Practices and strategies for sustainability-related risk management in multi-tier supply chains

This study investigates how sustainability-related risks are managed in multi-tier supply chains. It focuses on the strategies and practices that companies use to manage sustainability-related risks and how these differ between supply chains and supply chain tiers. We use a multiple-case study with 25 companies forming 5 multi-tier supply chains. As a result of this study, we present a conceptual framework for sustainability-related risk management practices in multi-tier supply chains and apply it empirically by defining sustainability-related risk management profiles for the case supply chains. We show that in multi-tier supply chains, companies need direct and indirect collaboration and direct and indirect monitoring practices for managing sustainability-related risks emanating from not only their first-tier suppliers but also lower-tier suppliers. Our framework helps purchasing and supply chain managers understand the dimensions of sustainability-related risk management in a multi-tier setting and develop strategies and practices for mitigating and managing those risks. We also empirically show the challenge of extending sustainability-related risk management practices beyond first-tier suppliers due to the different practices in different supply chain tiers.     

Competitive sustainability and stakeholder engagement: Exploring awareness,motivation, and capability

In adding to competitive dynamics and sustainability literature, this study examines the role of a supplier and consumer on a focal firm's sustainability competitiveness through the awareness, motivation, and capability (AMC) perspective and stakeholder engagement research. Regression analyses are performed utilizing secondary sustainability and financial data to test proposed environmental and social competitiveness hypotheses. A constraint factor model is also tested. This study finds that a focal firm's motivation is positively associated with its own sustainability competitiveness. The study also finds that awareness and capability are negatively associated with environmental and social competitiveness. Finally, whereas suppliers' AMC have no significant impact, customer awareness and capability do. The findings reflect both conformity and divergence from the AMC model when applying it to a supply chain context as well as enhance the managerial understanding of how a supply and customer base can impact their own sustainability competitiveness.     

Sustainability Management within Supply Chains – A Resource Dependence View

Proceeding from three basic concepts of resource dependence theory – organizational effectiveness, interdependence and external control – we conducted a multiple‐case study to investigate factors that facilitate and hinder sustainability management within supply chains. Our empirical observations highlight that focal firms do not necessarily transfer their own corporate sustainability agendas into control mechanisms for managing the sustainability of their suppliers. Based on this insight, we develop a new theory that explains how intra‐ and interorganizational sustainability management is affected by a firm's business case for promoting sustainability, control mechanisms, trade‐offs, trust and market liberalization. The theory offers new insights into drivers and barriers for effective interorganizational sustainability management, whereas previous theories could not fully explain the reasons for diverging sustainability management practices in supply chains. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

LRN 2016 SPECIAL – the antecedents and consequences of reduction within a supply chain collaboration orientation of CO2 emissions: evidence from China

ABSTRACT

This paper explores the impact of a predisposition towards supply chain collaboration (SCC) on the reduction of CO₂ emissions, along with its consequences, within the context of a growing recognition of green collaboration. The study draws upon three theoretical lenses, i.e. natural-resource-based view (NRBV), resource dependence theory (RDT) and institutional theory. It conceptualises a research framework in which the underlying constructs are defined and the hypotheses postulated. The empirical investigation was undertaken in China, resulting in data pertaining to 167 companies compiled from a questionnaire survey and subsequently analysed using structural equation modelling. The research findings reveal a causal relationship between two orientations, i.e. SCC orientation and a firm's CO₂ emission reduction orientation, and SCC-led CO₂ emission reduction and its impact on a firm's performance. The study suggests that, in a ‘low-carbon’ business environment, firms can guarantee the engagement of an SCC-led CO₂ emission reduction initiative towards broad environmental sustainability.     

Assessing the impact of green supply chain practices on firm performance in the Korean manufacturing industry

As a growing number of customers tend to view corporate social responsibility (CSR) as a key purchase decision criterion, demands for CSR including environmental sustainability have accelerated in today's business world. To meet such demands, many firms consider embracing environment-friendly business practices. However, many firms are still hesitant to implement those practices due to sceptical views about their real managerial benefits. Although the previous literature confirms the positive link between a firm's commitment to environmental sustainability and its performance, the varying degree of impact of different kinds of environment-friendly supply chain practices on the firm's operational performance is still unknown. To fill the void left by prior research, this paper aims to classify various types of green supply chain management (GSCM) practices and then assess the impact of each of these distinct types on the firm's operational performances (especially manufacturing and marketing performance). Also, this paper examines how the firm's organisational profiles such as firm size affect the particular firm's choice of GSCM practices. Our experimental results reveal that the chosen type of GSCM practices influences the firm's performance differently.     

Do the barriers of multi-tier sustainable supply chain interact? A multi-sector examination using resource-based theory and resource-dependence theory

In a geographically dispersed multi-tiered supply chain, managing sustainable practices throughout the entire upstream network is increasingly challenging for the lead firm. But often, it is the lead firm that is held responsible for the lack of non-sustainable practices by any of its suppliers in the network. This can potentially damage the reputation of the lead firm. Moreover, complex inter-relationship among multi-tier sustainable supply chain management (MSSCM) barriers tends to constrain the cascading of sustainability. Consequently, the strategies in overcoming the MSSCM barriers show limited impact. Thus, exploring the mutual interaction among MSSCM barriers is crucial as removing one barrier can intensify or diminish the effect of another barrier. This research unpacks the intra-firm, inter-firm, and contingency barriers for multi-tiered supplier network. A grey-based multi-criterion decision-making approach is adopted in establishing mutual relationships among MSSCM barriers. In addition, a combined resource-based theory and resource-dependence theory supports the theoretical anchoring. The MSSCM barriers are studied for supply networks which involve three lead firms, five tier-one suppliers, and ten lower-tier suppliers selected from automobile, beverage, and home appliances industries. The research provides a granularity of the MSSCM barriers’ by analysing the meaningful relationship at the individual tier-firm level and aggregated level.     

The geography of suppliers and retailers

In the last decades, supply chains have increasingly transcended national boundaries developing into global supply chains. Along with the many opportunities arising from international sourcing and the extended commercial presence over the world, the management of a globally dispersed supply chain is highly complex. A key issue to consider when dealing with the global supply chain design is the location of facilities, not only with respect to firms' owned facilities but also the supply and distribution side as factors that affect supply chain complexity and operational performance. This paper sets out a methodological framework to characterize the geographical configuration of a firm's suppliers and retailer networks. Quantitative indexes of network spatial concentration and relative proximity measures based on a nonparametric kernel density estimator are developed to identify both intra- and inter-firm patterns between the supply and point of sales' distributions. The method is first described by means of a series of theoretical-illustrative examples and exemplified by analyzing the geographical dispersion of four practical cases from the fashion-textile industry (i.e., Adidas, Benetton, C&A, and Puma). Subsequently, managerial implications and potential use of the metrics are discussed, showing how the proposed approach can support researchers and practitioners to improve supply chain location decisions and logistic integration, and evaluate changes in either the purchasing or distribution strategy.     

Global sourcing and quality recalls: An empirical study of outsourcing-supplier concentration-product recalls linkages

This study investigates how supply chain sourcing strategies are associated with product quality recalls. In particular, the research examines how make-or-buy decisions (i.e., outsourcing), the use of foreign suppliers (i.e., offshore outsourcing), the relocation of production to offshore markets (i.e., offshoring), and decisions to consolidate supply bases (i.e., the use of few vs. myriad suppliers) are related to product recalls. Product recalls are serious quality failures in supply chains with significant, negative impacts on firm performance. Product recalls are frequently connected to the globalization of supply chains. Globalization has, at times, promoted inconsistency in quality control and standards, leading to quality problems and failures. Data across multiple industries, with widely reported recalls, have been collected and analyzed using regression techniques. Our findings indicate that offshore outsourcing has a greater impact on recalls than offshoring without outsourcing; outsourcing domestically has the least influence. Outsourcing to a smaller supplier base may lead to fewer recalls at low levels of outsourcing. However, it may exacerbate the impact of outsourcing on recalls at high levels of outsourcing.     

Understanding the adoption of socially responsible supplier development practices using institutional theory: Dairy supply chains in India

Supplier development (SD) initiatives play an important role in building buyer-supplier capacities to deal with social and economic performance. The aim of this paper is to explain the motivations behind the adoption of similar SD strategies to address sustainability (particularly social issues) occurring in local supply chains of a developing country. We compare the economic and social variants of institutional theory to investigate whether efficiency or legitimacy seeking drives the adoption (and copying) of SD practices. Twelve case studies involving private and cooperative dairies were conducted in India via semi-structured interviews. Findings revealed that both private and cooperative dairies adopt similar SD practices to build supplier capabilities and improve social and economic performance of buyers and suppliers. Private dairies imitate SD practices of the cooperatives to survive the competition; i.e., economic performance is the main reason behind their isomorphism. Cooperatives, on the other hand, take up SD practices more for legitimacy and even philanthropic reasons; though also partly note the long-term economic benefits from developing the supplier community. These findings can be used both by practitioners and researchers to gain valuable insights into the reasons driving organisational isomorphism in social sustainability practices from a developing country perspective, something rarely done so far in the literature.     

Enhancing the role of human resource management in corporate sustainability and social responsibility: A multi-stakeholder,multidimensional approach to HRM

This paper focuses on the increased pressure for corporations to engage in corporate sustainability (CS) and corporate social responsibility (CSR) in order to address the current crisis of confidence in business, align their activities with the needs and expectations of a broader set of stakeholders, and help tackle the world's grand challenges. We argue that human resource management (HRM) has a potentially vital role to play in contributing to a firm's CS/CSR efforts, but so far has failed to deliver. We explore the reasons for this failure and discuss ways for HRM to play a more prominent role in the design and implementation of a firm's CS/CSR strategy. Building on earlier attempts to integrate corporate responsibility and sustainability into the HRM performance construct, we propose a multidimensional, multi-stakeholder approach to sustainable HRM that encompasses activities aimed both at avoiding harmful consequences for stakeholders and contributing to positive outcomes along the triple bottom line (i.e., people, planet, and prosperity). We discuss implications for research and develop a set of propositions and guidelines for future research.     

Linking sustainable business models and supply chains — Toward an integrated value creation framework

Extant literature on sustainable business models highlights that value creation stems from resources exchanged in relationships between a focal firm and its stakeholders. In this context, the literature has, so far, focused on direct relationships. However, despite the acknowledged relevance of sustainability issues in supply chains, this relational view of the focal company and its direct stakeholders has not been extended toward value creation for and with indirect stakeholders, such as stakeholders of suppliers. Addressing this gap, this conceptual article integrates a relational view of sustainable supply chain management into the management of sustainable business models. It extends the scope of sustainable business models from relationships between the focal firm and its direct stakeholders to indirect relationships with stakeholders of suppliers. A framework is developed that supports analysis and management of value-creating relationships between the focal firm, suppliers, and stakeholders of suppliers. By extending the conceptualization of sustainable business models to consider relationship chains beyond direct relationships, this article proposes that a focal firm has to actively manage interactions both with suppliers and with suppliers' stakeholders.     

Circular economy,the transition of an incumbent focal firm: How to successfully reconcile environmental and economic sustainability?

Circular economy (CE) has garnered increasing attention in political circles and practitioner literature thanks to its potential to overcome the harmful consequences of linear patterns of growth. Nonetheless, the adoption of sustainable practices entails a holistic approach requiring businesses to make significant changes to their production, technologies and stakeholder management. These challenges resulted in limited progress in terms of the practical implementation of CE. This paper addresses the need for more literature focused on the pragmatic aspects of applying this paradigm to incumbent firms. The author presents the journey that Lucart S.p.A., a major European tissue paper manufacturer, has undertaken between 2014 and 2020 to apply CE principles to its practices. Insights from the transformation process, reconstructed through interviews with the firm's management and environmental impact data, suggest that to succeed it takes innovating (plants, products and marketing strategies) and setting up supply chains that reconcile environmental and economic sustainability.     

Do institutional investors monitor management? Evidence from the relationship between institutional ownership and capital structure

We examine the dynamic relations between institutional ownership and a firm's capital structure. We find that a firm's leverage decreases when institutional ownership increases. This result implies that a firm reduces its debt level as institutional investors substitute for the monitoring role of debt. More importantly, we find that a firm's suboptimal leverage decreases when the institutional ownership increases, and institutional ownership decreases when a firm's suboptimal leverage increases. This finding shows that institutions not only effectively monitor a firm's capital structure but they also passively sell their shares when dissatisfied with it. In addition, we find that the monitoring evidence on a firm's leverage and suboptimal leverage are more pronounced when the institutional investors are less likely to have business relationships with a firm or the information asymmetry is high in the market.     

The effect of controversial global sourcing practices on the ethical judgments and intentions of U.S. consumers

Global sourcing has led to lower cost and more effective supply chains for many companies. However, when the cost-driven practices of many suppliers in these chains come to light there is often considerable debate over the ethics of these practices. This research uses the well-known Hunt–Vitell framework as the theoretical foundation for a structural equation model of the deontological and teleological evaluations used by consumers when making ethical judgments of a firm's controversial cost-driven global sourcing practices. Data from a large-scale U.S. consumer survey show the importance of deontological and teleological evaluations in forming consumers’ ethical judgments of global sourcing practices, and establish a strong relationship between ethical judgment and the intention of consumers to alter consumption of a firm's products. Extensions to the framework and demographic analyses for age, gender, and income provide insights as to how perceptions of these practices affect consumer evaluations of a company involved in global sourcing and how consumers actualize their resultant intentions.     

Framing Sustainable Supply Chain Finance: how can supply chain sustainability practices and supply chain finance solutions be integrated?

Supply chain finance (SCF) can play a role in improving supply chain (SC) sustainability. That is why academics have started investigating the connection between SCF and sustainable SC management, and practitioners have begun developing new SCF solutions with a sustainable orientation. Although SCF solutions have been suggested as supporting tools for the diffusion of sustainability within SCs, academic contributions have only partially investigated sustainable SCF (SSCF). There is the need to understand in greater detail first, how different SC sustainability practices (e.g., supplier assessment, supplier development, incentives to suppliers, and third-party involvement) can be integrated into SCF solutions; second, how different brokerage roles can facilitate this integration to contribute to the successful implementation of an SSCF solution. This paper investigates those aspects through multiple international exploratory case studies. The results confirm that SCF solutions become sustainable by integrating different SC sustainability practices, either embedded in the SSCF solutions or reinforced by the implementation of the solutions. Moreover, involving new actors, including third-party information providers, NGOs, and certification bodies, who assume different brokerage roles, positively influences the development of SSCF solutions.     

Sustainable Purchasing in Food Retailing: Interorganizational Relationship Management to Green Product Supply

Stakeholders’ demands for product sustainability redefine the focus of corporate purchasing strategies from the traditional concern with financial performance to considerations of ‘triple bottom line’ viability. This adds to the complexity of managing interorganizational relationships and poses a question regarding corporate ability to effectively leverage suppliers over environmental and social performance of supplied goods. Since it is not clear what type of purchasing relationship is more favorable for greening a product supply, the current paper aims to investigate how food retailers manage their relationships with suppliers in order to influence the environmental and social performance of procured goods and improve the availability of sustainably produced supply. The research is based on two case studies of Swedish supermarkets and supplementary semi‐structured interviews with Swedish, British and Danish supermarkets. The results of the study contribute to the existing body of academic knowledge in the field of sustainable supply chain management by developing a typology of sustainable purchasing relationships with detailed insights into the nature of collaborative practices, structure of incentives, sustainability ambition, and approaches to verification of compliance. The study has also revealed the dependence of sustainable purchasing relationships on the characteristics of the procurement context, namely the presence of well‐established sustainability certification schemes, perceived by purchaser's situation with availability of sustainability certified supply and purchaser's interpretation of the state of power dependence in relationships with suppliers. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Sustainable procurement practice

Procurement has a key role in sustainability as policies and practices need to extend beyond organisations' boundaries incorporating their whole supply chains. Guidelines on sustainability encourage procurement to make decisions that encompass the environmental, economic and social elements of the Triple Bottom Line (TBL). Taking a supply chain perspective, procurement also need to analyse how decisions impact on the TBL in respect of suppliers. The results of a survey of sustainable procurement practices in 44 English‐based UK Housing Associations (HAs), who are responsible for the provision of social housing, confirms prior research of other sectors that suggests 1) a failure to overcome inertia in relation to sustainable procurement; and 2) in the few examples where practices have been established, only the environmental element of the TBL is considered. The organisations surveyed have sustainability‐related issues in their missions and external and internal pressures to embed sustainability, yet this has not translated into widespread establishment of sustainable procurement. Recommendations to neutralise inertia are: firstly, take the experiences from other areas, e.g. innovation management, which stress the importance of inter‐organisational relationships; secondly, develop a small number of sustainable development indicators for procurement and, to take advantage of the relatively more‐advanced environmental practices to show how these elements have socio‐economic impacts; and finally, rather than focus on just the pressures and drivers of sustainability (as suggested in strategic models of sustainability), emphasise the triggers that overcome inertia and lead to changes in behaviour amongst procurement staff i.e. the establishment of ethical pricing models. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.     

Financial benefits and risks of dependency in triadic supply chain relationships

The economic consequences of interdependent relationships with suppliers and customers have long been of interest to supply chain managers and academics alike. Whereas previous studies have focused on the benefits or risks of embedded relationships that accrue to buying firms, this study simultaneously investigates the effects of a supplier's and a customer's embeddedness, arising from resource dependency, on a focal firm's financial performance in triadic supply chain relationships. Using 1,144 unique focal firm-years for U.S. firms from Compustat, we find that a supplier's and a customer's dependency both increase the focal firm's performance in terms of return on assets (ROA) and return on sales (ROS) by increasing asset turnover (ATO). As levels of supplier and customer dependency on the focal firm increase, however, the economic benefits of customer dependency diminish beyond a certain point, while those of supplier dependency continue to increase above that threshold. Thus, our findings show the paradoxically differing risks of the supplier's versus the customer's dependency, while establishing the unequivocal economic benefits of supplier and customer relations for focal firms in the middle of concentrated triadic relationships.     

Retailers’ incentives for green investment in differentiated competition channels

With increasing public environmental awareness, green activities in retail and distribution processes have become crucial tools for retailers to boost demand and enhance competitiveness. This study develops an analytical model to study the green investment choices of two differentiated retailers dealing with a common green manufacturer. It also explores the impacts of these investment choices on the manufacturer's operational decisions, channel efficiency, consumer welfare, and the environment. We derive three main results. First, the powerful retailer always favors green investments, whereas the less powerful (inferior) retailer may either prefer or avoid green investments. The fiercer the inter-retailer competition, the lower the willingness of the inferior retailer to introduce green investments. Second, although all supply chain parties may disagree on their preferences for retailers' green investments, a bilateral green investment (i.e., both retailers make green investments) can reach an incentive alignment for all firms if the differentiation between retailers is low enough and the competition between them is not substantially fierce. Moreover, a bilateral green investment improves consumer welfare and channel efficiency because of the great demand expansion and double marginalization reduction. Third, the retailers' green investments can motivate the manufacturer to produce greener products, but they do not necessarily benefit the environment. We show that the supply chain's economic sustainability aligns with its environmental sustainability only if the environmental improvement efficiency of green investments is substantially high. We further examine the impact of retailers with differentiated green investment abilities and the manufacturer's green investment efficiency to verify the robustness of the main results.     

Corporate sustainability and financial performance: Collective reputation as moderator of the relationship between environmental performance and firm market value

Markets value superior corporate sustainability performance in part because investors use a firm's environmental performance as a signal of desirable but difficult-to-observe attributes, such as the firm's integrity capacity. Yet a signaling conflict can arise when a firm belongs to an organizational form that has a collective reputation for being unethical. In such circumstances, the firm's environmental performance may no longer credibly signal its underlying integrity capacity, leading markets to adjust downward the value they would otherwise place on the firm's environmental performance. Using longitudinal data on South Korean firms, we find that improvements in firm environmental performance lead to smaller increases in market values for firms belonging to a poorly reputed organizational form. However, firms can partially recover lost value by adopting firm features that reduce the signaling conflict, thereby restoring the notion of corporate sustainability performance driving firm market values.