empowerment; gender equality, rural tourism, agritourism; social inclusion, rurality 2 integrated rural tourism and sustainable economy 23 integrated rural tourism; economic impact; local economic; rural tourism, agritourism, ecotourism, sustainable rural, income diversification; infrastructure; investment promotion; value-added growth 3 sustainable ecotourism and rural development 24 ecotourism; sdgs; environmental education; conservation; circular economy; ecological; responsible tourism; preservation; conservation; rural revitalization; climate changes; co2 emission 4 innovation and integrated tourism technology for rural sustainability 21 innovations, smart tourism, smart farm, gis, virtual tours, sustainable rural tourism; digitalization, big data; rural tourism, authenticity, agritourism, rural tourism, automation; empowerment, youth entrepreneurship 5 integrated rural tourism and governance 20 conservation policy; management, stakeholder, tourism management; governance; policy; destination management; regulations 6 integrated rural tourism well-being and good health 18 quality of life; satisfaction, poverty, rural ecotourism, life satisfaction; well-being, health; environmental quality; social development; loyalty. figure 3. keyword co-occurrence network in integrated rural tourism research. thao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 9 focuses on economic aspects such as economic impact, income diversification, infrastructure development, and investment in rural tourism. cluster 3, with 24 keywords, focuses on environmental protection, conservation education, and circular economy development in the context of climate change. cluster 4 includes 21 keywords, emphasizing the role of digital technology and innovation in tourism development. cluster 5 includes 20 keywords, emphasizing the importance of governance and sustainable management in rural tourism development. cluster 6 has 18 keywords, focusing on factors that improve quality of life, community health, and visitor satisfaction. figure 3 illustrates the keyword co-occurrence network, showing the connections and correlations between the keyword clusters. the keywords in each cluster reflect the characteristics of a core research interest and the contributions of each field to srd through irt. 3.6 temporal trends and thematic mapping analysis in addition, through rstudio bibliometric analysis of biblioshiny, we generated the density and centrality of keywords based on their temporal evolution. based on the latest trend (2024), the keywords that were used a lot were “land use” and “environmental impacts.” meanwhile, the keywords “agritourism,” “well-being and good health,” and “sustainable rural development” appeared simultaneously with high density in 2021. other high-density keywords such as “responsible tourism” and “ecotourism” appeared to have high density in 2020 (figure 4). in addition, we analyzed a thematic map to identify niche, emerging, or declining topics and underlying topics (figure 5). thematic maps were created using author keywords from the 964 publications in the database that had been searched and screened previously. this presents a thematic map categorizing key topics in srd research based on their development degree (density) and relevance degree (centrality). topics in “satisfaction” “community participation,” and “eco-inovation” are in the motor themes quadrant, indicating high relevance and development. basic themes, such as “rural tourism,” “sustainable tourism,” and “rural development” are emerging but still developing. topics in the emerging or declining themes quadrant (lower-left), like “biodiversity configure 4. temporal trends of research topics in integrated rural tourism. 10 bioproducts business 10(1) 2025 servation” and “sociocultural sustainability” have lower current relevance but are gaining importance for future research. in addition, niche themes such as “climate change adaptation”, “coastal area”, and “marine economics” show significant development but are less central in current studies. this map (figure 5) highlights the evolving focus on srd and irt, particularly environmental and community-based conservation approaches. 4. discussion 4.1 discussion of research clusters cluster 1 – integrated tourism, rural communities, and social development: this cluster highlights the role of irt in fostering community development, enhancing livelihoods, and creating socioeconomic impacts for local populations. irt serves as both an economic sector and a tool for promoting sustainable development through community participation (saarinen & lenao 2014). by engaging local people as tourism service providers, tour guides, homestay owners, or handicraft producers, irt generates employment, boosts income, and improves overall livelihoods (baby & kim 2024; ramaano 2023b). additionally, irt facilitates cultural integration by allowing tourists to engage with local traditions, enhancing rural destinations’ appeal, and fostering mutual understanding (ciric et al. 2021). successful rural tourism initiatives often involve active community participation, promoting equitable development and empowering marginalized groups, particularly women and youth, to engage in decision-making and address gender equality (dang & phan 2023; guo et al. 2023). furthermore, irt supports social capital development by encouraging collaboration among community members, fostering inclusion, and promoting local economic growth (rocca & zielinski 2022). irt also plays a key role in preserving cultural identity and heritage by facilitating cultural exchange and raising awareness of traditional values (tang & xu 2023; zhang et al. 2024; yang et al. 2022). ultimately, irt strengthens community and social participation, forming the foundation for sustainable rural development (srd). cluster 2 – integrated rural tourism and sustainable economy: irt is important in promoting economic and sustainable development in rural areas (baby & kim 2024; bannor et al. 2022). analyses by (bannor et al. 2022; giaccio et al. 2018) combining tourism with agricultural activities and cultural heritage conservation has created many investment opportunities, diversifying income sources and improving infrastructure, helping rural communities develop economically and ensuring sustainable environmental and cultural conservation. developing local figure 5. thematic map of integrated rural tourism research trends. thao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 11 products, accommodation in agricultural tourism, and ecotourism development to stimulate value growth, strengthen connections between tourists and local people, and contribute to the sustainable development of the local economy (oliver & jenkins 2003; quaranta et al. 2016). some authors have suggested that improving tourism infrastructure, such as transportation systems, accommodation, and public utilities, benefits not only tourists but also local communities (brune et al. 2021; thakur et al. 2024). in addition, from the perspective of rocca and zielinski (2022), irt stimulates investment by connecting rural tourism businesses, agriculture, and local industries. this integration enhances the value of agricultural products, increases tourist traffic and promotes economic revitalization. the increased demand for rural tourism also encourages investment from the government and the private sector in infrastructure development projects and sustainable initiatives. cluster 3 – sustainable ecotourism and rural development: recent research has focused on integrating environmental protection with srd, especially in the context of climate change and the growing demand for responsible tourism (chen et al. 2023). ecotourism is an important element in the sustainable development of rural areas, raising awareness and education about environmental protection. through educational programs at destinations, ecotourism helps tourists realize the importance of protecting natural resources and supporting sustainable development goals (fang et al. 2018; ivona 2021). responsible ecotourism practices contribute to promoting sustainability in rural areas, from economic growth and strengthening social structures to environmental conservation (chiu et al. 2014; mary et al. 2024). circular economy in rural tourism optimizes resource use and minimizes negative environmental impacts through resource reuse, recycling, waste reduction, and the promotion of renewable energy, thereby protecting ecosystems and promoting sustainable development (mihai et al. 2021; rodríguez et al. 2020). irt can restore degraded areas by combining economic activities and environmental protection, benefiting the local economy and ecosystem (hatma indra jaya et al. 2024; xiang & yin 2020). the relationship between environmental protection and sustainable tourism development is becoming a key strategy to mitigate the impacts of greenhouse gas emissions and climate change (gabriel-campos et al. 2021; mancini et al. 2022) cluster 4 – innovation and integrated tourism technology for rural sustainability: this cluster highlights the important role of innovation and technology in irt development, especially in the context of digital transformation and changing tourist demand, as represented by 21 keywords. innovation and technology play an important role in developing srd by improving operational efficiency, promoting cultural heritage, and contributing to socioeconomic growth (ciolac et al. 2022; hussain et al. 2023). integrating ai technologies, supporting the resolution of sustainability challenges, enables efficient resource management and reduces environmental impacts in tourism activities (jiang et al. 2023). along with the development of technology and innovation in management through stakeholder empowerment and communityled models, it is essential for sustainable growth in rural tourism sectors (rocca & zielinski 2022; zhao et al. 2011). in addition, business innovation helps to differentiate local businesses, increase community engagement, and promote social inclusion, in line with the sdgs (antão-geraldes & sheppard 2020; cosma et al. 2014) cluster 5 – integrated rural tourism and governance: governance plays a key role in irt with sustainable development, acting as an intermediary and coordinating the collaboration among different stakeholders to generate socioeconomic and environmental benefits (apostolopoulos et al. 2020; marzo-navarro et al. 2017). effective governance ensures that tourism development is consistent with the target ambitions of economic growth, cultural preservation, and environmental sustainability, promoting long-term benefits and minimizing potential negative impacts on rural areas (cawley & gillmor 2008; dos anjos & kennell 2019). effective governance helps manage and respond to fluctuations or risks such as natural disasters and epidemics, ensuring benefits for local communities and minimizing negative impacts, supporting economic growth and social stability in rural areas (pennington-gray et al. 2014). implementing effective management rules ensures sustainable practices and wise destination management, using natural resources and cultural assets appropriately to maintain ecological balance and promote community welfare (bichler 2021). effective destination 12 bioproducts business 10(1) 2025 management strategies involve establishing rules that support tourism infrastructure and environmental management, which help local communities benefit economically while maintaining ecological integrity and enhancing the visitor experience (mihai et al. 2021). cluster 6 – well-being and good health: irt improves the quality of life of rural communities through employment opportunities, income generation, and infrastructure improvements, alleviating poverty (baby & kim 2024; bannor et al. 2022; ramaano 2023b). in addition, tourism activities also increase community connections, and local people can learn and exchange experiences, contributing to the construction and development of the local economy and society toward sdgs (dang & phan2023). rural integrated tourism not only can help protect the environment but also can contribute to improving the health of the community as well as tourists themselves. for example, resort tourism and health tourism activities can improve the physical and mental health of tourists, increasing tourists’ level of satisfaction, as well as improving local communities (an & alarcón 2020; chen et al. 2023). in addition, irt activities help tourists feel connected to nature, enhance relaxation, reduce stress, and increase tourist satisfaction with tourist destinations. the positive impacts of rural tourism on health, social development, and loyalty are considered important factors in promoting the sustainable development of rural areas (leo et al. 2021). in addition, irt can enhance the subjective well-being of women, where tourism development improves their quality of life and daily experiences (cheng & xu 2021; pesonen & komppula 2010). 4.2 discussion on the implications of key trends and emerging themes as the thematic map suggests, the underlying themes related to rural sustainable development provide a foundation for understanding core concepts and research areas related to rural tourism and sustainable rural development. niche themes in the literature expand research on sustainable development issues, especially in coastal areas and industries related to fisheries, tourism, and climate change adaptation. the emergence of niche themes such as marine ecotourism, small-scale fisheries, and climate change adaptation underscores the importance of sustainable practices in irt. these elements create opportunities to connect tourism with environmental protection and community development and contribute to building more effective models of sustainable development. the core motto themes show how irt impacts srt in terms of economic, community, and environmental aspects that are harmonized to create a tourism model that is not only financially beneficial but also protects and promotes cultural and natural values, thereby promoting sustainable development for both the community and the economy. a core theme focuses on building a tourism model that supports economic growth, protects the environment, and improves the quality of life of local communities through sustainable development strategies. this theme reflects a holistic view of integrating creative, community, environmental, and economic elements into tourism development, in relation to the increasing emphasis on sustainable and environmentally friendly aspects of rural tourism development, including natural elements. the emerging/declining theme shows a deep understanding of the harmony between economic development and environmental protection, creating an integrated rural tourism model in which socio-cultural sustainability and biodiversity conservation in rural tourism development are linked with ecotourism. in addition, rural tourism development appears to intersect with the underlying theme that has profound implications based on the fundamental elements of rural sustainable development. the elements of gender equality and heritage intersect with the underlying themes that underpin social welfare and equality development. the emerging themes related to the deep understanding of the elements of irt development that impact srt intersect with the underlying themes based on the elements of empowerment and heritage, which shows that many new approaches show an evolution in rural tourism development based on these underlying theoretical foundations. in contrast, the niche topics show much broader streams related to environmental protection from a new perspective on coastal tourism and climate change. based on the image analysis, it is possible to provide an overview of the linkages between sustainable development, community empowerment, and environmental conservation in rural tourism, highlighting the relationthao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 13 ship between protecting natural resources, improving community life, and maintaining cultural values 4.3 building the knowledge framework based on the analysis of irt and srd, we can easily see that the whole development process of this topic is very complicated; each stage has had different research directions and “hot topics.” these new research directions may be expanding or deepening existing topics; therefore, changes in research topics and directions are always moving and developing. previous studies have conducted assessments and analyses of rural sustainability from different analytical perspectives. however, the existing studies have not yet established a knowledge framework, making it difficult for readers to obtain important information concisely and intuitively. therefore, it is necessary to build a new valuable, comprehensive, and intuitive theoretical knowledge framework for research related to irt’s impact on srd, which will provide an overall picture of this field and directions for future research. the resulting research framework clearly and concisely presents the overall research relationships, essential stakeholders, and new research directions to provide valuable references for future studies (figure 6). 4.4 current challenges the above analysis reveals that the impact of irt on srd includes a combination of various related topics. combined trends inevitably complicate the relationship between movement and innovation in the topics, which opens up new interdisciplinary issues. based on the above analysis and framework, the field faces the following challenges, which scholars and practitioners need to pay attention to, specifically: (1) role of irt in srd remains ambiguous in prior studies: while tourism boosts economic opportunities in rural areas, it can also result in environmental degradation and resource overexploitation. this raises questions: how can tourism be designed to benefit rural communities and safeguard local resources simultaneously? what conflicts of interest arise between tourism and other economic sectors? lastly, what are the ethical responsibilities of stakeholders—local governments, businesses, and communities—in fostering sustainable tourism development? (2) transforming tourism enterprises’ business models: transforming from a traditional business model to a sustainable one requires tourism enterprises to change their operations and management. the challenge is how enterprises can maintain profits while applying sustainable principles, such as minimizing environmental impacts, protecting cultural heritage, and ensuring social equity. (3) resource management issues in sustainable tourism: one of the major challenges in developing irt and srd is the rational management and use of natural and cultural resources. how do we balance the utilization of resources for tourism and their conservation? (4) changing tourist habits and awareness: although many tourists increasingly choose sustainable tourism, attracting and maintaining their participation in sustainable tourism activities remains a major challenge. how can we raise tourists’ awareness of the long-term benefits of sustainable tourism and encourage them to change their travel habits? (5) disparities in national resources: large countries have advantages in resources for developing tourism. sustainable tourism can be difficult for countries and regions with limited resources. how can disparities in access to and implementation of sustainable tourism be reduced between regions, and in both developed and developing countries? how can equitable distribution of sustainable development in society be ensured between countries? mechanisms must be established to support and share experiences and knowledge to ensure sustainable tourism can be implemented evenly and effectively in all localities. (6) integrating cultural and social factors into sustainable tourism is essential but presents challenges: how can local cultural values be preserved without compromising their authenticity? with differing interests among community groups, how can conflicts in development methods and goals be resolved to achieve consensus? furthermore, how can communities better understand the long-term benefits of sustainable development and adapt their perspectives to align with these trends? 14 bioproducts business 10(1) 2025 (7) the method of achieving srd is still vague: many detailed factors affect the effectiveness and efficiency of achieving sustainable tourism; these factors affect sustainable tourism differently. in addition, it is still unclear what detailed approaches can be used to achieve sustainability. specific approaches may need to be designed to integrate with national and regional policies to synchronize sustainable development activities. 4.5 future research direction research on sustainable development in rural areas is constantly growing, especially on irt. this has led to a richness in approaches and a great change in its central themes and positions in each period. therefore, researchers need to have a full and correct understanding of future research directions and characteristics in srt development. theoretically, we deduce the following research characteristics based on our current knowledge framework and challenge analysis. (1) developing climate-resilient coastal ecotourism models in rural areas: future research needs to explore the development of climate-resilient coastal ecotourism models. this includes studying the interactions between climate change, coastal ecosystems, and the communities that depend on these resources and developing tourism development strategies that minimize the impacts of climate change. (2) analyzing protection mechanisms and tourism development strategies that do not degrade the quality of land resources: this may also include finding ways to minimize the negative impacts of tourism on the ecosystems and biodiversity of rural areas. it is essential to investigate the effects of climate change on coastal tourism destinations, particularly those with significant cultural heritage value. the research will help identify effective protection measures and sustainable tourism development in this context. figure 6. knowledge framework for the impact of integrated rural tourism on sustainable rural development. thao et al. — sustainable rural development through integrated agritourism, rural tourism, and ecotourism: a bibliometric review 15 (3) creative community tourism and preservation of local culture: future research will focus on developing creative community tourism models in which local communities actively create tourism products while preserving and promoting local cultural values. this research direction will seek ways to help rural communities maintain cultural traditions while developing tourism. (4) application of technology and innovation in rural tourism development: new technologies such as vr, ar, or digital platforms must be studied to develop creative irt products, attract tourists, and create economic opportunities for local communities while protecting and developing natural and cultural resources. (5) srd focusing on gender equality and empowerment of vulnerable communities: this research direction will focus on developing sustainable irt strategies in which women, children, and vulnerable groups can participate and benefit from tourism activities. the research will assess the effectiveness of sustainable tourism models in creating economic opportunities and development for these community groups. (6) social equity and benefit distribution in tourism development: this research will explore how to ensure equity in the distribution of tourism benefits so that rural communities can benefit fairly from tourism development without causing social polarization. (7) research that can create tourism development models in which factors such as community welfare, natural resource protection, and tourist satisfaction are effectively integrated. (8) green rural tourism and carbon emission reduction: the study will focus on developing rural tourism models that protect the environment and contribute to reducing greenhouse gas emissions. these models may include promoting renewable energy, sustainable transport, and tourism activities that minimize environmental impacts. 5. conclusion using vosviewer and biblioshiny, we performed a visual bibliometric analysis of documents from wos from 1990-2024. the results showed the publication trends of influential journals, authors, and countries. furthermore, the analysis of the collaboration network of countries, together with the analysis and co-keywords, revealed that irt impacts srd with expanded perspectives to provide challenges and future research trends. specifically, some key findings are as follows: (1) this trend reflects that irt research has become an area of great interest in the academic community, associated with the increasing awareness of sustainable development in rural areas in the context of globalization. (2) the analysis of the collaboration network shows that major countries such as the usa, italy, and the uk collaborate more frequently in this field, especially china, emerging after 2020, affirming its position in the quantity and influence of research. additionally, the large population of china may also contribute to its high level of scientific production. however, asian countries have relatively weak global cooperation, implying that global cooperation should be expanded, especially in developing countries. in addition, development strategies have differences in the research approaches of countries, between prioritizing the production of many documents and focusing on high-quality publications. (3) keyword co-occurrence network analysis shows that irt impacts srd with broader perspectives than traditional ones. in addition to the impact on economic improvement, social development, and environmental protection, many studies also focus on factors affecting technological innovation, governance, and the impact on welfare and good health. the challenges and research directions towards srd are based on environmental protection policies, climate change adaptation, especially for coastal areas, and policies in land management for irt. researchers need to clearly understand the implications of these keywords to contribute valuable findings in this field. this study is innovative. from a knowledge perspective, we analyzed and reviewed the research progress of irt from the perspective of collaboration, influencing factors, and co-phenomena. this analysis is full-scale, multidimensional, and integrated to pro16 bioproducts business 10(1) 2025 vide sufficient information for readers to understand the dynamics of this field. theoretically, we have built a new knowledge framework for this field, facilitating a clearer, more vivid, and faster understanding of the logical structure and development of srd based on tourism development. practically, we identify the current challenges and characteristics of future research, guide scholars to identify more appropriate research concerns, and continue to practice more effective research in the future. there are some limits, however. firstly, as researchers using the wos for the data search sources, we limit the wide range of sources found in the scientific community. secondly, our limitation is only “articles,” so many works have not been studied. furthermore, because the language chosen was english, valuable academic studies published in other languages may have been missed. despite these limitations, the methodology we used was the best choice currently available for achieving the most accurate results possible. in the future, we will update the latest publications to conduct more in-depth analyses based on additional findings and will combine methods to develop a new research model. in addition, we will include more databases from other sources to make the results more representative. furthermore, we will explore literature in other languages to gain a more comprehensive understanding. acknowledgment we sincerely thank the science and technology fund of hue university, project no. dhh2023-10-35, for supporting this research. references an, w., & alarcón, s. 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(2011). social capital and tourism entrepreneurship. annals of tourism research, 38(4), 1570–1593. https://doi.org/10.1016/j. annals.2011.02.006 https://doi.org/10.1016/j.wdp.2024.100592 https://doi.org/10.1016/j.wdp.2024.100592 https://doi.org/10.1080/09669582.2023.2235888 https://doi.org/10.1080/09669582.2023.2235888 https://doi.org/10.1016/j.annals.2011.02.006 https://doi.org/10.1016/j.annals.2011.02.006 abstract megaforces such as climate change, and market dynamics are impacting the development of product and service markets in the forest sector, driving renewal and reorientation. the university of helsinki (uofh) has produced leading academic research, through global collaborations, on managing that transition by firms within the nordic forest sector. to further understanding of how much and in what ways their research is aligned to forest sector developments, a case study was conducted assessing (1) the nordic industrial forest context, (2) the corresponding research contributions and collaborations from 2014–2019, and (3) future research orientations. a conceptual lens of forest-value chain sustainability from the perspective of industrial competitiveness was applied. research design included three questions for the aspects noted, investigated sequentially to triangulate and validate results. the results highlighted similarities and divergences between current and future research orientations and between researcher perspectives and the actions of incumbent forestry firms. together, these indicate gaps in the ambition level required to support renewal in industrial competitiveness. closing them will require a radical transformation, relying on proactive management and investment toward new product and service development, in order for forest industry firms to become champions in the circular and bioeconomy paradigms. keywords: literature review, sustainability transition, bioeconomy, finland, industrial competitiveness, forest sector current and future research themes in forest sector competitiveness: case study of research orientations at the university of helsinki 1 department of forest sciences, university of helsinki, finland * corresponding author. email: anne.toppinen@helsinki.fi acknowledgements: we acknowledge valuable insights from the three reviewers and editor of this journal. this study was realized with funding from the faculty of agriculture and forestry, university of helsinki and the ella and georg ehrnrooth foundation (grant reference no. 190046). brent matthies,1 jaana korhonen,1 anne toppinen1* bioproducts business 5(8), 2020, pp. 87–106. issn 2378-1394 https://doi.org/10.22382/bpb-2020-008 1. introduction the concepts of both the circular and bioeconomy, as research paradigms and industrial strategies, imply economic growth-based transformation and development with varied approaches toward achieving sustainability (d’amato et al. 2017). the concept of “bioeconomy” is more closely associated with business-as-usual operations for the nordic forest sector and is less reflective of expected transformations in society and the economy, e.g., to meet the 2030 sustainable development goals and the 2015 paris agreement on climate change, than circular economy (d’amato et al. 2017, guerrero & hansen 2018, stern et al. 2018, hurmekoski et al. 2018). as such, the bioeconomy emphasizes reliance on bio-based resources without linking to upstream or more inclusive innovation. to an extent, the nordic forestry sector has reflected both concepts recently via attempts to mobilize biobased resources with greater efficiency and drive product and service innovation. nordic firms use wood-based inputs across a breadth of product categories, including, e.g., bio-based textiles, wood products and furniture, liquid biofuels, paper, bio-based chemicals, and bio-based electricity. however, efforts toward higher value-added products have seen mixed results, with a risk of further decline in gross value-added production, contradicting bioeconomy aspirations (hurmekoski et al. 2018). this is a concern, especially if growing demand is disproportionately allocated to lower value-added products (e.g., pulp) (pöyry inc. 2015). 88 bioproducts business 5(8) 2020 key drivers for a recent rise in nordic bioeconomy investments are the growing global demand for such lower value-added products, e.g., pulp, sawtimber and renewable energy, as well as to address the higher factor costs in comparison to emerging market producers (e.g., uruguay). such investments increase the importance of securing resource supply and ensuring sustainability throughout the value chain. this article examines these strategic transformation efforts from the perspective of industrial competitiveness – defined here as the overall value-creation potential of the forest sector within the circular and bioeconomy paradigms, triggering changes in products, services, processes and networks. an examination of the state of the art in circular and bioeconomy forest value chains at country or regional levels in the nordic context was conducted to start – an approach with limited research to date (see, e.g. wreford et al. 2019). thereafter, we examined the state of the art in local academic research orientations: their alignment and/or divergence in perception from the sector’s current transition ambition. this is a novel approach for examining transition pathways, their potentials and challenges, relying on research paradigms and qualitative analysis rather than quantitative metrics, e.g., paris agreement alignment of greenhouse gas emissions trajectories for corporations. among the highest geographical concentration of forests in europe, finland is at the center of a regional industrial cluster with head offices for 3 of the 10 largest european forestry, pulp and paper firms (by net income in 2018 terms) (pwc 2016).1 the strategic push by finland towards circular and bioeconomy development follows a period of national economic stagnation linked with the structural changes in the global forest product markets with a trend away from paper use (bouwman et al. 2014), where most forest sector firms have sought higher value-added innovations to replace the revenue losses from declining markets and high costs. competitiveness and sustainability are at the core of finnish, nordic and european efforts to support renewal and innovation in the industrial forestry sector (tem 2014; european commission 2012, 2018a,b). to support implementation of the finnish bioeconomy strategy, the academy of finland published an r&d report on future research paradigms to map the national role in the global bioeconomy (academy of finland 2014; see appendix a).2 key research orientations in the report focused on networks, value co-creation and innovation, values and perceptions of consumers and individuals, supply of raw material in a sustainable manner, innovation and resource efficiency and the need for new pathways to ensure both adaptation and adaptability. these were later funded in a 10 million euro (meur) national research programme (biofuture 2025, 20172020), in short, to support enhanced sustainability and industrial competitiveness in finland through circular bioeconomic research. the university of helsinki (uofh) was a major recipient of those funds. it has been at the forefront of academic research on how industrial forest-sector firms are managing the aforementioned transition and its challenges. to further understand how much and in what ways that research fit within the theoretical underpinnings of the ongoing nordic industrial forest-based transformation, a case study review was conducted concentrating on uofh’s research contributions and collaborations during 2014–2019.3 three research questions (rqs) were posed in this study to sequentially gather results (figure 1), iteratively reviewing and validating new results against earlier results, using them toward further research design in subsequent rqs, and eventually bringing them together in a set of final results and discussion themes (see section 4). an appropriate research method was selected to investigate each rq, examining how uofh’s research has approached the topic from different geographic, political, economic and social contexts. this review’s results are highly topical, given the national and regional importance of the sector for finland and the nordics in the transition to a sustainable low-carbon economy. rq1 set the foundation, including the theoretical setting on industrial competitiveness and a review of current forest sector market dynamics in the nordic context (i.e., “market review”). data included statistical 1 the finnish bioeconomy contributed eur 193.3 billion to the national economy (12% of total value added) in 2017, growing by approximately 20% between 2010-2017 (luke, 2019). total value added in the finnish bioeconomy has increased over time, though the effect on employment has been neutral or negative (ronzon et al. 2015, piotrowski et al. 2019). 2 the academy of finland (2014) report acts as a reference in this review for assessing new and interesting research findings on forest sector competitiveness in the finnish geographical and industrial settings during the period of this review (2014–2019). 3 the uofh has been ranked as one of the globally top 5 university level forestry faculties, and has a long history of academic research focused specifically on forest sector competitiveness (jeglum & scarratt 1989, cwur 2017, cwts 2018). on that basis, it provides a benchmarking case study for assessing academic research developments towards the creation of sustainable competitiveness within the forest sector and its associated transition. matthies et al. — current and future research themes in forest sector competitiveness 89 and disclosed information on market developments (e.g., firm investments). rq1 results provided the conceptual lens for comparing and contrasting, triangulating and validating results from rq2 and 3. for rq2, a publication analysis and in-depth literature review was conducted, eventually focusing on the 20 highest-profile articles on industrial competitiveness during 2014–2019. rq3 used expert interviews with 10 faculty members, together with the literature review, to determine thematic alignment or divergences on ambition in the forest sector transformation. in the next section, we present the theoretical background on industrial competitiveness in the finnish industrial forest sector based on the outcomes of rq1. thereafter, an overview of methods and data used this case study, focusing on rqs 2 and 3, is provided in section 3, supplemented with further description in appendix b. in section 4, results from the publication analysis and four themes based on the results for rqs 2 and 3 are presented and discussed. conclusions are presented in section 5, followed by limitations in section 6. 2. theoretical setting toppinen et al. (2017a) provide a framework for the analysis outlining the competitiveness orientations of the finnish industrial forest sector (figure 2), which is used in defining “competitiveness” beyond the common concurrent competitiveness measures, such as profitability or market share, and emphasizing the importance of securing future value creation potential (korhonen et al. 2018a). sustainable value creation potential is built on the ability to manage internal (i.e., firm resources) and external (i.e., voluntary norms and stakeholders) factors that are linked with global sustainability megatrends, as well as the policy environment and other considerations driving or impacting the emerging range of commercialized forest products and services. as internal factors may be partly controlled by the firm, external factors (e.g., unpredictability of climate change) take an increasingly important role in shaping organizational decisions and actions by the firm (toppinen et al. 2019). key factors in securing sustainable value creation potential can be approached from two complementary theoretical logics. a resource-based view of the firm (rbv) focuses on those characteristics of resources and the strategic factor markets from which they are obtained to explain firm heterogeneity and sustainable advantage (wernerfelt 1984, barney 1991, lopez-gamero & molina-azorín 2016). it considers that resources that are valuable, scarce, inimitable, and non-substitutable (vrin) provide enduring firm differentiation and above-normal profits and may be viewed as important in the context of proactive environmental management by the firm. the dynamic capability view (teece et al. 1997) emerged in the 1990s extended the rbv argument by addressing how the vrin resources can be created and how the figure 1. overview of research questions and corresponding methodologies applied to answer via the case study conception lens (figure 2). source: authors. research questions corresponding methodology in what ways is the country’s position as a global supplier of sustainable forest products competitive in the “current snapshot”? market review to what extent and in what ways is the “current orientation” of research in selected faculty aligned with the “current snapshot”? publication analysis and literature review in what ways can our research best contribute to future orientations? interviews via interview framework co nc ep tu al len s f or a ss es sin g dif fe re nt fa cto rs a nd ge og ra ph ica l, p oli tic al, e co no m ic an d so cia l c on te xt of th e ca se st ud y research objective: case study on academic contributions of a leading institution in subject matter 90 bioproducts business 5(8) 2020 current stock of valuable resources can be refreshed in the changing business environments (for a reference in the wood industry, see korhonen & niemelä 2005). alternatively, institutional theory considers that rules, norms, and beliefs are part of the context where economic activity occurs and that define or enforce behavior viewed as socially acceptable (meyer & rowan 1977, dimaggio & powell 1983, lopez-gamero & molina-azorín 2016). for firms, the theory can be linked to organizational culture, and at the interfirm level, it refers to public or regulatory pressures or norms in a specific industry. both the resource-based view and institutional theory can be applied to managing the diversifying internal and external expectations that are deriving from the changing operational environment of firms and industries (yang & konrad 2011). the resource-based view focuses on the value creating assets and competencies of a firm, while institutional theory considers the firm’s capability to support those same assets and competencies. therefore, external factors create the context where resource strategies and decisions occur. toppinen et al. (2017a) provide a summary of the internal and external competitiveness factors important for achieving or maintaining accepted level of sustainability in the context of the bulk and export-driven industrial forestry model of the nordic region, including, e.g., good governance of natural resources, solid land tenure system, and global societal demand for sustainability. according to those authors, innovation, thus, requires a view beyond costs toward high-value-added products and services. to explore the competitiveness orientations of the finnish industrial forest sector, the two theoretical logics are applied, while accounting for the “megaforces” driving a transformation toward sustainability and higher valueadded products and services. mitigating climate change and the negative impacts of other external megaforces increasingly requires a radical sustainability transformation, as part of a broader forest sectoral renewal. this means pursuing diverse and multiple dynamic and adaptive pathways, including for resource limitations, information flows, and network expansion, to provide strategic insights and create resilience (haasnoot et al. 2013). in that context, a “mature” industry, such as the finnish industrial forest sector, should strive to mobilize scarce resources toward new radical product and service niches by avoiding inward-looking and insular networks. the latter can lead to myopic attitudes and potential techfigure 2. european forest bioeconomic industrial competitiveness – a conceptual lens and guide for this study. source: adapted from toppinen et al. (2017a). matthies et al. — current and future research themes in forest sector competitiveness 91 nological and capability lock-ins (or lock-outs), limiting transformability of the sector over a relatively short timescale (geels 2014, oinas & lagendijk 2017). as such, it is important to reduce cognitive proximity between firms, which can limit the flow of new knowledge into and its transmission within a network, limiting the potential for renewal (boschma 2015). research plays an important role in such networks, if it is able to support knowledge co-production and transfer that support to value proposition development (korhonen et al. 2018b, lovrić et al. 2020). 3. methods and data as outlined in section 1, case study research design centered on three sequential rqs. they were selected through emails and meetings with a panel of experts (hereafter, the “expert review panel”) and the co-authors during an initial research design phase (figure 3, points a-d). in the following data collection phase, results from answering each rq informed the research design of the subsequent rqs. for example, the market review results for rq1 informed keyword selection for answering rq2, and the literature and market review results from rqs 1 and 2 informed the interview framework for rq3 (figure 3, points e-h, appendix b). the results from rq1 and 2 set the state of the art for nordic industrial competitiveness and research on it, respectively. results for rq3 set out the future research orientations, which together with results for rq2 informed on how much and in what ways the studied research is aligned to forest sector developments. a triangulation and validation phase resulted in a set of final themes building on outcomes from rqs 2 and 3. the market review for rq1 was conducted as outlined in section 1 and is not described here further; the results were integrated into this article in the introduction and theoretical setting (i.e., case study background). the research procedure for rq2, publication analysis and literature review, is described further in section 3.1 and the outcomes discussed in section 4. the aim of the publication analysis was to depict key concepts and their prevalence in competitiveness research, and the aim of the literature review was to analyse the contribution of 20 key articles fulfilling the predetermined criteria (i.e., research state of the art). the aim of the interviews for rq3 was to compare and contrast with outcomes from rqs 1 (market developments) and 2 (past research), and set out future research orientations on the case study topic. for further explanation of the methods, see appendix b. the research design and approach used in this case study was considered appropriate and reliable, as it supported saturation toward key themes as presented in section 4, for example: 1. initial research design a) expert review panel meeting on research design b) research planning c) data collection identification & confirmation d) expert panel review research planning 2. data collection e) market review to rq1 f) publication analysis & literature review to rq2 g) triangulation findings from rq1 & 2 and expert panel review of triangulated results h) interviews to rq3 3. triangulation & validation i) content analysis & triangulation of results across research methods j) validation of results by co-authors k) expert review panel validation of final results figure 3. research design in three stages: (i) initial research design, (ii) data collection, and (iii) triangulation and validation, for steps a-k. source: authors. 92 bioproducts business 5(8) 2020 • two state-of-the-art analyses were conducted, for current market developments and recent research developments, to inform an interviews approach and validate its results. • interviewees were selected initially by the expert review panel and further interviewees added based on interviewee recommendation and agreement with the expert review panel. • multiple researchers reviewed coding outcomes from interviews, which were recorded digitally and transcribed. • convergence in interview responses on a given threshold is disclosed (as defined in section 3.3) and aligned with the outcomes for rq2 to determine key themes. 3.1 research question 2: publication analysis and literature review research output during the review period (2014–2019) was collected for a selected group of researchers (list of researchers in appendix b) using digital libraries and keywords to determine the state of the art.4 the following criteria were applied to analyse the publications: • author located from within the sub-group research cluster; • published between 2014-2019; • published within the top 10% percentile of journals; and • addressed a key topic identified in toppinen et al. (2017a). an analysis of topics and keywords was also conducted for all publication search results, using scival 5 and manually for comparison by the author from data originating in scopus. scival metrics for grouping publications by keywords and themes for analysis were automated according to the publisher’s own methodology described in elsevier (2019). manual keyword clustering was also completed, by listing like-pairs of keywords in clusters for keywords appearing more than once (i.e., 2+). keywords related to methodologies were excluded, as were any that were unclear (e.g., “management” can refer to either environmental or corporate forms). the keywords generated by these different analyses were then used to develop the interview framework for rq3. a targeted list of 20 publications were selected from the total search results, based on the articles’ impact ranking as defined by scival, which was reviewed and approved by the expert review panel before proceeding.6 each article was reviewed individually and as part of a group under a set of thematic headings identified during the market review and the keywords as indicated by the publication analysis results. most of the articles were led by researchers from the faculty in the research groups, but some were written through collaborations. 3.2 research question 3: expert interviews interviewees were selected through dialogue with the expert review panel. a total of 10 interviews were conducted out of 13 contacted prospective interviewees. the invited interviewees were sought in order to cover the spectrum of perspectives on the theme of the review from within the faculty of agriculture and forestry, and only a few of the interviewees had articles selected for in-depth review. all interviewees were adjunct, tenured, or full professors working in or in close contact with the topic of the review. the interview guide (see appendix b), developed from the results of rqs 1 and 2, covered a range of open-ended questions on the themes and keywords highlighted in this review. interviews lasted approximately 1 hour and were recorded and transcribed. each interviewee was provided the interview guide in advance. qualitative content analysis (qca), a method proposed by schrier (2012), was used for identifying themes within the interview response data and to account for frequencies. coding of the interviews was done using inductively and deductively grouped and categorized phenomena. during the process of interviewing, many of the findings were saturated, meaning that the total sample size was deemed sufficient. in presenting the results, convergence among interviewees regarding coded statements is noted in the article text. only statements with high (>5/10 respondents) and medium convergence (<5 but >3/10) on the same points by interviewees are noted. the low (<3/10) convergence statements are not included in this article. interview outcomes are presented consistently at the end of each results sub-section. 4 data span was chosen to match publication of finnish bioeconomy strategy in 2014. 5 scival is an elsevier tool for publication analysis, which “enables you to visualize research performance, benchmark relative to peers, develop collaborative partnerships and analyze research trends” (scival 2020). 6 this expert was not interviewed. matthies et al. — current and future research themes in forest sector competitiveness 93 4. results and discussion results for rq1 were the case study background, integrated to this article as the introduction and theoretical setting (sections 1 and 2). this section presents the results from rqs 2 and 3, separated as the publication analysis (section 4.1) and the resulting key themes from literature review and interviews (section 4.2). 4.1 research question 2: publication analysis results according to the publication analysis, the extent to which uofh’s research is impactful in its field of scientific literature and aligned with current competitiveness themes faced by the industrial forest sector was considered high during the review period. competitiveness-specific research was analysed according to the defined criteria (section 3.1), with 259 peer-reviewed publications having a field-weighted citation impact 7 of 1.89 and an average of 9.2 citations per publication (table 1). topic areas identified by scival metrics demonstrated alignment to the academy of finland themes as presented in section 1, with innovation, sustainable development, and sociotechnical transitions themes in industrial forest sector competitiveness increasing in importance. sustainability, knowledge sharing, and networks did not feature in the top 5 topics, but did feature in the top 10 topics (table 1). monitoring and reporting of sustainability information featured at 6th on the list, with sustainable business development (11), disclosure (12) and innovation (14). bioproducts were mentioned in the context of wood/timber (8) and by or sub-products (3, 4, 10, and 13). alternative forest service options were considered in the clusters about deforestation and communities (7) and on ecosystem services (9). however, the lower absolute output by topic does not translate into a lower impact overall. topics indicated close linkages with circular and bioeconomy concepts, various aspects of value chain, from security of the wood supply to products and processes, as well as the growing importance of innovation, sustainable development, and socio-technical transitions. this suggests a strong alignment with the themes of renewal in industrial competitiveness. field-weighted impact and publication prominence of the selected research contributions demonstrated the high value added in sustainability transitions literature (table 1). the impact on servitization (e.g., ecosystem service literature) scored highest in terms of field-weighted citation impact (6.42) among the list of 14 topics. it was followed by sustainability disclosure by firms (3.88) and sustainable development literature (3.78). this trend was also reflected in its global prominence scoring, where corporate responsibility (99.9th percentile), ecosystem service (99.9th percentile), sustainability disclosure (99.7th percentile) and innovation and socio-technical transitions (99.9th percentile) all scored highly. the results indicated that industrial competitiveness research at uofh increasingly investigates sustainability transitions dimensions, as the urgency of global sustainability challenges has gained prominence. for alternative comparison, manually clustering publication keywords by incidence, according to the 259 publications, demonstrated that forest management, products and services, sustainability, competitiveness and economy were the themes within the top 5 (table 2). in total, 119 of 160 identified keywords were clustered. servitization, sustainability, competitiveness, and economy featured on the list in terms of associated keyword prominence. manual clustering highlighted the importance of sustainable transitions, sustainable development, and competitiveness themes in faculty research output, demonstrating that the majority of the 15 keyword clusters deal with these topics in various aspects, as they relate to forestry and the industrial forest sector. it further supported the outcomes of the scival approach to publication analysis. 4.2 research questions 2 and 3: key themes from literature review and interviews 4.2.1 theme 1: sustainability as an opportunity for forest sector competitiveness changes in production approaches (e.g., shifting to the global south) and sustainability awareness were found within the published research and interviews as affecting competitiveness and reputation for nordic industrial forestry firms. according to interviewees, cost competitiveness was viewed as important but as a narrow definition for industrial competitiveness with very few new factors. rather, external factors beyond the organization have a growing importance and role for driving industrial competitiveness during the current moment of history.8 equally, environmental sustainability was viewed 7 field-weighted citation impact (fwci) is the ratio of the total citations actually received by the denominator’s output, and the total citations that would be expected based on the average of the subject field. 8 high convergence, 8/10, among interviewed respondents. 94 bioproducts business 5(8) 2020 table 1. topics of research within the competitiveness sub-group with output above 4 articles, 2014-2019, as identified by scival. topics, in ranked order # of articles field-weighted citation impact global prominence percentile * 1 forest, forests, forest landowners 18 3.75 90.8 2 certification, forest, certified wood 11 1.62 94.6 3 cellulose, lignin, hot water 9 1.12 93.7 4 leuconostoc, dextran, acid bacteria 9 1.74 91.7 5 food, diet, animal products 7 2.22 99.7 6 corporate social responsibility, csr, social responsibility 6 0.74 99.9 7 forest, deforestation, community forests 6 1.83 98.9 8 wood, lumber, softwood lumber 6 1.36 75.3 9 ecosystem service, ecosystem services, multiple ecosystem 5 6.42 99.9 10 aerogels, cellulose, cellulose aerogels 5 1.20 96.9 11 sustainable development, biomass, economic growth 5 3.78 96.4 12 corporate social responsibility, disclosure, environmental disclosure 4 3.88 99.7 13 lignin, cell walls, lignin biosynthesis 4 1.62 98.2 14 innovation, sustainable development, socio-technical transitions 4 1.99 99.9 * global “prominence is an indicator of momentum/movement or visibility of a particular topic calculated” by scival. if the research topics addressed by an institution are in the top percentile, then it demonstrates that the selected institution is highly active and leading in a field of research that also has considerable momentum. scival provides the following definition for calculating a topic’s prominence, combining three metrics to indicate the topic’s momentum: (1) citation count in year n to papers published in n and n-1; (2) scopus views count in year n to papers published in n and n-1; and (3) average citescore for year n. table 2. keyword clusters as identified by the author for competitiveness research by the sub-group, 2014-2019. keyword clusters keyword cluster descriptor occurrence for clustered keywords forestry, forest management, forestry practice, plantation forestry, forests, forestry production, land use, eucalyptus forestry 71 innovation, forest product, forestry services, products, new product launch, bioenergy, bio-energy, ethanol, packaging, packaging materials, furniture, wood, timber, wood products, wooden construction products and services 65 sustainability, sustainable development sustainability 54 competitiveness, competitive advantage, competition, corporate strategy, costs, future prospect, investment(s), strategic approach, business development, business ecosystem, business opportunities competitiveness 49 bioeconomy, circular economy, green economy, commerce, economics, business, small and mediumsized enterprise economy 44 chemistry, metabolism, tensile strength, cellulose, exopolysaccharide(s), plant protein, water vapor permeability, alcohols, barrier properties, elastic moduli, mechanical properties, elongation at break, films biophysical and chemical properties 41 stakeholder, consumers, perception, consumption behavior, consumer, co-creation, human(s), environmental perceptions, environmental awareness, health stakeholders 33 ecology, ecosystem(s), nonhuman, ecosystem service(s) ecosystem 33 forest industry, forest sector(s), pulp and paper industry, construction industry, timber industry, construction business, food industry industrial sectors 30 environmental impact, economic and social effects, environmental impacts, environmental indicator, environmental performance, dependency, environmental issue, environmental sustainability, carbon, carbon footprint non-financial impact 30 finland, china, sweden, europe geography 25 environmental management, environmental protection, conservation, climate change, biodiversity, environmental regulations, environmental policy environmental management 25 corporate social responsibility, corporate social responsibilities (csr), communication, corporate responsibility, corporate sustainability, environmental communication csr 24 forest certification, certification, sustainable forest management, timber certification, environmental certification, eco-friendly products certification 15 nonindustrial private forests, non-industrial private forest owners, forest owners forest ownership 9 matthies et al. — current and future research themes in forest sector competitiveness 95 as mutually exclusive to financial performance among forestry firms, with climate change being the major sustainability “megaforce” under consideration (pätäri et al. 2016). this indicates an alignment between researchers and industry on sustainability being a priority for both forestry sector competitiveness and in current research. to effectively internalize these changes to business models and processes, environmental policy predictability and stability were seen as important for the forest industry (korhonen et al. 2015). a proactive environmental policy approach by some firms to such challenges has been shown to correspond with active communication, including product recyclability, measuring carbon footprint, energy use, and promoting research and development activities (räty et al. 2016). climate change is often viewed as an opportunity internally to many industrial forest firms; a basis for transitioning to more sustainable business practices (pätäri et al. 2016). firms view their role towards addressing climate change as to include mitigation via material substitution, bioenergy, recycling and material efficiency. according to interviewees, this shift affects entire business models, and increasingly new networks are important, but most new networks are often only in niche areas.9 in the reviewed literature, industrial representatives were the most adamant compared to other expert groups (governmental, research) about the role of climate change and energy as megaforces driving changes in the sector (korhonen et al. 2015). there is also a growing awareness of environmental issues among consumers, which is seen by forestry firms as an opportunity for competitive advantage by firms with high environmental standards (korhonen et al. 2015). this underlines the managerial belief that sustainability is part of competitiveness and competitive advantage, and supports the conceptual underpinnings from toppinen et al. (2017a) on how to operationalize the long-term view on competitiveness. there is also a strong, though not fully realized, role for government institutions within the forest value network during the sustainability transformation, acting as a catalyst for innovation and renewal through policy predictability and stability (korhonen et al. 2015). in turn, proactive and intrinsically motivated firms can also manifest action through internal environmental policy seeking the implementation of environmental communication and managerial and strategic attitudes on environmental performance. räty et al. (2016) found proactive firm behavior went beyond labelling, while neutral firms restricted their communication and often relied only on labelling. small and medium-sized, value-added firms and do-it-yourself stores were more often proactive or neutral, in contrast to retailers and construction firms who were predominantly neutral or passive. environmental certificates were perceived as important, but used more in b2b than consumer export markets. the key benefits from a proactive environmental policy included resource efficiency, changing customers’ preferences, waste management and raw material origination. such managerial level aspects of forest sector renewal and sustainability transitions should come forward, according to interviewees, in research output and engagement (e.g., effect of non-foresters leading major incumbents) to support adaptive planning and mitigate short-termism.10 4.2.2 theme 2: proactive environmental action by firms includes mechanisms to reduce and efforts to disclose value chain impacts there is a persistent perception of finland as having the best managed forests, forming part of a belief that finland is already being sustainable,11 according to the interviewees. to address these beliefs, they asserted that there should be a focus toward radical rather than incremental changes, as the time for optimism is decreasing with future emphasis on both climate change mitigation and adaptation having material consequences.12 for efficient use of wood in climate change mitigation by industry, the carbon sink in the forest, long-term storage in wood products, and avoided emissions through substitution should all be maximized (soimakallio et al. 2016). to expand the carbon sink, ecosystem service market participation by forestry firms in the nordic region can result in limitations to asset market liquidity, meaning there is not a win-win for all market participants (matthies et al. 2015). one means for achieving these objectives is through sustainable forest management (sfm) certification, linked with eu bioeconomy-linked policies and regulations seeking to reduce the impact of forestry utilization. according to soimakallio et al. (2016), the direct impact to the carbon emissions balance from wood harvesting in finland (in 2010) was greater than the 9 moderate convergence, 4/10, among interviewed respondents. 10 moderate convergence, 4/10, among interviewed respondents. 11 high convergence, 7/10, among interviewed respondents. 96 bioproducts business 5(8) 2020 combined direct emissions from wood utilization (i.e., substitution effect, which created a significant reduction in net emissions, but not enough to offset lost growth) and fossil fuel use in industrial production. thus, the alternative “no harvesting” scenario had lower impact overall than all scenarios that included harvesting. these results indicate that changes in management and harvest processes in finland may be required to meet the forest sector’s climate change mitigation targets, but finding solutions that both researchers and industry agree on and that firms initiate proactively can be challenging. impact offsetting and sfm certification provide two mechanisms to achieve those objectives. interest in carbon and biodiversity offsetting via forests in finland is growing, but the benefits of carbon offsets for investors and forest owners relative to traditional forest income (e.g., timber harvesting) may be limited. according to interviewees, firms should retain ownership of the service vehicle (e.g., carbon ownership is a competitive advantage).13 matthies et al. (2015) found the financial and diversification benefits from offsets were low at the stand level but increased as the landholding area increased. fertile sites were optimal for receiving payments, creating a trade-off with timber production, while low correlations between offsets and timber markets overall support the move toward diversifying cashflow streams. alternatively, sfm certification adoption, which also creates voluntary forest conservation areas, contains benefits of market differentiation, reputation and brand image, value chain communication and supplier relationships (tuppura et al. 2016). this can create both strategic and profitability motivations for firms, while clients requesting sfm certification indicates instrumental and institutional motives. customer demand and expectations, policy, and regulation have all been cited as important external factors driving sfm adoption. however, industry-level barriers for sustainability transition action are often linked with insufficient customer preferences toward sustainable products and policy and regulation uncertainty (räty et al. 2016). thus, there is a tendency toward being reactive, responding largely to external pressures, rather than proactive environmental behavior among industrial forest firms, which should be addressed to ensure competitiveness is sustained during a potentially rapid sustainability transition. corporate profiles oriented toward strongly sustainable transitions within the industrial forest sector were also viewed by interviewees as limited, and that there is not always a strong push to alter this by incumbents.14 lähtinen et al. (2016a, b) examined corporate reporting on such environmental issues by large and small forestry firms. large firms tended toward reporting of indirect impacts (77%) rather than direct impacts (i.e., on biodiversity and ecosystem services) and positive case studies (81%) over negative ones. resource efficiency and renewability were important co-benefits with environmental management actions, with strong emphasis by firms on sfm certificates and other conservation programmes. monitoring methodologies and uncertainties around environmental issues were not transparently reported by the large firms. reporting was focused toward actions within a broader value chain scope and positive orientation, demonstrating an imbalance between reporting and the scale of environmental challenges like climate change and biodiversity loss facing most forest sector firms. there was also lack of common economic, social, and environmental criteria and indicators among small firms (lähtinen et al. 2016b). divergences in social indicators (e.g., workforce, working conditions and safety) and environment (e.g., water, energy) meant that respondents, among smaller firms, did not perceive environmental sustainability as critical to their business operations or markets. to better integrate environmental sustainability to external communication more broadly and the quantification of negative impacts will require a greater level of strategic insight and awareness among the actors in finnish forest value chains toward the role of such disclosures in terms of engaging stakeholders. understanding the impacts of industry internationalization on competitiveness extends analysis beyond the boreal forests, with many of the nordic industrial forestry companies having operations in the global south. according to a global meta-review by malkamäki et al. (2018), the socioeconomic impacts of such largescale tree plantations are many and varied. the greatest number of impacts have been on employment, land, livelihoods, and social impact feedbacks. these results support the view that displacement of locals during the plantation establishment phase is a major social impact, which has effects both in terms of lost local livelihoods and access to land. although there are challenges to 12 high convergence, 7/10, among interviewed respondents. 13 moderate convergence, 4/10, among interviewed respondents. 14 high convergence, 7/10, among interviewed respondents. matthies et al. — current and future research themes in forest sector competitiveness 97 achieving a proactive approach toward mitigating and disclosing against negative impacts, the nordic and finnish forest industry has a long tradition of overcoming global and local challenges in wood supply, according to interviewees. future forest competitiveness research should include managing new risks (e.g., demographics, climate), certification challenges, and more emphasis on downstream activities (e.g., consumers) helping to manage more a radical transition successfully.15 4.2.3 theme 3: realizing innovativeness and industry renewal requires transformative change value-added products and services are viewed as important means for improving industrial competitiveness according to interviewees, with a focus on new margin and profitable growth. academic research has explored both product and service market potentials and limitations, supporting this development (e.g., alekhina et al. 2014, dahlbo et al. 2015). however, innovation in the nordic and finnish industrial forestry context is still limited and innovation systems uncertain, with the focus of incumbents still on bulk and low value added. that has effects on innovation orientations, technology lock-ins, lack of long-termism in product development and timber market developments.16 to overcome these challenges, research indicates that adopting new paradigms is important for supporting competitiveness and resilience. key themes emerging to support the finnish forest sector’s sustainability transition include green, circular and bioeconomy paradigms. d’amato et al. (2019) investigated how corporate reports used these themes, finding that circular economy was utilized abundantly, for efforts such as eco-efficiency and innovations, focusing on (1) monitoring/assessing; reducing/optimizing; (2) recycling/ reusing of energy; and (3) material flows. for the bioeconomy, use centered around (1) bio-based energy and fuels; (2) higher value use of biomass; and (3) biosecurity. taken together, very few linkages were found between the use of these concepts as reported by firms, opening for further development a combined paradigm for a “circular bioeconomy”. such a paradigm could support bio-based themes of product and service innovation, while integrating the sustainability dimensions of industrial competitiveness. interviewees noted that a new focus taking on global and radical sustainability transformation questions is a high priority (e.g., the climate crisis), with new growth paradigms (e.g., no growth), new value networks of actors, new innovations and knowledge sharing between actors required.17 support for the development of future products and services oriented toward circularity and long-term use of wood (e.g., wood construction and bio-materials) have scored favorably among forest industry actors (korhonen et al. 2018b). however, upon further exploration, key product and service categories include sawn wood and pulp and paper products, the traditional mainstays of finnish industrial forest product mix. services and packaging solutions also score highly, with marketing ranked as a core aspect to enhance these by industry actors. to support commercialization of circularity and longer lifespan of products are dimensions noted by firms for emphasis (e.g., wooden construction and bio-materials). mattila and roos (2014) indicated large incumbent service organizations are favored by market dynamics and forest ownership, making them slow to adapt, with limited customer orientation. instead, service providers often view forest owners as material providers rather than customers. these results contrast with d’amato et al. (2019), demonstrating the role of managerial-level engagement beyond only corporate reporting, where perceptions, knowledge and capacity toward the sustainability transition can be more granularly assessed. toppinen et al. (2017b) found that forest industry stakeholders viewed innovation more positively and this view was more widespread than 10 years earlier, with new products by network actors contributing between 30% and 75% of turnover in 2030 (average 61%). the highest estimates came from industry associations and industry experts. changes included substantial shifts in strategic partnerships within value networks. for future scenarios, product portfolio diversification through niche markets and high-value-added products were important considerations. however, a high level of divergence between industry actors’ perceived capacity to realize these shifts by 2030 and researchers indicates a high level of uncertainty for the sector. a radical shift in the business logic may be required to achieve the required changes in the product portfolio. interviewees and literature reviewed demonstrate a major divergence between researchers’ perspectives and the actions of 15 high convergence, 7/10, among interviewed respondents. 16 high convergence, 6/10, among interviewed respondents. 17 high convergence, 7/10, among interviewed respondents. 98 bioproducts business 5(8) 2020 incumbent forestry firms in the theme of realizing innovativeness and industry renewal. an important factor limiting such a transformation of the sector is the density of local and regional bioeconomy value networks. korhonen et al. (2108b) identified the finnish industrial forest network as being high and divided in two sub-groups, (1) a research–national institute-ngo group; and (2) an industry–government– other group. the former had higher levels of communication and knowledge sharing among actors than the latter. large industrial firms are central organizations, while other periphery actors included research, ngos and consultancies in the latter group. the network was centrally steered in a top-down manner by government agencies and industrial actors, who advocated their own policy interests. such a structure may be detrimental to long-term innovation and inclusive knowledge transfer, which can impact on the adaptability and resilience of the sector in competitive markets. the interviews also emphasized the pathways, networks, adaptive capacity and scenarios required for future academic research orientations. such research supports industrial competitiveness orientations by leading in ambition setting, to be prioritized and accepted by internal and external actors and built on, as it helps to orient toward what is the end goal for stakeholders and/ or society.18 sustainability aspects of academic research (e.g., futures research, sustainability transitions) should be central to forest industry renewal and associated policy making debate and decision-making, focusing on adaptive governance and futures research, especially given rapid sustainability transition periods and potential chronic crisis/disruptions (i.e., in markets).19 4.2.4 theme 4: transition requires knowledge sharing by firms towards stakeholders research indicates the importance of knowledge sharing between suppliers and buyers for increasing stakeholder awareness about sustainability dimensions in forest value chains and expanding beyond current value networks (e.g., wang et al. 2014). to overcome market prejudices towards timber use (e.g., susceptibility to fire, warping and shrinkage, history of concrete use) may require better knowledge sharing about timber products from the supplier side. however, a slow response and development by industries to meet demand and uptake for wood-based product utilization has been viewed, almost unanimously, as a hindrance to innovation diffusion by franzini et al. (2018). technical and financial aspects and the end-user preferences are also important considerations in firms seeking to better share knowledge about their product and service innovations (franzini et al. 2018). service offerings to customers should also have a material impact on business outcomes by addressing the heterogenous nature of individual preferences through personalization and differentiation (kaptein and parvinen 2015). as a result of growing awareness and change in perceptions of consumers toward a bio-based economy, there is also growing support among finnish citizens toward bio-based products, e.g., for bioenergy compared with fossil fuel-based energy (vainio et al. 2019). renewal of the energy markets and consumer awareness were key drivers in preferences, with smallscale production and domestic bioenergy power in rural areas seen as important. this underlines the rural employment dimension of the bioeconomy, where biomass energy production is an important component in finland. interviewees of this study also noted the importance of stakeholder management as an aspect of competitiveness, in order to outreach to and inform consumers about quality and finnish value added in environmental and social considerations (e.g., welfare, income distribution).20 5. conclusions past research by and interviews with uofh researchers in the assessment of and support towards transformation of the industrial forest sector in finland and the nordic region was indicated by the publication analysis and across the four themes presented. this research was built on the orientations outlined by the academy of finland themes (appendix a), including, inter alia, networks, value co-creation and innovation, stakeholder values, and sustainable and efficient resourcing pathways to ensure both adaptation and adaptability. notably there were similarities to the views from industry research on the first theme, as to the role of sustainability toward industrial competitiveness, while divergences emerged on the latter three themes. for resource utilization and the reduction of negative impact (theme 2), product and service innovation and 18 high convergence, 7/10, among interviewed respondents. 19 high convergence, 7/10, among interviewed respondents. 20 high convergence, 6/10, among interviewed respondents. matthies et al. — current and future research themes in forest sector competitiveness 99 proliferation (theme 3), and the importance of engaging value chain stakeholders (theme 4), interviewed researchers suggested a greater importance and more radical transformation than did industry. still, the importance of these themes was recognized by industry through the existing research. the key findings that emerged through this case study were the growing perception among researchers that increasingly radical sustainability orientations are required to transform the sector, as evidenced by articles published from the end of the 2014–2019 review period compared with those published in the beginning of the period, and that a higher drive for transformative change was identified among interviewed academic experts than what could be concluded about the industry studied. this could be a cause of concern also from a research funding perspective if the academy continues to focus less on practical industry development needs and more on high-profile scientific ambitions. thus, there are reservations as to whether incumbent firms are sufficiently ambitious to harness the emerging opportunities. this observation is important not only for guiding forest industry managerial decision making, but also nationally, as finland seeks to diversify its economy and broaden and deepen the integration of networks beyond traditional value chains. barriers to more radical sustainability action within firms were found to be tied with extrinsic motivation for sustainability or reactive approaches to external factors, such as customer expectations. the sustainability transformation has increased uncertainty in many industries, including forestry, requiring innovativeness, the uptake of new materials, and the establishment of collaborations throughout the value chains. recent advancements in european industrial policy (e.g., the european battery alliance) demonstrate that these challenges can be overcome through targeted action. the paradigm shift in research orientations, as evidenced in this case study, can feed into the broader commercial renewal through knowledge sharing and educational development. as key takeaways, we conclude that sustainability contributes to competitiveness and market access over the long-term. a more radical transformation is thus needed, relying on proactive sustainability management and strong investment toward new product and service development, in order for forest industry firms to become champions in the circular and bioeconomy paradigms. 6. limitations the authors acknowledge that the focus on a single case institution provided a limited scope for review without a peer comparison. however, by assessing the output of the institution on three rqs, the case study examines in greater detail how individual research items contribute towards understanding different factors within a broad theme – industrial competitiveness. further, we could contrast researcher groups’ past outputs with their views to future orientations to better understand the emergence of new or the strengthening of existing themes. by continuing to critically explore these research orientations, academic research has a continued importance for the finnish and global industrial forest sector. methodological options for how to carry that out are found to range from futures research exploration of new pathways to the evaluation of scenarios that link socioeconomic and environmental changes. naturally, using our (or any other documentarybased) approach, it is not possible to address to what extent the research has actually been used by the industry itself to gain higher competitiveness. a more fine-tuned analysis is called for in developing more explicit managerial recommendations to improve the competitiveness of the different segments of the forest sector and build firm-specific strategies. despite this, our review reflected a wider scope of research conclusions, going beyond a dissertation level connection of articles to connect closely oriented outputs across research groups, while retaining granularity not found in a broader faculty or university level research review. it explored the broader publication record for a subset of researchers focusing on topics relating to industry competitiveness in one of the leading forestry countries in europe, and by doing this, pinpointed the relevance for a sustainability transition, particularly under the bioeconomy and circular economy paradigms. a more specific limitation, the topic of integrating preferences by and knowledge from stakeholders, appears as an issue that would be better tackled with other data and methods than the literature review and researcher interviews done here, and those results are therefore not conclusive. as a whole, the gained case-based evidence from the perspective of one leading academic institution provides a potentially valuable benchmark for similar reviews to determine how research on this topic is evolving in different geographic, political, economic and social contexts. 100 bioproducts business 5(8) 2020 future research should also complement this by focusing on the inclusion of viewpoints from other stakeholders (e.g., firms from different segments, governments, trade associations, ngos, consultants, etc.) about how much and in what ways academic research has supported the development of the national forest bioeconomy. 7. references academy of finland. 2014. biotalous: kohti kestävää kasvua – näkökulmia biotalouden tutkimustarpeisiin (in finnish). 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understanding diversity management practices: implications of institutional theory and resourcebased theory. group & organization management 36(1). doi: 10.1177/1059601110390997 102 bioproducts business 5(8) 2020 appendix a: academy of finland report on bioeconomy research paradigms systemic changes in the bioeconomy: • value networks • biorefineries and product portfolios • cross-border resource efficiency • durability of protein production and consumption • consumption as a force for change products, services and concepts of bioeconomy: • modular local production • technically and economically sound raw materials • from nature to holistic well-being biomass availability and ecosystem services: • security of supply • optimal use of material flows • powerful surfaces • blue-grain economy • tailored biomass scientists in science and technology: • modular mobile local production • enabling technologies in the bioeconomy • bio-based compounds and substances • system changes, value networks reform • tailored biomass researchers in culture and society: • a critical review of the bioeconomy • creation and implementation of innovations in the bioeconomy • citizen in the bioeconomy • changing values • a value choice for a sustainable resource economy matthies et al. — current and future research themes in forest sector competitiveness 103 appendix b supplementary information 1. research design research design was based on iterative meetings, email exchanges and reviews with the expert review panel and co-authors. initial results, triangulation of secondary outcomes and final validation, as outlined in figure 4 of the article, was done in accordance with the three research questions and associated methods outlined in figure 2. 2. market review research question 1: in what ways is country x’s position as a global supplier of sustainable forest products competitive in the “current snapshot”? a market review was conducted building on the conceptual lens in figure 3. key themes included, inter alia, forest management certification, nordic-baltic economic convergence, finnish industrial forest cluster, new products and services, the circular bioeconomy and climate change. multiple data sources were used, ranging from media to peer-reviewed articles and statistical databases, to build a snapshot stateof-the-art of the industrial finnish forestry context. market review outcomes were compiled and used to inform the triangulation and validation of results from the methods applied to research questions 2 and 3. it was used to identify and validate the themes by which literature were grouped in the publication analysis and literature review. to do this, the key themes identified by the market review were presented to co-authors and expert review panel members by email and discussion to review, debate and validate as key themes in the context of the finnish industrial forest sector. the market review was condensed into the introduction section of this article. 3. publication analysis & literature review research question 2: to what extent and in what ways is the “current orientation” of research in faculty x aligned with the “current snapshot”? a. publication analysis the following persons were included in the list of sub-group researchers: • toppinen, anne • valsta, lauri t. • d’amato, d. • parvinen, petri m. t. • berghäll, sami • korhonen, jaana e. • lähtinen, katja • salo, jari • karppinen, heimo • korhonen-kurki, kaisa • mattila, osmo • hukkinen, janne i. • häyrinen, liina • rekola, mika • matthies, brent d. • holopainen, jani markus • vainio, annukka • tuomisto, hanna l. • li, ning • wan, minli • heinonen, visa • tenkanen, maija b. literature review articles were reviewed as follows, first read of the article, searching for key information about the research question, background and theoretical framework, method, results and conclusions as they related to the topics identified in interview framework figure and competitiveness. key information was placed in summary texts of approximately 250-500 words, which were then analysed as a grouping under a thematic heading aligned with the themes identified in the market review through validation with the co-authors and expert review panel. thereafter, the summaries were integrated into a thematic summary as presented in the results and discussion. selected articles ranged from 2014-2019 with a range of contributing authors and author leadership. majority of the articles were led by researchers from the faculty, but some were written through collaborations 104 bioproducts business 5(8) 2020 with outside organisations or universities in finland. results of the publication analysis and literature review were triangulated, including the keywords identified, and included in the interview framework development. in this way, the interviews built on the existing market and research contexts to inform discussions about current and future research dimensions. 4. interviews & interview framework a. interviews the interview framework (next section) was developed after concluding the results of rqs 1 and 2. a draft was reviewed by co-authors and the expert review panel. the framework covers the purpose of the study, the background theory, definitions, and data collection approach. the interviewees were selected by confirmation with the expert review panel. each participant in the interviews was provided the framework in advance (at the time of agreeing the interview via email). a total of 10 interviews out of 13 contacted prospective interviewees were conducted (77% response rate). all interviewees work in or in close contact with the faculty on the issues related to competitiveness. the following persons were interviewed from the faculty for this review: interviewee titles aggregate number interviewed professor emeritus 1 professor 7 associate professor 1 adjunct professor 1 there were a total of 5 structured headings with introductory and open-ended questions and one ‘other’ category: 1. personal definition of competitiveness 2. research roles 3. research outputs 4. research futures 5. research priorities 6. other half of interviews were conducted face-to-face (5/10), with the reminder carried out via phone. the interviews lasted 1 hour each. all interviews were recorded using a phone app and transcripted into written copies for review through a purchased service. transcripts were reviewed and excerpts compiled in an excel spreadsheet to provide an overview of the structure of the results. the primary researcher assessed the outcomes to compile the key issues by topic heading. after compiling the findings by heading, coding the responses and compiling preliminary findings, the initial results were reviewed by a second researcher, an external expert in the field of finnish forest sector competitiveness. coding included inductively and deductively grouped and categorised phenomena. qualitative content analysis (qca) method proposed by schrier (2012) was used for identifying themes within the response data and accounting for the frequencies. the themes were identified through concurrent and iterative review of the transcripts from the interviews. transcripted texts were copied to an excel and reviewed together with the outcomes of the other interview responses. the responses were compared to determine any emergent themes and clustered according to the themes identified using the identification of shared keywords, concepts and orientations associated to the identified themes to determine the level of convergence by the interviewees. the obtained themes were then compiled into a second excel sheet and convergence frequencies were calculated. during the process of interviewing, many of the themes were saturated (i.e. >50% of the interviewees mentioned and converged on the same themes) meaning that the total sampling size was deemed sufficient. in presenting the summary of the interviews, convergence was noted (amount of interviewee’s responses that converged on the theme statement). an indication of the number of interviewees who converged on the same points during their interviews is given (high = >50% of interviewees, moderate = >20% and matthies et al. — current and future research themes in forest sector competitiveness 105 <=50%, low = <20%). convergence was defined as stating the same response theme to the same question asked to other interviewees, an example of the second excel results with themes and convergences is provided here: theme research futures (future themes) number of converged responses 1 new focus taking on global and radical sustainability transformation questions is high priority (e.g. climate crisis, biodiversity crisis, new growth paradigms (e.g. no growth), new value networks of actors, new innovations and knowledge sharing between actors) 7 2 managerial level aspects of forest sector renewal and sustainability transitions should come forward in research output and engagement (e.g. effect of nonforesters leading major incumbents) to support adaptive planning and mitigate short-termism 4 3 forest industry has a long tradition of overcoming challenges in wood supply, but future research should include new risks (e.g. demographics, climate), certification challenges and more emphasis downstream activities (e.g. consumers). ability to address these questions uncertain. 5 4 currently there are numerous unresearched areas (e.g. sustainable finance) and underresearched areas (e.g. effects on land opportunity costs during sustainability transition, effects of rapid adaptation and landuse lock-ins), especially in social sciences (i.e. due to limited competencies) 8 5 servitisation and digitalisation are key future themes to continue developing 2 6 rapid policy making cycles should be a focus, taking into account long-term path dependencies and adaptive governance in public and private strategy and policy development 4 the final results of the coding and presentation of the interview results was validated with both co-authors through review and the expert review panel via presentation of the results and a group discussion. 5. interview framework (as presented to interviewees) the aim of this research is to benchmark the faculty's expertise and experts in research relative to the current and projected future research paradigms in forest sector competitiveness focusing on industrial development. the final report will examine effects from the policy environment, market dynamics, and global megatrends driving or impacting on the emerging range of commercialised forest products and services, including forest cluster growth, product innovation, and supply chain integration. the framework for competitiveness shown in figure 2 is used in this study to frame what research outputs and research groups are included in the analysis. the following european commission definitions used in the context of this research: 1. competitiveness: the ability of a country (region, location) to deliver the beyond-gdp goals for its citizens (aiginger, 2013) 2. beyond-gdp goals: measures that go beyond economic to include environmental and social aspects of well-being (e.g. sustainable development goals) (european commission, 2019) 3. bioeconomy: the production of renewable biological resources and the conversion of these resources and waste streams into value added products, includes traditional agriculture, forest, fishery, food and pulp and paper value chains (european commission, 2012) 4. circular economy: starts at the very beginning of a product's life” where both the design phase and production processes have an impact on sourcing, resource use and waste generation throughout a product's life (european commission, 2015) 106 bioproducts business 5(8) 2020 interview questions: 1) definition of competitiveness: in your view, what does “competitiveness” mean in the context of finnish industrial forest sector? a) list some key words in describing: i. competitiveness (beyond gdp) ii. finnish industrial forest sector (circular bioeconomy) iii. future economy & society 2) research roles: in your view, what role do you see for research and researchers in supporting, researching and reflecting on the competitiveness of finnish industrial forestry and its development over time? a) in what manner is that role currently being expressed within the faculty? could it be improved? if so, how? b) is there currently a close linkage with the private actors in the sector? if not, how could research more closely relate to their needs? what actions should be taken to achieve that? 3) research outputs: what have been key outputs of your / your research group / your colleagues contributions toward research about competitiveness by the finnish industrial forest sector? a) are your contributions currently sufficient for your goals / objectives in this area of research? if not, what improvements would be needed? how would those be achieved? 4) research futures: what do you think are the key competitiveness challenges for finnish industrial forestry actors currently in your view? and in the next 10 years? a) what opportunities are there for the faculty to address those challenges through research outputs and outreach? 5) research priorities: what should be the research priorities generally within the faculty to support a more competitive finnish industrial forest sector? within your field of study (indicate/define)? a) how might those priorities be best achieved within the next 10 years? 6) open discussion: please feel free to discuss any related topics that you feel are important for supporting this research. supplementary references aiginger, k, bärenthaler-sieber, s, & vogel, j. 2013. competitiveness under new perspectives (no. 44). working paper. current forestry reports. 2019. author guidelines for current forestry reports. springer, usa. elsevier. 2019. topic prominence in science. accessed on december 3, 2019. available from: https://www.elsevier.com/solutions/scival/ releases/topic-prominence-in-science european commission. 2012. innovating for sustainable growth: a bioeconomy for europe. communication from the commission to the european parliament, the council, the european economic and social committee and the committee of the regions, brussels. european commission. 2015. closing the loop an eu action plan for the circular economy. communication from the commission to the european parliament, the council, the european economic and social committee and the committee of the regions. european commission. 2019. beyond gdp. accessed on august 15, 2019. available from: https://ec.europa.eu/environment/beyond_gdp/ index_en.html schrier, m. 2012. qualitative content analysis in practice. sage, los angeles, ca, p. 280. toppinen, amk, korhonen, je, hurmekoski, e, and hansen, e. 2017. what makes a european forest-based bioeconomy competitive? towards a sustainable european forest-based bioeconomy assessment and the way forward. https://www.elsevier.com/solutions/scival/releases/topic-prominence-in-science https://www.elsevier.com/solutions/scival/releases/topic-prominence-in-science https://ec.europa.eu/environment/beyond_gdp/index_en.html https://ec.europa.eu/environment/beyond_gdp/index_en.html abstract business modeling and strategic planning are crucial for navigating competitive market environments. this study explores how villa exclusivo b.v, a pre-assembled and custom-made kitchen factory located in curaçao (netherlands antilles), upgraded its business strategy by applying kolyada’s business modeling and strategic planning theory and methodology, referred to as, “kolyada’s methodology.” specifically, kolyada’s methodology enables firm leaders to evaluate target cluster selection and market segmentation, and perform business model optimization based on projected industry trends. by combining these tools, this study illustrates the methodology’s potential to effectively assess a competitive environment, create a market model, and forecast its volume, as well as evaluate and forecast the performance of companies operating within a market niche. additionally, it provides scenario-based approaches to evaluate potential business outcomes under different economic conditions. while applications of kolyada’s methodology were previously limited to russian-language scholarship (russia and cis), this study’s findings provide practical insights into strategic decision-making for english-speaking professionals, demonstrating how structured business modeling can improve a company’s market positioning. keywords: business modeling, market forecasting, strategic management, strategic planning, competitive positioning, target market segmentation, clustering, clusterization. an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s business modeling and strategic planning methodology 1 general manager of villa exclusivo b.v curaçao (netherlands antilles). eurasian management and administration school (emas business school). email: anthonyjhosset@gmail.com. orcid: https://orcid.org/0009-00018745-4827 2 eurasian management and administration school (emas business school). email: rector@emasglobe.com. orcid: https://orcid.org/0009-0005-97259370 * corresponding author. declaration of competing interest: no conflicts declared. bioproducts business 10(3), 2025, pp. 29–50. issn 2378-1394 https://doi.org/10.22382/bpb-2025-003 anthony jhosset gonzalez rodriguez1, andrey a. kolyada2 * 1. introduction in today’s dynamic and uncertain business world, business models must evolve and innovate, leveraging technological advancements to capitalize on new opportunities (morris et al. 2005; nielsen and aagaard 2021). forecasting tools are crucial for this process because they enable organizations to simulate scenarios, evaluate potential outcomes, and align their strategies with future goals. ultimately, forecasting enables firms to adapt their business models and create customer value in an increasingly globalized market (baden-fuller and haefliger 2013). although magretta (2002) defined business models fairly simply as stories that show how organizations operate, the management literature has struggled to reach a consensus on their operational definition. for example, in a review of 103 publications on business models, zott et al. (2010) found that 37% did not provide a definition of the concept, 19% referenced definitions from other authors, and 44% proposed distinct business models based on one or more specific elements. following gambardella and mcgahan (2010), this study defines a business model as a company’s method to produce revenue at a logical cost that integrates assumptions regarding how to generate and obtain value. more concretely, a business model also demonstrates how an organization plans to surpass competitors and succeed mailto:anthonyjhosset@gmail.com https://orcid.org/0009-0001-8745-4827 https://orcid.org/0009-0001-8745-4827 mailto:rector@emasglobe.com https://orcid.org/0009-0005-9725-9370 https://orcid.org/0009-0005-9725-9370 30 bioproducts business 10(3) 2025 in saturated “red ocean” markets through strategic planning and management. business models often operate in collaboration with business strategy, to the extent that massa et al. (2017) viewed a business model as a continuation of the firm’s strategy, rather than a new element. along similar lines, slávik and zagoršek (2016) highlighted that a business model outlines how a firm operates and generates revenue, whereas a business strategy defines and explicates in what way, where, and for what reason a business model is applied. george and bock (2011) argued, however, that business models can be non-reflexive, stationary, and centered on opportunities, whereas strategy is dynamic, reflexive, and focused on competitors/environments. according to teece (2018), a business model must be effective if it is aligned with a strategy. overall, while strategy plays a significant role in combination with business model, the business model itself can predetermine strategic choices (kolyada 2023). despite the expanding recognition of business models as strategic tools, a gap remains in empirical research on how structured methodologies can be applied in niche manufacturing industries. existing frameworks, such as the business model canvas (osterwalder and pigneur 2010) and the balanced scorecard (kaplan and norton 1996), offer strategic planning insights but remain primarily descriptive and do not incorporate structured market forecasting or competitive positioning approaches tailored to smaller, industry-specific businesses. by comparison, “kolyada’s methodology”—a business modeling and strategic planning theory and methodology developed by andrey kolyada (kolyada 2014, 2023, 2025)—enables firm leaders to evaluate target cluster selection and market segmentation and perform business model optimization based on projected industry trends. however, empirical applications of kolyada’s methodology have appeared almost exclusively in russian-language outlets (russia and cis), limiting both its visibility and validation in the international english-speaking literature. this study addresses these gaps by applying kolyada’s methodology, which emphasizes market forecasting as a means to anticipate future market trends more precisely, within the context of a kitchen manufacturing firm in curaçao. accordingly, the crucial research question is: how can kolyada’s methodology be applied to forecast market trends and optimize business strategies in kitchen manufacturing firms? villa exclusivo b.v served as an illustrative case for this analysis. situating the case study within the broader field of strategic management highlights a key principle: forecasting is not only a methodological tool but also a critical enabler of organizational performance. effective business performance relies heavily on the ability to forecast with precision, use data to establish goals, allocate resources, and minimize potential risks (chambers et al. 1971; theodorou et al. 2025). these forecasts can be effectively employed in managerial decision-making by creating knowledge, leading policy decisions, and tracking system performance (lindberg and zackrisson 1991). maximizing the return on invested resources is another vital advantage of integrating business modeling and market forecasting. by incorporating projections of market fluctuations and competitors’ strategic actions into business modeling, rather than merely reacting to market shifts and competitors’ achievements, organizations can take proactive steps to stay ahead of their competitors in the market. companies gain a competitive edge by identifying high-return opportunities in environments with limited resources. these projections inform key decisions, help align a company’s goals better, and bridge the gap between forecasting and effective planning. in particular, specialized manufacturing firms must strategically choose the appropriate niche. without that clarity, a business risks spreading too thin across many opportunities, wasting valuable time and resources. dalgic and leeuw (1994) noted that, as competition intensifies, only the most adaptable businesses tend to survive. adapting within the right niche is equally crucial; resilient companies stand out in their ability and capacity to adapt in response to the ever-evolving marketplace. mintzberg (1994) emphasizes that, at times, strategies for decisionmaking should remain a broad and flexible vision rather than being precisely defined, allowing for adaptation to a changing environment. strategic management encompasses the methods and tools necessary to execute these steps effectively, including the selection of an effective business model for a company’s market niche (casadesus-masanell and ricart 2010). many existing studies on this progonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 31 cess focus on large firms, thereby creating a gap in the literature on smallto medium-sized niche manufacturers. accordingly, this study applies the algorithm present in kolyada’s methodology to present a case study of business model development for a small and medium-sized enterprise (sme) in the custom kitchen industry. it investigates whether kolyada’s methodology can bridge the gap between models and strategy by offering a structured method for business modeling, strategic planning, and forecasting in a niche manufacturing environment. according to kolyada (2014, 2023), a strategic algorithm involves a continuous cycle of three key steps: (1) establish the target market and find a market niche, (2) design and implement a business model and strategy to achieve the desired position (share) in the market, and, (3) change strategic goals from growth to retention, eliminating growth-oriented costs to maximize profit in the target market. villa exclusivo b.v, a kitchen manufacturing company operating within a small niche market in curaçao (netherlands antilles), is the setting for the case study. in 2023, this company had a market share of 32.38% in monetary terms, employed 150 people, and had over 17 years of experience in the industry. by focusing on a niche manufacturing company, this study offers insights into the applicability of structured business modeling in dynamic competitive environments. 2. literature review 2.1 business models and forecasting in recent decades, business models have become a critical element of strategic management. for example, van de ven et al. (2023) pointed to the business model canvas (bmc) as a broadly used framework for representing business models in research and practice, and for evaluating their performance. however, many studies have criticized the concept for its ambiguity and lack of clarity, given the absence of consensus regarding its definition and components (fielt 2013). several studies have attempted to resolve this issue. notably, shafer et al. (2005) categorized business model components into four domains: strategic selection, value network, value generation, and value retention. they emphasized the need for clarity in distinguishing business models from strategy and proposed a synthesized definition that bridges theoretical and practical perspectives. this structured approach clarifies how business models operate and how they can be effectively utilized in corporate management. building on this work, samavi et al. (2009) established a strategic modeling framework designed to clarify and analyze the goals, intentions, roles, and underlying rationale of strategic actions within a business context. casadesus-masanell and ricart (2010) introduced a framework that facilitates the integration of strategies, business models, and tactics. in their formulation, a business model is directly derived from a business strategy; however, the two are distinct concepts and should not be equated. this recognition also enabled their framework to differentiate between tactics and strategies. wirtz et al. (2010) emphasized that developing and adapting a business model is crucial for a firm’s executives to respond effectively to technological advancements, competitive shifts, and regulatory changes. to tackle this managerial challenge, they proposed a comprehensive framework of web 2.0 features and success elements, enabling managers to identify crucial tendencies relevant to their internet business models. they asserted that a firm’s environment fundamentally influences the business models capable of creating value within a specific market context. teece (2010) contended that a business model refers to the way a company produces, delivers, and retains value. he argued that a well-designed business model consolidates the assumptions of management regarding customer needs, and it is the most effective way to provide value while generating profits. furthermore, he examined the connection between business models, strategy, and sustainable competitive advantage, emphasizing that while a business model is more general than a business strategy, integrating the two is essential to protect the competitive advantage created through the design of new business models. braun et al. (2019) reinforced this idea, stressing that achieving a delicate equilibrium between strategy and business model is crucial for securing an organization’s sustained competitive advantage and rentability, while mcgrath (2010) noted that business models provide strategists with a novel approach to navigating unpredictable and rapidly 32 bioproducts business 10(3) 2025 changing environments. finally, zott and amit (2013, 2015) extended this theoretical foundation by defining business models as systems of interdependent activities. their work provides a robust conceptual base for understanding the interconnection between actors and resources in delivering value, making it highly relevant to contemporary research in strategic design. forecasting plays a pivotal role in enhancing the agility of business models, especially in dynamic market environments. predictions made using modeling tools are crucial for companies to adapt flexibly to changing conditions. sakas et al. (2014) pioneered the use of dynamic simulation models (dsms), which are indispensable tools for it companies to simulate operational scenarios before committing actual resources. these models help to establish strategies, ultimately leading to precise decision-making processes. the primary concepts underlying dsms can be universally applied, enhancing strategy practices across various sectors and navigating rapid technological progress. groesser and jovy (2015) applied this insight by advocating a systems-based simulation methodology that allows strategic experimentation under volatile conditions. they emphasized the importance of examining and understanding the structure of a business model, as well as the changes driven by strategic initiatives. specifically, they argued that existing qualitative models lack robust guidelines, particularly in uncertain and volatile situations characterized by rapid technological change and agile competition. they recommended adopting a quantitative approach using a systemic simulation methodology, allowing decision-makers to gain valuable insights through experimental designs within a company’s business model. pröllochs and feuerriegel (2020) integrated forecasting with business analytics and topic modeling to effectively assess corporate scenarios. their automated text-mining tool employs techniques such as swot analysis, examining company profiles to identify potential risks and opportunities, and positioning forecasting as a critical component of strategic modeling. this enables businesses to predict market fluctuations, safeguard themselves against risks, and assess their competitive positioning in relation to their competitors. globocnik et al. (2020) further explored the correlation between strategic planning and business model management. they introduced a structured management framework that aligns activities across various levels of an organization, including strategy, business models, and tactics, to streamline operations as a unified and effective unit. this systematic approach guarantees coherence and enables quick adaptation, allowing companies to tailor their models to market changes. 2.2 kolyada’s methodology this section summarizes kolyada’s business modeling and strategic planning theory and methodology, which emphasizes the multi-level nature of business models and strategic planning, was initially developed in russia at the eurasian management and administration school (emas business school). several earlier publications detail its key provisions, particularly the idea that business models and strategy operate on at least three levels: product-market, corporate, and holding (kolyada 2014, 2023). business modeling and strategic planning are implemented at each of these levels. the business model is considered the foundation of strategy. the economic efficiency of the chosen business model compared to competitors’ business models should determine the limits (maximum values) of the company’s strategic goals. a company cannot achieve market results exceeding those predetermined by the effectiveness of its business model. strategy represents the answer to the question “how” to implement the chosen business model and achieve strategic goals based on it. the same business model and the set of strategic goals based on it can have different strategies for their achievement (kolyada 2014, 2023, 2024, 2025). kolyada’s methodology, particularly its predictive economic-mathematical model component, comprises a set of interconnected tools and has undergone continuous validation since its creation. following initial tests from 2010 to 2014, this sequence of business modeling and strategic planning was intensively tested between 2021 and 2024, when graduate students and faculty at emas implemented it in nearly 300 projects for russian, cis, and global firms (kolyada, 2025). these applications confirmed the forecasting accuracy and reliability of the methodology, as the models were tested against realworld results and adjusted where necessary. several gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 33 publications in russian scientific journals demonstrate the reliability of the methodology (abramchuk, lyashenko, and kolyada 2024a, 2024b; abramchuk and kolyada 2024). the methodology ensured the initial validation and continuous fine-tuning of the predictive model in two stages: (1) initial tuning by reconciliation of reverse forecasts performed by the model with the actual results/data in historically completed periods, and (2) continuous comparison of the forecasts for the years in the planning horizon with the actual results/data obtained in these years. after the period of systematic validation and iterative refinement, the methodology provides that the forecasts aligned closely with actual outcomes. each analysis is to be implemented within a planning horizon that is divided into a set of corresponding years, and relies on a market scenario-based approach and “as-is” and “to-be” formats. the scenario approach distinguishes between three possible futures: (1) a main scenario representing the most probable trajectory of market and competitive changes, (2) an optimistic scenario assuming favorable external factors such as rapid growth or reduced risks, and (3) a pessimistic scenario incorporating adverse conditions such as decreasing demand or unfavorable external factors or heavy risks. these scenarios differ not only in their assumptions but also in their strategic implications. the main scenario provides a baseline for planning, the optimistic scenario highlights extra opportunities that could accelerate growth, and the pessimistic scenario identifies extra negative factors that may threaten performance. the idea behind kolyada’s methodology of testing business models under these alternative assumptions is not only to enhance forecasting accuracy but also to help organizations evaluate the robustness of their business models across different possible scenarios while anticipating volatile markets. this aligns with the scenario-planning tradition established in strategic management (notably schoemaker 1995; ringland 2006; van der heijden 2005), which emphasizes the disciplined anticipation of contrasting futures to reduce cognitive biases, strengthen decision-making, and better manage uncertainty. kolyada’s contribution, as discussed above, extends this tradition by embedding quantitative, competitorfocused forecasting into scenario analysis, providing a structured mechanism for evaluating business model resilience in turbulent markets. kolyada’s book on the methodology (2023) was recognized as the best business book by a russian author in 2024 (tedo 2024), highlighting its growing impact in the field. currently, active scientific research continues in russia to further develop the theory and methodology. kolyada’s methodology has undergone extensive application in russia and the cis, including validation across hundreds of business projects and the publication of award-winning work (tedo 2024). however, any emerging framework carries strengths and boundaries of applicability. therefore, a balanced appraisal requires acknowledging its potential limitations alongside its contributions. first, the methodology’s adoption has thus far been geographically concentrated, with most validations occurring in russia and the cis. despite multiple testing outside russia and cis, its transferability to other institutional and cultural contexts remains underexplored, raising questions regarding its generalizability. second, implementing this methodology is resource-intensive, requiring access to reliable datasets and advanced analytical expertise, conditions that many small and medium-sized enterprises may struggle to meet. as a final point, while its structured, quantitative nature is a strength, kolyada’s methodology is not a one-size-fits-all solution; its effectiveness depends on an organization’s readiness to deal with complex analytical tasks. at the same time, situating kolyada’s methodology within the broader international literature highlights its relevance beyond russian and cis contexts. in addition to its alignment with scenario planning approaches (schoemaker 1995; ringland 2006; van der heijden 2005), parallels can be drawn with scenario planning approaches developed by schoemaker (1995). it emphasizes that strategic scenarios are relevant in any context in which decision-makers need to anticipate possible future developments under conditions of uncertainty. kolyada’s methodology extends this observation by adding a quantitative, competitor-focused dimension to the scenario-based comparative forecasting present in his methodology (kolyada 2014, 2023). this move also aligns with the dynamic capabilities framework by teece et al. (1997) and teece (2007), 34 bioproducts business 10(3) 2025 which highlights a firm’s capability to incorporate, develop, and reconfigure internal and external competencies in response to environmental changes. in the context of the “concept of dynamic capabilities,” according to kolyada’s theory, business modeling is one of a company’s high-level routines. this routine ensures the firm’s dynamic capability to create innovative and cost-effective business models (kolyada and plekhova, 2025). overall, by quantifying market niches and forecasting competitive moves, kolyada’s methodology offers a structured mechanism for operationalizing dynamic capabilities, particularly in turbulent markets. the framework connects to the growing literature on predictive analytics in strategic management (cote 2021; adwani 2025), where predictive analytics are applied to anticipate market trends and forecast scenarios that help guide strategic decisions. rooted in economic and mathematical modeling, yet forward-looking in its data-driven strategy design, kolyada’s approach can thus be positioned within the broader international movement toward anticipatory, analytics-based management. for a detailed description of the step-by-step procedures, “as-is/to-be” formats, base year definitions, and validation processes underlying kolyada’s methodology, see appendix a. 2.3 comparative analysis of strategic and business modeling frameworks to evaluate kolyada’s methodology in context, comparing it with other commonly used business modeling frameworks is helpful. although kolyada’s methodology, like other frameworks, naturally has many limitations, its distinguishing features lie in scenario-based quantitative forecasting of the effectiveness of different business models and strategy variants for a company, compared to those of its competitors. this enables the company to evaluate the economic efficiency of potential business models and strategy options, and select the optimal solution based on the forecasted outcomes. a comparative analysis is provided in table 1 to enhance understanding. 3. methodology the following section describes the application of a specific part of kolyada’s methodology to villa exclusivo b.v, a kitchen manufacturer in curaçao (netherlands antilles). the case study seeks to demonstrate the predictive and strategic utility of this methodology. however, the study only applies a reduced version of the market volume and complexity analysis (mvc-1) tool to market modeling (forecasting volume and market structure) and clustering. the approach targets cluster segmentation and develops positioning within the target cluster and segment. the full version of mvc-1, including the mathematical algorithm for forecasting market and market cluster dynamics, remained outside the scope of this study. accordingly, the study does not consider the method’s broader set of forecasting tools, such the business modeling economic-mathematical predictive mechanism that ensures the selection of the most economically efficient business model for the company’s operations in the chosen market niche, in particular decision-making matrix analysis (dmm), z-equation, market risk analysis (maris), customer satisfaction index (csi) calculations, and other predictive tools. nevertheless, these tools were utilized in the project to obtain the results described in this article. strategic goal setting and target-based management, brand management, corporate culture management, budgeting, and other parts of the methodology also remained outside of the scope of the article. the research employs a single-case study design (yin, 2003), which is appropriate for addressing “how” questions and is also particularly valuable in research areas where existing theory is insufficient or underdeveloped (eisenhardt 1989). villa exclusivo b.v was used as an illustrative case study to assess the applicability of kolyada’s methodology. as yin (2003) and baxter and jack (2008) emphasize, case study research is especially suitable for investigating complex phenomena within real-world contexts. in this study, the context is a niche manufacturing firm in curaçao (netherlands antilles), making the design particularly appropriate for addressing the central research question. the case study was also selected to address a potential weakness in kolyada’s methodology: though it has been extensively validated in russia and cis, its applicability to international contexts remains underexplored. villa exclusivo b.v represents a theoretically gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 35 significant example: a niche manufacturer operating in a dynamic, highly competitive local market, facing several key challenges that the methodology aims to address, namely establishing a market position and predicting future market trends. likewise, the context of the kitchen manufacturing sector in curaçao allows for a detailed exploration of how kolyada’s methodology can guide strategic forecasting and market positioning under environmental uncertainty within a specific industrial domain, utilizing a scenario-based approach. this empirical study draws on a combination of primary and secondary data sources. as saunders et al. (2009) emphasize, most studies rely on such data to adequately answer their research questions and ensure reliability through triangulation (yin 2003; creswell and miller 2000). primary data were gathered to complement and validate villa exclusivo b.v’s internal company records for 2023, thereby enhancing reliability through data triangulation (creswell and miller 2000). these records provided detailed quantitative information on revenue by product category, number of clients per cluster, sales volumes, pricing structures, and direct costs. in addition, semi-structured interviews were conducted with villa exclusivo b.v’s general manager and sales director in 2022 and 2023, focusing on segments based on psychographic motives as well as operational capacities and constraints. secondary data sources were also collected from diverse sources, which were examined, summarized, and categorized to construct a robust picture of the kitchen manufacturing sector in curaçao and villa exclusivo b.v’s competitive positioning. these included: (1) industry reports from the central bureau of statistics of curaçao (central bureau of statistics of curaçao 2023,2024) (e.g., sector kpis, market size estimates), (2) historical benchmarking of sales, market shares, and business positioning, and (3) competitor pricing and cost data covering 2023–2024. secondary sources provide essential insights into the industry’s structure and external dynamics that cannot be captured through primary data alone. as in other case study research (e.g., saunders et al. 2009), reliance on secondary data has both advantages and disadvantages. on the one hand, it may have fewer resource requirements, be less obtrusive, and offer better data performance. on the other hand, limitations include the possibility that it was collected for a purpose that does not align with table 1. kolyada’s theory and methodology vs. other common strategies and business modeling frameworks. framework (author, year) emphasis and advantages limitations balanced scorecard (robert kaplan and david norton, 1996) • emphasis: strategic goal setting and planning. • advantage: clear logic of goal setting. theoretical ambiguity in distinguishing between business model and strategy concepts; lack of in-depth analysis of current business model and strategy effectiveness; absence of thorough market modeling, analysis, and forecasting; no tools for forecasting quantitative effectiveness of developed business model elements and strategic initiatives; no comparative forecasting with competitors. business model canvas (alexander osterwalder and yves pigneur, 2010) • emphasis: business model design with a focus on graphical representation. • advantage: visual clarity for the business modeling process. similar to the balanced scorecard limitations, plus insufficient attention to strategic goal-setting, target-based management, and strategic planning frameworks. swot analysis and associated strategy development methods (albert humphrey, 1960s/2005; popularized in the 1980s) • emphasis: planning. • advantages: user-friendly and simple-to-implement system. similar to the business model canvas limitations. takes a reactive approach to strategizing, focusing on responding to emerging opportunities and threats. kolyada’s theory and methodology (2014, 2023, 2025) • emphasis: economic-mathematical modeling with scenario-based forecasting. • advantage: enables quantitative competitorfocused forecasting and integrates business modeling, strategic goal-setting, target-based management, and strategic planning. validation outside russia and cis remains limited. the methodology requires initial predictive model tuning using reliable historical data, as well as ongoing multi-year calibration. it is labor-intensive and requires professional skills for effective implementation. 36 bioproducts business 10(3) 2025 the study’s needs, access may be difficult or costly, and there may be limited control over data quality. ambrosini et al. (2010) argued that data reliability increases when researchers draw on replicable teaching sources and integrate them with additional evidence to achieve triangulation. to address these issues and safeguard the quality of the secondary data used, we triangulated secondary sources with internal company information and managerial interviews, thereby enhancing validity and reducing bias. clustering was performed to identify the natural structure of the market, using three characteristics: price range, product type, and purchasing method. the rationale for selecting these variables, and their significance for competition in curaçao’s kitchen market, is elaborated in section 4 (case study). a similar approach is described in the case of applying the theory and methodology to the furniture market in russia (kolyada 2023). to perform scenario-based forecasting, an approach similar to that of schoemaker and van der heijden (1992) was employed, utilizing scenarios as tools for enhancing decision-making under conditions of uncertainty. for this study, we developed three scenarios: a main scenario, an optimistic scenario, and a pessimistic scenario. this choice reflects the standard practice in strategic planning: working with a limited number of scenarios that capture plausible developments of key risks (fotr et al. 2014) these scenarios were constructed through a combination of expert interviews (to identify potential shocks, such as competitor entry), economic projections (to establish baseline assumptions for inflation and pricing), and historical trend analysis (to capture demand patterns and market behavior). the key variables considered across the scenarios included customer demand volume, average purchase per customer, operating costs, shifts in customer preferences, and the entry or exit of competitors. the main scenario represents the most probable trajectory of market and competitive changes, assuming stable economic conditions, modest demand growth, and continued competition without significant disruptions. the optimistic scenario assumes favorable external factors such as accelerated demand growth and reduced risks, resulting in higher customer volumes and stronger profitability. conversely, the pessimistic scenario anticipates adverse conditions, including demand contraction, rising operating costs, and intensified competition, with customers delaying or reducing their purchases. together, these scenarios provide a structured range of possible futures rather than a single deterministic forecast. significantly, these scenarios also shape strategic choices regarding cluster selection and positioning. under an optimistic scenario, management could pursue more aggressive expansion into the highprice custom-made segment, leveraging increased demand and margins. under the pessimistic scenario, however, the emphasis would likely shift to the medium-price segment, focusing on operational efficiency and resilience against cost pressures. the main scenario supports a balanced choice; sustaining presence in the core niche while preparing contingent actions should shift conditions. thus, scenario-based forecasting provides a structured basis for evaluating which target cluster is most viable under different competitive and economic assumptions. this ensures that scenario-based forecasting not only provides alternative futures but also directly informs strategic cluster selection, which is central to evaluating the applicability of kolyada’s methodology in niche manufacturing. while this article presents results based on the main scenario, the whole project incorporated all three to stress-test strategic options against varying market conditions. the forecasting component of kolyada’s methodology is grounded in a predictive economic-mathematical model that applies a sensitivity analysis and scenario simulation. inputs include base-year data on sales, prices, direct costs, and customer purchases by cluster, combined with projections of future demand, competitor behavior, and external risks. this combined dataset enhanced the credibility and reliability of the case study, providing a robust foundation for applying kolyada’s methodology with a one-year planning horizon. the timeframe was selected based on curaçao’s dynamic market conditions, availability of validated input data, and the need to produce actionable insights within a limited timeframe. before applying the model prospectively, initial tuning and validation were conducted by forecasting villa exclusivo b.v’s 2024 sales volume and those of gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 37 its competitors using 2023 data as the base year. the projections were then compared to the actual outcomes, confirming the reliability of the model and highlighting the need for ongoing recalibration to maintain accuracy in longer planning horizons. in practice, the methodology is effective in shortterm forecasting but achieves higher accuracy when recalibrated continuously over multiple years as new market and competitor data become available. this helps ensure that forecasts remain both credible and adaptable, supporting the study’s aim of evaluating its applicability to strategic planning in niche manufacturing (see appendix b for technical details of the mvc-1 tool). to clarify the methodological framework, table 2 summarizes the tools applied at each step of the study, their respective purposes, data sources, type of analysis, and associated notes or limitations. 4. case study: villa exclusivo b.v the following subsections illustrate how kolyada’s methodology was applied to villa exclusivo b.v, a niche-oriented kitchen manufacturer in curaçao. each stage of the methodology is described in terms of its analytical purpose, data inputs employed, and contribution to answering the central research question. this research was conducted as part of the ongoing development of the scientific school in business modeling, strategic planning, and strategic management at the eurasian management and administration school (emas business school). 4.1 market modeling and clustering, scenariobased forecasting (mvc-1 tool) the first stage of the methodology involved market modeling and clustering using a simplified version of the mvc-1 tool. clustering was conducted using three criteria: price range, product type, and purchasing method. these characteristics capture the primary drivers of competitive dynamics in curaçao’s kitchen market. price was categorized into low ($1,000–3,000), medium ($3,000.01–5,000), and high ($5,000.01– 25,000) ranges.1 these ranges were selected to reflect the purchasing power and market stratification typical of curaçao’s population, as also observed in the company’s 2023 transactions. the low-price 1 note: all financial figures are presented in usd. table 2. methodological framework applied in the study. step/tool from kolyada’s methodology purpose/function data sources notes/limitations market modeling and clustering, scenariobased forecasting (mvc-1 tool) • to model the market and identify relevant clusters based on product type, pricing, and purchasing method. • to assess volumes, profitability, and gross profit in individual clusters and the market as a whole in the base year. • to perform scenario forecasting of the dynamics of volumes, sales profitability, and gross profit in individual clusters and in the market as a whole over the planning horizon (main, optimistic, pessimistic scenarios). • to choose target cluster(s) for the company. villa exclusivo bv sales, pricing, and client data. cbs curaçao reports industry data. expert interviews, historical trends, macroeconomic projections, and 2023–2024 operational data. quantitative analysis and forecasting. the economic-mathematical forecasting model has undergone only two stages of validation: reconciliation of reverse forecasts with the actual results of the previous period (2022/2023) and reconciliation of the forecast for 2024 with the actual data obtained this year. according to the methodology, further validation is required to improve the accuracy of forecasts in future periods. short-term reliability is high. cluster segmentation • to divide the target cluster into segments based on consumer motives. • to choose target segment(s) for the company. interviews with villa exclusivo bv management. observed purchasing behavior. qualitative analysis. not statistically tested, relies on expert judgment, and offers strategic insight for positioning. positioning development • to develop the company’s positioning in the target cluster and segment. • to align the company’s value proposition and unique selling proposition with the dominant consumer motive and positioning in the target cluster and segment. derived from previous segmentation and internal strategy discussions. strategic and qualitative analysis. relies on accurate segmentation. implementation depends on internal alignment and the capability of resources. 38 bioproducts business 10(3) 2025 range corresponds to mass-market affordability, the medium range captures middle-income households seeking both value and quality, and the high-price range reflects the premium custom-made market. product type distinguishes between pre-assembled and custom-made products, reflecting differences in lead times, customization depth, and gross margin. this criterion is critical for villa exclusivo b.v, since the company’s core competence lies in custom design, which demands greater craftsmanship but also offers higher margins. in contrast, the preassembled part represents standardized products that compete primarily on cost efficiency, presenting different strategic risks and opportunities. finally, purchasing methods were divided into direct sales and tender-based transactions, a distinction that separates retail/household demand from institutional and project-based procurement. this factor is particularly important in curaçao’s market, where b2b and b2c dynamics coexist and most b2b transactions are conducted through tenders. tenders, such as contracts for hotels, government buildings, or large housing projects, can significantly influence demand volumes and revenue stability. by contrast, direct sales rely on household-level decisions and are more sensitive to shifts in consumer sentiment. these categories were chosen because they represent the most salient dimensions of competition in curaçao’s kitchen manufacturing market, thereby providing decision-useful forecasts by cluster that inform positioning and resource allocation. typically, the methodology requires considering b2c and b2b as separate markets, i.e., developing a distinct mvc-1 for each of them. however, in this particular case, an exception was made to combine both markets within a single mvc-1, i.e., treating them as different parts (clusters) of one market. the reason for this decision is the very small size of these markets in curaçao, which makes it impractical to increase labor and financial costs for separate modeling and forecasting of b2c and b2b markets in this territory. applying the mvc-1 tool, twelve (12) possible clusters emerged from these combinations, of which six were viable (see appendix c) and six were excluded as artificial because they did not exist in the actual market. in line with schiffman and wisenblit’s (2019) criteria that effective segments must be identifiable, profitable, accessible, and reachable, only these six clusters qualified as realistic strategic options. the viable clusters displayed distinct sales volumes, customer bases, profitability levels, and growth potential. the analysis established the market structure for 2023 (the base year) and projected cluster dynamics for 2024. this study focused on identifying the key economic parameters of the clusters in the base year, such as volume in physical and monetary terms, sales profitability, gross profit, and customer numbers. it also conducted scenario forecasting for changes in these parameters in 2024 and identified the most profitable clusters, taking into account competitive density and resource availability for villa exclusivo b.v. this facilitates the analysis and projection of the target market and cluster data, cluster characteristics, pricing structures, and client bases. this stage not only revealed the structure of the market but also established an economic baseline for scenario-based forecasting, thereby linking market clustering and the resulting segmentation to the study’s broader aim of testing how kolyada’s methodology can guide strategic positioning under uncertainty. 4.2 selection of target cluster after market modeling and clustering, the second stage of kolyada’s methodology involves the selection of a target cluster. a target cluster is defined as the cluster offering the most advantageous balance of profitability, competitive density, and growth potential. it must also remain attainable, given the firm’s intellectual, financial, and technical resources. in this case, villa exclusivo b.v’s assessment focused on identifying the cluster that combined high projected margin income with manageable competition intensity and reasonable growth opportunities. this logic reflects kotler and keller’s (2016) view that target market selection must consider both external attractiveness and internal fit with company resources. this stage is critical for addressing the research question, as it demonstrates how scenario-based forecasting and comparative analysis within kolyada’s methodology inform practical decisions regarding where to compete. for organizations such as villa exclusivo b.v, this guidance is particularly important in dynamic markets, where selecting the wrong cluster could result in wasted resources and strategic misgonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 39 alignment. following the identification of the target cluster, the analysis proceeded with psychographic segmentation of its clients to refine the company’s strategic focus. 4.3 segmentation of the target cluster the third stage of applying kolyada’s methodology is the segmentation of the selected target cluster to refine villa exclusivo b.v’s strategic focus. while segmentation may include socio-demographic characteristics (for b2c), physical, operational, situational, and other factors (for b2b), and psychographic characteristics (for both b2c and b2b), kolyada (2023) argues that the first two criteria are the most common, but also the least effective way to segment a cluster. instead, psychographic analysis, based on natural and consumer motives (what clients want) and psychological type (how clients decide), is used in this case study. this choice is supported by wedel and kamakura (2000), who emphasize that motivesand valuesbased segmentation provide deeper insight into consumer behavior than demographics, since customers with similar profiles may differ significantly in their purchase motivations (kotler and keller 2016; wedel and kamakura 2000). this distinction is particularly relevant in the curaçao kitchen market, where customers with the same demographic profile may differ significantly in whether they value tangible incentives, such as extended warranties, or intangible ones, such as the prestige of owning a custom-designed kitchen (kotler and keller 2016). therefore, segmenting based on motives provides a more accurate and actionable understanding of demand than demographic profiling alone. practically, this approach allowed villa exclusivo b.v to evaluate how different subgroups within the chosen cluster would respond under alternative market scenarios. for example, in an optimistic scenario, segments driven by consumer motives such as prestige might expand, encouraging greater investment in high-end custom kitchens. in the pessimistic scenario, the cost-saving motive dominates, where customers prioritize the opportunity to purchase a product at a lower price (while remaining within the price range that defines the cluster) or to obtain more for the same amount of money. the integration of motives with scenario-based forecasting also shaped the selection of the target cluster: optimistic conditions made high-price custom-made clusters more attractive, whereas pessimistic conditions favored the medium-price cluster. the main scenario reinforced villa exclusivo b.v’s current niche, while highlighting adjacent opportunities. by connecting segmentation to motives and scenarios, this stage demonstrates how kolyada’s methodology translates forecasting into concrete strategic marketing and product design choices. this directly addresses the central research question by demonstrating how structured business modeling enables villa exclusivo b.v to select and adapt its niche effectively under conditions of environmental uncertainty. 4.4 position development the fourth stage of kolyada’s methodology involves translating segmentation insights into a clear market position. positioning, as kolyada (2023) emphasizes, goes beyond a simple slogan; it is a strategic assertion that this company or product is the best choice for customers in the target segment, based on their natural and dominant consumer motives (kolyada 2023). building on schiffman and wisenblit’s (2019) idea that positioning is fundamentally about shaping a distinct image and identity in the minds of consumers, and ries and trout’s (2001) insight that positioning is ultimately determined by perception rather than product features, the analysis focused on how villa exclusivo b.v could translate segmentation insights into market advantage together, these perspectives underscore that effective positioning requires alignment with the target segment’s intrinsic motivations while also differentiating the company from its competitors. for villa exclusivo b.v, effective positioning requires aligning its value proposition with the dominant consumer motive identified in the target segment. by tailoring its message to emphasize both functional benefits (e.g., quality and durability) and symbolic value (e.g., prestige from custom design), the firm reinforced its credibility as the best-equipped provider to meet client needs and aspirations. this stage addresses the research question because it demonstrates how kolyada’s methodology moves from forecasting and segmentation to an 40 bioproducts business 10(3) 2025 actionable strategy. positioning based on psychographic insights ensures that villa exclusivo b.v not only selects the right niche, but also creates and communicates its competitive advantage in a way that resonates with customer motives, thereby translating strategic forecasting into tangible market leadership. 5. results this section presents the results derived from the application of kolyada’s methodology to villa exclusivo b.v. the findings reflect the application of the main scenario defined during the forecasting phase, focusing on the high-end custom-made kitchen market in curaçao. each phase, market modeling and clustering, target cluster selection, segmentation, and positioning, generated quantitative outputs as well as strategic insights that directly informed villa exclusivo b.v’s decision-making. by illustrating how forecasts inform strategic choices, the results also demonstrate the value of the methodology as a tool for guiding business modeling and strategies under uncertainty. 5.1 market modeling and clustering clustering using the mvc-1 tool identified six viable clusters in curaçao’s kitchen market, defined by the price range, product type, and purchasing method. it illustrates data from villa exclusivo b.v and two competitors (as well as from a “minor player” group of smaller companies) operating within the selected product category of built-in kitchens. these clusters revealed the natural structure of competition, including price level, production type, sales channel, cluster volume, and projected growth. they highlighted the cluster with the highest concentration of profitability and growth potential. table 3 presents the distribution of clusters based on the sales volume, customer base, and profitability. it also includes both the base year (2023) and the forecast year (2024) data. the analysis indicates that the high-price, custommade clusters represented a smaller share of the market, but generated high profitability. in contrast, the medium-price clusters were larger, but characterized by stronger competitive pressure. the low-price clusters were less attractive, with narrower margins and greater sensitivity to economic fluctuations. this stage provides a baseline for subsequent forecasting. it clarifies how villa exclusivo b.v can evaluate opportunities across clusters, shows how the methodology organizes competitive landscapes into decision-useful clusters for strategic forecasting, and translates raw data into actionable strategic insights, rather than static market categories. 5.2 selection of target cluster applying kolyada’s methodology, the next step is to identify the target cluster that offers the best balance of profitability, competition intensity, and resource feasibility. villa exclusivo b.v identified clusters 3, 4, and 5 as strategic targets. although clusters 3 and 4 demonstrated an acceptable profitability, the company already held a significant market share of both 52.6% and 66.7%, respectively. therefore, the company chose to continue developing these markets incrementally, while prioritizing entry to cluster 5, where it had no presence. cluster 5, distinguished by high prices, custommade products, and direct purchases, emerges as a particularly attractive opportunity. it combines strong profit potential (expected profit of $101,789 and projected profitability of 31.60%), forecasted market growth (from $300,000 to $322,088), and low competition density, with only one major competitor. these conditions signaled a strategic opening in a profitable niche where villa exclusivo b.v’s capabilities could provide immediate differentiation. table 4 summarizes the comparative indicators across clusters. the results indicate that cluster 5 was the most attractive for villa exclusivo b.v. it combines strong gross margins with manageable competition and high entry barriers, protecting against rapid imitation. whereas the medium-price clusters showed a greater volume, they also presented fiercer competition and lower profitability. this choice was also supported by organizational fit: villa exclusivo b.v possessed the technical capabilities, infrastructure, and customization expertise required to compete effectively in this cluster. thus, the selection of this target cluster demonstrates how kolyada’s methodology operationalizes comparative forecasting into a rational and evidencebased choice of strategic niche, directly addressing the central research question. 5.3 segmentation of the target cluster once the target cluster was identified, segmentation analysis was performed to refine villa exclusivo b.v’s understanding of the customer groups. psychographic gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 41 table 3. mvc-1: market model, clusters, and their characteristics main scenario. cluster 1 cluster 2 cluster 3 cluster 4 cluster 5 cluster 6 company name total sales low price, preassembled, direct purchase low price, preassembled, tenders medium price, custommade, direct purchase medium price, custommade, tenders high price, custommade, direct purchase high price, custommade, tenders company’s market share, % competitor 1 $525,000 $250,000 $225,000 $50,000 20.00% competitor 2 $325,000 $100,000 $175,000 $50,000 12.38% group: minor players $925,000 $200,000 $200,000 $300,000 $225,000 35.24% villa exclusivo bv $850,000 $75,000 $75,000 $250,000 $350,000 $100,000 32.38% cluster volume/market volume, $ $275,000 $625,000 $475,000 $525,000 $300,000 $425,000 $2,625,000 sales profitability (rate of return), % 17.09% 14.58% 21.53% 22.14% 32.45% 31.72% 22.43% total profit volume, $ $47,007 $91,116 $102,284 $116,238 $97,345 $134,795 $588,785 cluster share, % 10.5% 23.8% 18.1% 20.0% 11.4% 16.2% change in cluster volume/market volume (in money), next year, % 109.87% 111.13% 160.27% 109.83% 107.36% 58.26% expected cluster volume/market volume, next year, $ $302,148 $694,588 $761,276 $576,601 $322,088 $247,609 $2,904,310 expected sales profitability (rate of return), % 16.48% 13.92% 20.51% 21.18% 31.60% 30.88% 20.76% expected total profit volume in the cluster/market next year, $ $49,797 $96,683 $156,137 $122,143 $101,789 $76,465 $603,014 expected cluster share in the market volume, % 10.4% 23.9% 26.2% 19.9% 11.1% 8.5% 100.0% colors the company’s share in the cluster 0-5% 5%-10% 10%-15% 15%-20% 20%-25% 25%-40% >40% table 4. selected target cluster. cluster 5 company name total sales high prices, custom-made, direct purchase company’s market share, % competitor 1 $500,000 18.87% competitor 2 $325,000 12.26% group: minor players $1025,000 $300,000 38.68% villa exclusivo bv $800,000 30.19% cluster volume/market volume, $ $300,000 $2,650,000 sales profitability (rate of return), % 32.45% 22.84% total profit volume, $ $97,345 $605,228 cluster’s share, % 11.4% 100.0% dynamics of the cluster volume/market volume (in money), next year, % 107.36% expected cluster volume/market volume, next year, $ $322,088 $2,902,936 expected sales profitability (rate of return), % 31.60% 21.18% expected total profit volume in the cluster/market next year, $ $101,789 $614,898 expected cluster share in the market volume, % 11.1% 100.0% target market: product group: built-in kitchens geographical region: curaçao 42 bioproducts business 10(3) 2025 motives, natural motives (functional, value-for-money concerns), and consumer motives (shortest delivery time, prestige, and personalization preferences) were used to distinguish segments. table 5 presents the segmentation of cluster 5 under the main scenario. the cluster was divided into three segments based on dominant customer motives, as previously explained. all segments comprise small, medium, and large-sized enterprises, reflecting differing strategic needs and profit potential. segment 1. dominant consumer motive — “shortest delivery time (maximum speed)”: clients in this segment desire to receive the product as quickly as possible and value efficiency and prompt service. segment 2. dominant consumer motive — “prestigious status”: clients in this segment are driven by the aspiration to own products that signify their association with an exclusive or high-status group. they value items that fulfill practical needs while simultaneously acting as symbols of belonging to a prestigious community. segment 3. dominant consumer motive — “maximum customer focus (personalization)”: clients in this segment value personalization and attentiveness, expecting suppliers to thoroughly understand and prioritize their unique needs and preferences. to demonstrate how the methodology accounts for competitive dynamics, an expert-based estimate assessed the degree of customer association with competitor brands in each segment. as shown in table 5, segments 2 and 3 exhibited low competitor brand association levels of 15% and 10%, respectively. this indicates that these segments remain largely unoccupied by strong competitor perceptions, offering villa exclusivo b.v a strategic advantage by establishing a stable brand association as consumers’ preferred choice. based on these findings, villa exclusivo b.v selected segments 2 and 3 within cluster 5, as they align most closely with its operational capabilities. the company’s value proposition was modified in accordance with the dominant consumer motives of the selected segments. these results suggest that integrating psychographic segmentation with scenario forecasting provides a stronger foundation for strategic decision-making than demographic segmentation alone. they also illustrate how kolyada’s methodology translates customer motives into actionable strategies, ensuring that cluster and segment choices are anchored in both forecasting accuracy and consumer psychology. 5.4 development of positioning the final stage translated the segmentation insights into a clear market position for villa exclusivo b.v. the positioning strategy was designed to align with the dominant consumer motives in segments 2 and 3, prestige and personalized services, ensuring that the company’s value proposition addressed the psychological and functional expectations of high-end clients seeking exclusivity, quality, and attentive interaction. the following position statement guided this strategy: “villa exclusivo b.v delivers high-priced customtable 5. segmentation of the target cluster (main scenario) and selection of the target segment. segmenting cluster 5 (high prices, custom-made, direct purchase). segment # dominant consumer motive customer profile expected profit volume $/next year company that formed a strong association with its brand in the base year, % of respondents in the segment 1 shortest delivery time (maximum speed) small, medium, and large-sized enterprises $ 47,332 competitor 1+2: 73% 2 prestigious status small, medium, and large-sized enterprises $ 18,831 competitor 1+2: 15% 3 maximum customer focus (personalization) small, medium, and large-sized enterprises $ 35,626 competitor 1+2: 10% cluster total $ 101,789 target segments gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 43 made kitchens, combining the highest quality and prestige with exceptional personalized customer service.” the results show that aligning positioning with dominant consumer motives strengthens villa exclusivo b.v’s credibility as the leading provider of high-end custom-made kitchens in curaçao. this stage demonstrates how the methodology ensures that strategic positioning is systematic, grounded in forecasting, segmentation, and validation, rather than arbitrary. 5.5 validation of forecast accuracy using 2024 data the reliability of the model was validated by comparing its 2024 forecasts with actual performance data for cluster 5. as shown in table 6, the deviation between the projected and real figures is minimal; for instance, the sales volume deviates by only +0.65%. these results confirmed that the model was tuned correctly during the initial calibration phase and was capable of producing accurate short-term forecasts. this reinforces its value in strategic planning within dynamic market environments such as the kitchen manufacturing sector in curaçao. additionally, sensitivity analysis was embedded into the scenario modeling process, enabling the model to assess how changes in variables, such as customer demand, costs, and competitor behavior, impact key outputs. this enhances the robustness and adaptability of the model in forecasting future conditions. the results of this validation confirm the effectiveness of the forecasting model in identifying viable strategic opportunities. cluster 5, characterized by high pricing, custom-made solutions, and direct purchasing, proved to be a key opportunity for villa exclusivo b.v. these forecasts guided the selection of target segments and the development of a positioning strategy aligned with customer motives. kolyada’s methodology provided a structured and reliable framework for market modeling, clustering, segmentation, and positioning. ultimately, it supports the development of a business model that is both strategically aligned and market-responsive. 6. strategic discussion this study applied a key component of kolyada’s methodology to identify an optimal market niche for villa exclusivo b.v. the findings suggest that the company is well-positioned to capture two high-value segments in cluster 5: customers who prefer high prices, custom-made products, and direct purchases, by aligning its capabilities with consumer motives such as prestigious status and maximum customer focus (personalization). the projected growth in this cluster indicates a rising demand for bespoke, highend products and requires that villa exclusivo b.v be well-positioned to meet this demand through its commitment to quality craftsmanship and personalized offerings. beyond this case, however, kolyada’s methodology offers unique advantages for strategic decision-making. unlike better-known tools such as the business model canvas (osterwalder and pigneur 2010), swot analysis, and balanced scorecard (kaplan and norton 1996), which primarily provide qualitative assessments, kolyada’s methodology enables quantitative forecasting of core business metrics such as revenue, market share, cluster share, sales profitability, and gross profit. this data-driven approach supports more precise and risk-informed business modeling and strategic planning. a key differentiator of the methodology is its built-in sensitivity analysis, which allows decision-makers to simulate and assess alternative business models and strategy options under different market scenarios. additionally, the model can simulate competitor behavior and quantify the effects of strategic rivalry, an uncommon but estable 6. comparison between base year (2023), forecast year (2024), and actual year (2024) for cluster 5. metric base (2023) forecast (2024) actual (2024) deviation (%) sales volume (cluster 5, ang) $300,000 $322,088 $320,000 +0.65% sales profitability (rate of return), % 32.45% 31.60% 30.00% +1.6% total profit volume, $ $97,345 $101,789 $103,250 -1.42% cluster’s share, % 11.4% 11.1% 11.6% -0.5% 44 bioproducts business 10(3) 2025 sential feature for companies operating in dynamic, segmented markets. from a cost-benefit perspective, while the methodology requires moderate investment in data collection and initial model calibration, the ability to make analytically supported strategic choices offers a high return, especially for companies seeking to optimize positioning and profitability in volatile sectors. it is essential to note that this study was based solely on a part of kolyada’s methodology, which focused on determining the market position as one element of the organization’s business model. other parts of the methodology are likewise helpful but lie outside the scope of this study. these include digital business modeling, quantitative forecasting of productivity, assessing the economic efficiency of a business model, strategic goal setting, targetbased management, brand management, corporate culture management, budgeting, and other related tools and methods. 7. conclusion this study introduces kolyada’s business modeling and strategic planning theory and methodology and demonstrates how it can be utilized to forecast market trends and support business modeling and strategic planning in a niche manufacturing context. by applying a selected part of the methodology focused on identifying and validating a target market niche, the case study of villa exclusivo b.v demonstrates the methodology’s predictive potency and strategic usefulness. the analysis successfully identified and validated a profitable, low-competition niche (cluster 5) for the firm in curaçao’s kitchen manufacturing industry. by combining scenario-based forecasting with consumer-motive segmentation, this study provided actionable guidance for positioning and strategic focus. the findings indicate that even partial application of kolyada’s methodology yields quantifiable forecasts of revenue, profitability, and market share, while supporting managers in aligning operations with consumer expectations in high-value segments. projection validations through historical tuning confirmed the predictive strength and practical relevance of the methodology. the results of this case study highlight that kolyada’s methodology brings distinctive value by enabling quantitative forecasting of a potential business model (e.g., revenue, market share, and share in the target cluster). this differentiates it from qualitative business modeling methods that rely on relative assessments. moreover, by integrating sensitivity analysis, the methodology creates a digital business model (predictive economic-mathematical model) for the firm, allowing managers to test multiple strategic alternatives under different scenarios. this structured experimentation helps to identify the most effective options based on expended resources and the economic results obtained. this is very important for practical management, as company managers prefer to make decisions based on analytically sound models and tests performed with their help, rather than based on abstract and relative assessments. additionally, the methodology evaluates the economic efficiency of both the organization’s business model and those of its competitors. it further illustrates the economic consequences of competitive rivalry arising from different business model variants. this supports more informed management decisions in business modeling and strategic planning by considering not only incurred costs and outcomes but also the dynamics of competitive rivalry. this is important, as most modern markets are characterized by a very high level of competition. from a policy perspective, the methodology can be applied by governments, development agencies, or industries, enabling them to guide the strategies of small, medium, and large businesses and identify economically viable clusters and niches for sustainable growth and innovation. 7.1 theoretical implications the main contribution of this research lies in expanding the concept of business modeling and strategic planning. it demonstrates how new theory and economic-mathematical methodology of business modeling and strategic planning (kolyada 2014, 2023, 2025) can be applied in the context of niche manufacturing. the study contributes to the literature on business modeling and strategy development by demonstrating how quantitative scenario modeling and forecasting can be integrated with psychographic segmentation to identify market niches and develop effective company positioning—an aspect often overlooked in existing methodologies such gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 45 as the business model canvas (osterwalder and pigneur 2010). specifically, three theoretical insights have emerged. first, by applying kolyada’s methodology outside the russian and cis markets, this study provides evidence of its transferability. it discusses how forecasting-based business modeling and strategic planning tools can be used in other markets. second, it addresses a longstanding concern in the forecasting literature. as makridakis et al. (2009) emphasize, precise forecasting in economics and business is rarely achievable because most activities are exposed to unpredictable events that generate significant uncertainty. thus, scenario-based approaches are particularly valuable. kolyada’s methodology complements traditional forecasting by simulating multiple plausible outcomes rather than relying on a singlepoint estimate. third, the findings illustrate how the theory and methodology support the concept of dynamic capabilities (teece et al. 1997; teece 2007) by considering business modeling as a high-level routine and a structured mechanism for tracking changes, leveraging opportunities, and making strategic decisions regarding company development in the market under unstable conditions. 7.2 managerial implications this study has several interesting implications for business practitioners. first, forecasting-based business modeling and strategic planning tools require time, calibration, and historical data to generate value. however, firms that adopt them early are better positioned to adapt to disruptive change. second, market niche search should be approached as a two-step process: first, model and forecast the market to select a target cluster, and then segment that cluster to identify the most viable target segment. third, developing the company’s positioning, value proposition, and unique selling proposition (usp) in accordance with the natural and consumer motives of the target segment ensures optimal alignment. this alignment connects the company, its product, and its service with the expectations of target customers. this ensures that firms choose the most economically advantageous market position, one that is aligned with available resources and responsive to client motives, thereby winning in the competitive struggle. ultimately, forecasting models provide not only quantitative predictions but also a disciplined framework for strategic dialogue, reducing reliance on intuition and improving decision quality under uncertainty. 7.3 limitations and further research directions as noted throughout this paper, this study has several limitations. first, the results described in the article are based on a single case study in curaçao. second, due to the limited scope of the article, only a reduced version of the mvc-1 tool and the approach to segmentation based on consumer motives were applied. these represent just a portion of kolyada’s entire set of tools and approaches—specifically, the toolkit dedicated to determining the market position within a company’s business model. the full version of mvc-1, including the mathematical algorithm for forecasting market and market cluster dynamics, as well as other business modeling and strategic planning tools that are integral parts of the methodology, remained outside the scope of this article. also, the economic-mathematical predictive model that ensures the selection of the most economically efficient business model variant for the company’s operations in the chosen market niche. however, these tools were utilized in the project to obtain the results described in this article. third, the economic-mathematical forecasting model underwent only two stages of validation: reverse forecasting for 2022/2023 and forward forecasting for 2024. although these exercises confirmed short-term reliability, further longitudinal testing is necessary to strengthen predictive accuracy across longer horizons and different environments. the methodology requires initial model tuning using reliable historical data and ongoing multi-year calibration, which may limit the immediate applicability for small firms that lack robust datasets or analytical resources. therefore, future research should explore simplified or hybrid approaches that adapt kolyada’s methodology for resource-constrained smes. fourth, kolyada’s methodology is labor-intensive and requires professional skills for its effective implementation. fifth, empirical validation outside russia and cis remains limited. a broader application in an international context would help establish the gen46 bioproducts business 10(3) 2025 eralizability of kolyada’s methodology and reveal potential cultural or institutional constraints. by acknowledging these limitations, this study adheres to best practices in case study research, where transparency about scope and constraints is crucial for credibility (ross and zaidi 2019). at the same time, each limitation points to opportunities for future scholarship to refine, test, and extend kolyada’s methodology across diverse organizational and cultural settings, including comparative, multisector case studies and longitudinal analyses. 8. references abramchuk, a. n., lyashenko, i.yu, kolyada, a. a. 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(2010). the business model: theoretical roots, recent developments, and future research. iese research papers d/862, iese business school. https://www.iese.edu/media/research/pdfs/ di-0862-e.pdf 7. strategy development (strategic actions to build a target business model and achieve strategic goals based on it). 8. budgeting. economic-mathematical predictive model in the methodology the set of projects included an economic-mathematical predictive model of the company’s business model and strategic plan, with an emphasis on the following: • mvc-1 tool: development of a market model, including clustering of the target market, determination of key economic characteristics of clusters and the market as a whole (structure, volumes, sales profitability, and other indicators) in the base year, and forecasting the dynamics of these indicators within the planning horizon. • mvc-1 and maris tools: forecasting external factors (macro and micro-environments) and risks (internal and external sources) within the planning horizon. • business process matrices: forecasting of internal business process efficiency. • dmm tool and z-equation: creation of a digital business model of the organization and projection of key economic indicators: sales volume in physical terms, revenue, market shares, target cluster share, sales profitability, etc. as-is and to-be formats • “as-is”: the “as-is” format assumes that during the forecast period, the business model and strategic appendix a: procedural details of kolyada’s methodology to preserve analytical clarity in the main text, a brief description of the procedural elements of kolyada’s methodology is presented here. step-by-step sequence in the methodology 1. scenario-based market modeling and forecasting, including market cluster (niche) selection. 2. scenario-based comparative quantitative forecasting of the proposed business model/strategy’s economic efficiency, as well as competitors’ business models and strategies. this step uses the “as-is” forecasting format to track projected sales volume in physical terms, revenue, profit, profitability, market shares, and other economic indicators. 3. scenario-based comparative quantitative forecasting of a firm’s potential business model/strategy variants’ economic efficiency (and competitors’ efficiency). this step uses the “to-be” forecasting format to select the optimal business model and strategy, based on the projected indicators and required resources. 4. strategic goal-setting and target-based management are both derived from the selected business model. 5. brand management. 6. planning and management of corporate culture in the context of the selected business model and strategic goals. file:///f:\__cascadia\______bioproductsbiz_vicki_eric\__volume%2010\10_3%20gonzales\%2043(2–3 https://doi.org/10.1016/j.lrp.2010.01.005 https://doi.org/10.1177/1476127013510466 https://doi.org/10.1177/1476127013510466 https://doi.org/10.1016/b978-0-08-097086-8.73040-6 https://doi.org/10.1016/b978-0-08-097086-8.73040-6 https://ideas.repec.org/p/ebg/iesewp/d-0862.html https://ideas.repec.org/p/ebg/iesewp/d-0862.html https://ideas.repec.org/p/ebg/iesewp/d-0862.html https://ideas.repec.org/s/ebg/iesewp.html https://www.iese.edu/media/research/pdfs/di-0862-e.pdf https://www.iese.edu/media/research/pdfs/di-0862-e.pdf gonzalez and kolyada — an analysis of kitchen manufacturers in the curaçao market by applying kolyada’s methodology 49 decisions (characteristics) of the organization and competitors would be identical to those in the base year. • “to-be”: assumes that during the forecast period, the organization selects the optimal business model and strategic decisions to outperform its competitors, taking into account their anticipated actions (selection of business model and strategy). base year and planning horizon • the base year is defined as the last completed calendar year when the project is initiated. • the planning horizon is the current unfinished year and the following three years or more. predictive models are developed annually, incorporating a scenario-based analysis. the “as-is” and “tobe” formats consider the main, optimistic, and pessimistic scenarios. follow-up projects and validation follow-up projects are implemented annually, on average, starting from one year after the original projects. each follow-up project extends a project in an earlier period, conducted for the same organization and competitors, within the same market and target cluster. they focus on validating the forecasts made for the first year in the planning (forecasting) horizon based on the model and fine-tuning the model by comparing the projected indicators with the actual results obtained that year. alongside the primary tasks of the initial projects, these projects also include necessary corrections in the strategic goal-setting, brand management, defining a target corporate culture profile, developing strategic initiatives, and establishing budgeting processes. this approach ensures both the initial validation and continuous fine-tuning of the economic and mathematical predictive model. developers either confirm the alignment of forecasts for the previous year of the planning horizon with the actual results (under the realized market scenario) or make adjustments if the forecast did not materialize. adjustments include: • changing input factor values when actual values differed from projections. • revising cause-and-effect relationships between inputs and forecasts. • implementing a combination of both methods. appendix b. technical details of predictive economic-mathematical model for the curaçao kitchen manufacturing market the forecasting component of kolyada’s methodology applies sensitivity analysis and scenario simulation through an economic-mathematical predictive model that links input variables to projected business outcomes. in the villa exclusivo b.v’s project, the base year was taken as the last completed calendar year at the time the project was carried out. in contrast, the planning horizon was the current unfinished calendar year in which the project was being executed. initially, the predictive model was configured through “forecasting” past periods for which the developers had the necessary data. main inputs and initial calculations (base year, 2023): • market modeling and clustering characteristics. • monetary sales volume for villa exclusivo b.v and competitors. • pricing and direct costs (villa exclusivo b.v and competitors). • average customer purchase size by cluster. • unit sales volume for villa exclusivo b.v and competitors (calculated). • customer numbers by cluster and companies in cluster (calculated). • sales profitability by cluster (calculated); • companies market and cluster shares (calculated); • other market and cluster characteristics (calculated). projected inputs, scenario mode (2024 horizon, main, optimistic, and pessimistic scenarios): • pricing and direct costs. • average customer purchase size by cluster. • customer numbers by cluster. • other market and cluster characteristics. • external market factors and risks. • comparative efficiency in business processes. 50 bioproducts business 10(3) 2025 appendix table 1. clustering results for the curaçao kitchen manufacturing market cluster price range (usd) product type purchasing method market characteristics strategic relevance 1 1,000–3,000 pre-assembled direct sales mass-market, cost-driven, sensitive to consumer sentiment low margins, high volume 2 1,000–3,000 pre-assembled tender-based bulk contracts for low-cost units (e.g., social housing) stable demand, price competition 3 3,000.01–5,000 pre-assembled direct sales middle-income households seeking quality & value balanced growth potential 4 3,000.01–5,000 custom-made direct sales middle/upper-middle customers wanting affordable customization attractive margins, moderate demand 5 5,000.01–25,000 custom-made direct sales high-income clients valuing exclusivity & craftsmanship premium niche, high margins 6 5,000.01–25,000 custom-made tender-based luxury projects (hotels, offices, upscale housing) high-value, b2b-driven demand outputs, scenario mode (2024 horizon, main, optimistic, and pessimistic scenarios): • forecasted sales volumes (monetary and physical terms) for villa exclusivo b.v and competitors. • expected customer numbers for villa exclusivo b.v and competitors. • companies market and cluster shares for villa exclusivo b.v and competitors. • sales profitability by cluster for villa exclusivo b.v and competitors. • gross profit for villa exclusivo b.v and competitors. validation process: the predictive model was first tuned using 2023 data points as the base year. forecasts were generated for 2024 and compared with the actual outcomes. discrepancies prompted adjustments to input values and, where necessary, revisions to the causal relationships within the model. this iterative process of validation and recalibration is integral to maintaining forecasting accuracy. each cycle of back-testing not only strengthens predictive reliability but also improves managerial decision-making by refining assumptions about demand, competitor behavior, and risk exposure. appendix c. clustering results for the curaçao kitchen manufacturing market twelve clusters were initially modeled by combining three price ranges (low, medium, and high), two product types (pre-assembled and custom-made kitchen furniture), and two purchasing methods (direct sales and tender-based). of these, six clusters were considered viable (appendix table 1). the remaining six represented fictitious combinations that were not observed in the curaçao market and were excluded.