Sustainable supply chain management and partner engagement to manage climate change information

Climate change poses significant new risks and challenges for businesses and their supply chains. Additionally, in many sectors, Scope 3 indirect greenhouse gas emissions resulting from the sourcing and distribution of goods and services are larger than firms' own carbon footprints. Here we study how firms engage their key stakeholders in their supply chains in obtaining, processing, and transferring relevant climate change‐related information designed to overcome information asymmetry and drive sustainable development. Grounded in organisational information‐processing theory (OIPT), we draw on data from the Carbon Disclosure Project's Climate Change Supply Chain initiative for a qualitative content analysis of a large sample of global firms. Consistent with OIPT, we find that although firms primarily engage their supply chain partners in a variety of ways to reduce information uncertainty around indirect emissions data, effectively interpreting and managing broader sustainability information equivocality becomes a growing priority. Our findings further suggest that firms engage suppliers, customers, and other supply chain partners through basic, transactional, and collaborative types of engagement. We contribute to literatures on interorganisational information processing and sustainable supply chain management by providing a more detailed understanding of how firms engage supply chain partners in the context of climate change.     

Understanding the dynamics of global supply chain sustainability initiatives: The role of institutional distance from the buyer's perspective

Research points to sustainable supply chain management as a core strategic goal for most global firms. However, managers continue to struggle with implementing successful sustainability initiatives both internally and throughout their globally dispersed supply chains. Using grounded theory, our findings uncover a potential explanation for how firms manage sustainability initiatives in the context of global supply chain management, from a buyer's perspective. Institutional theory of the firm is applied to help explain the challenges of developing and implementing global supply chain sustainability-related initiatives within buyer-supplier relationships. Analysis of the data from qualitative interviews show that institutional distance is an influential factor that produces mixed effects on the global buyer-supplier relationships in our sample in the context of buyer and supplier strategic orientation toward sustainability. The findings can help guide managers when approaching sustainability-related initiatives in the context of global supply chains. Theoretical and managerial implications are discussed as well as areas for future research.     

Product co-development in an emerging market: The role of buyer-supplier compatibility and institutional environment

In emerging markets, supply chains increasingly serve as critical value chains through which ideas, practices and knowledge flow to and from suppliers and buyers. Drawing on buyer-supplier collaboration literature and organizational learning theory, we examine the antecedents and underlying mechanisms of product co-development. Due to emerging markets' unique institutional environments, we further investigate how government intervention and guanxi importance moderate supplier-buyer collaborative outcomes. Dyadic data from 323 supplier-buyer pairs in China largely support our theoretical framework. Partners' knowledge commonality has a curvilinear (inverted U-shaped) relationship to product co-development, whereas goal compatibility has a positive impact on product co-development. Mutual learning partially mediates the main effect. Furthermore, government intervention weakens the positive effect of mutual learning on product co-development whereas guanxi importance strengthens this relationship. This research provides fresh theoretical and managerial implications to supply chain collaboration in emerging markets.     

Efficiency meets accountability: Performance implications of supply chain configuration, control, and capabilities

The public increasingly holds firms accountable for social and environmental outcomes, such as product toxicity problems and human rights violations, throughout their global supply chains. How can companies improve the social and environmental performance within their supply chains, particularly as other competitive pressures, such as cost and quality, continue to escalate? Starting from an efficient versus responsive supply chain framework, we develop an integrative model that blends together elements of supply chain configuration, stakeholder management, and capability development. Specifically, we spotlight the dimensions of control and accountability that collectively determine stakeholder exposure, and show how this new construct affects the linkages between supply chain capabilities, configuration, and performance. In particular, this analysis reveals that the nature of stakeholder exposure determines how social/environmental technical and relational capabilities impact social and environmental outcomes. We conclude with implications for research and practice, discussing how current supply chain theories must be extended to incorporate external stakeholders, to clarify strategies and identify potential pitfalls, and to better predict performance outcomes.     

The effect of operational slack,diversification, and vertical relatedness on the stock market reaction to supply chain disruptions

This paper empirically examines whether operational slack, business diversification, geographic diversification, and vertical relatedness influence the stock market reaction to supply chain disruptions. The results are based on a sample of 307 supply chain disruptions announced by publicly traded firms during 1987–1998. Our analysis shows that firms with more slack in their supply chain experience less negative stock market reaction. The extent of business diversification has no significant effect on the stock market reaction. Firms that are more geographically diversified experience a more negative stock market reaction. We find that firms with a high degree of vertical relatedness experience a less negative stock market reaction. These results have important implications on how firms design and operate their supply chains to mitigate the negative effect of supply chain disruptions.     

Supply chain collaboration and eco‐innovations: An institutional perspective from China

This study explores the impact of supply chain collaboration on eco‐innovations in the context of 220 Chinese manufacturing supplier firms involved in global supply chain networks. It investigates how supplier and customer collaborations help firms to enhance product eco‐innovations, and/or process eco‐innovations, and how the institutional context (i.e., regulatory, market, and community pressures) influences these relationships. The structural equation modeling approach is used to analyze the data captured from medium and large manufacturing enterprises in three major sectors: automotive, electronics, and textiles. The results show that community pressure has a positive effect on supplier collaboration, which further leads to enhanced process eco‐innovation. On the other hand, the findings indicate that while market pressure enhances customer collaboration, this does not reinforce product eco‐innovation. Contrary to our expectation, regulatory pressures do not impact supplier or customer collaboration for innovation. Overall, different institutional factors indicate divergent effects on supply chain collaboration and product/process eco‐innovation. The importance of normative pressures, such as those applied through the local community and interest groups, for eco‐innovations in production processes is further discussed as a typical feature of the institutional environment of Chinese supplier firms.     

The effects of innovation–cost strategy, knowledge, and action in the supply chain on firm performance

Despite the importance of supply chains within today's economy, we know little about how the knowledge of supply chains can contribute to superior performance at the firm level. Building on the resource-based view, knowledge-based view and strategic choice theory, we develop hypotheses linking two knowledge-driven supply chain phenomena (i.e., knowledge development capacity and intellectual capital), innovation–cost strategy, and action to firm-level performance. Using survey and archival data from 489 firms, we found that performance is influenced by how well knowledge development capacity and intellectual capital efforts complement alternative chain strategies. More specifically, each strategy type requires different constellations of knowledge development capacity and intellectual capital to enhance action and create superior firm performance. These results highlight the importance of supply chain phenomena for firm-level performance, and more broadly, the value of supply chains as a competitive weapon in contemporary firms.     

Drivers and outcomes of open-standard interorganizational information systems assimilation in high-technology supply chains

In recent years, firms in high-technology supply chains have established internet-based electronic linkages with their trading partners. As a result, they have improved their ability to coordinate and synchronize shared business processes by using more complete, accurate, and timely information. These electronic linkages are based on open-standard interorganizational information systems (OSIOS), which are fundamentally different from traditional electronic data interchanges. OSIOS capture not only the technical specifications for data interchange but also the sequential steps for the execution of shared business processes. Because OSIOS are still at an early diffusion stage, it remains unclear why firms would assimilate such an innovation and whether assimilation provides firms any benefits. In this research, we develop a framework grounded on the economics of standards, institutional theory, and strategic interorganizational information systems literatures to investigate the drivers and outcomes of OSIOS assimilation in a focused context. In order to test our hypotheses based on this framework, we used data from a high-technology supply chain and employed econometrics techniques. We found that both competition asymmetry across supply chain echelons and OSIOS assimilation within supply chain echelons predict individual firms’ OSIOS assimilation. The results also suggest that firms’ supply chain dominance is both a driver and an outcome of OSIOS assimilation, highlighting a mutually reinforcing process. In addition, our study reveals boundary conditions of the hypothesized relationships. The use of multiple theoretical perspectives, a unique dataset, and innovative statistical techniques to investigate OSIOS assimilation in high-technology supply chains contributes to the body of knowledge in both the supply chain management and management of information systems disciplines.     

Contract ineffectiveness in emerging markets: An institutional theory perspective

The effectiveness of contracts is bounded by the institutional environment in which they are designed and enforced. When firms form supply chain partnerships in emerging markets, they may experience contract ineffectiveness, which is defined as a firm's perceived limits of contracts with respect to safeguarding interests and coordinating activities. Specifically, we identify two institutional factors that may give rise to contract ineffectiveness, information transparency and legal enforceability, as they determine how effectively a firm designs and enforces a contract. In addition, we reveal that contract ineffectiveness prompts a firm to seek social ties, including business ties and political ties, to overcome the institutionally induced limits of contracts. These efforts, however, are moderated by the type of predominant pressure a firm bears. While equity pressure strengthens the relationship between contract ineffectiveness and a firm's pursuit of social ties, efficiency pressure weakens this relationship, because seeking social ties imposes an extra burden of efficiency. Tested by data collected from 187 distributors in China, our study reveals the institutional causes and the consequences of contract ineffectiveness, which is a common problem encountered by firms when forming supply chain partnerships in emerging markets.     

The impact of the COVID-19 pandemic on business expectations

We document and evaluate how businesses are reacting to the COVID-19 crisis through August 2020. First, on net, firms see the shock (thus far) largely as a demand rather than supply shock. A greater share of firms report significant or severe disruptions to sales activity than to supply chains. We compare these measures of disruption to their expected changes in selling prices and find that, even for firms that report supply chain disruptions, they expect to lower near-term selling prices on average. We also show that firms are engaging in wage cuts and expect to trim wages further before the end of 2020. These cuts stem from firms that have been disproportionally negatively impacted by the pandemic. Second, firms (like professional forecasters) have responded to the COVID-19 pandemic by lowering their one-year-ahead inflation expectations. These responses stand in stark contrast to that of household inflation expectations (as measured by the University of Michigan or the New York Fed). Indeed, firms’ one-year-ahead inflation expectations fell precipitously (to a series low) following the onset of the pandemic, while household measures of inflation expectations jumped markedly. Third, despite the dramatic decline in firms’ near-term inflation expectations, their longer-run inflation expectations have remained relatively stable.     

Supply chain finance schemes in the procurement of agricultural products

Product, information, and finance flows are all interrelated within the modern supply chain; thus, it is now more than ever of paramount importance for practitioners to integrate procurement and financial decisions. This challenge is exemplified in many agricultural supply chains, where operational risks are significant and access to capital differs sharply across firms. We study three management tactics that some large food/beverage manufacturers – situated downstream in these chains – have used to meet the challenge: ordinary fixed price contracts (or soft tolling) with direct suppliers, hard tolling and contract farming where the manufacturer intervenes upstream, providing capital, and coordinating procurement decisions. We place these upstream intervention schemes in the theoretical context of supply chain finance (SCF) and model their application to a three-echelon agricultural supply chain. We perform a numerical study in order to understand how the structure of capital constraints in the chain may influence the manufacturer's choice of SCF scheme. The numerical study is based on a business case that reflects the barley–malt supply chain of Heineken N.V. Despite greater coordination opportunities, we show that upstream intervention is not necessarily preferable for the manufacturer. Nevertheless, the preferred SCF scheme can be inferred on the basis of relatively simple characterization of the capital constraints in the supply chain.     

Firm's resilience to supply chain disruptions: Scale development and empirical examination

This paper expands our understanding of factors that contribute to development of firm resilience to supply chain disruptions. In doing so, we operationalize firm resilience to understand how supply chain disruption orientated firms can develop resilience to supply chain disruptions. We find that supply chain disruption orientation alone is not enough for a firm to develop resilience. Supply chain disruption oriented firms require the ability to reconfigure resources or have a risk management resource infrastructure to develop resilience. The way in which supply chain disruption oriented firms develop resilience through resource reconfiguration or risk management infrastructure depends on the context of the disruption as high impact or low impact. In a high impact disruption context, resource reconfiguration fully mediates the relationship between supply chain disruption orientation and firm resilience. In a low impact disruption context, supply chain disruption orientation and risk management infrastructure have a synergistic effect on developing firm resilience.     

Improving sustainable supply chain performance through organisational culture: A competing values framework approach

This research adopts the institutional and relational view theories to empirically test the impact of organisational culture (OC) on sustainable supply chain performance (SSCP) and further examines the impact of external integration on their relationship, drawing on a study in the food manufacturing industries in the UK and Greece. Using the mixed method approach, structural equation modelling (SEM) technique was first used to empirically analyse the data from a survey of 315 firms. In addition, insights from 11 interviews from top managers were qualitatively used as the basis to enrich and confirm the findings from the quantitative study. Our findings revealed that in the context of global supply chains only developmental, hierarchical, and group culture components of the competing values framework (CVF) as a model for assessing OC are conducive for achieving a higher SSCP. Although developmental, hierarchical and group cultures are instrumental for SSCP, a strong external integration is still required. Thus, external integration was found to mediate the relationship between the dimensions of OC and SSCP. The results further confirmed a positive relationship between all the dimensions of OC (developmental, group, hierarchical and rational culture) and external integration and a positive impact of external integration on SSCP. This research expands the institutional and relational view theories to examine the effect of OC (using CVF) on SSCP and further reveals the extent of external integration needed in the relationship to enhance SSCP in global supply chains. Supply chain managers are encouraged to adopt integrated competing values, namely, developmental, group, and hierarchical cultures to intensify the external integration in the supply chain to overcome several sustainability challenges and improve SSCP.     

Sustainability in multi-tier supply chains: Understanding the double agency role of the first-tier supplier

In light of the growing complexity of globally dispersed, multi-tier supply chains, the involvement of first-tier suppliers has become instrumental in the quest for achieving sustainability compliance along the supply chain. We describe this new responsibility as the double agency role. We employ agency and institutional theory arguments to explore the conditions under which first-tier suppliers will act as agents who fulfill the lead firm's sustainability requirements (i.e., the primary agency role) and implement these requirements in their suppliers' operations (i.e., the secondary agency role). The findings from three in-depth case studies embedded in different institutional contexts highlight the importance for lead firms to incentivize each agency role separately and to reduce information asymmetries, particularly at the second-tier level. In addition, our inductive analysis reveals several contingency factors that influence the coupling of the secondary agency role of the first-tier supplier. These factors include resource availability at the first-tier supplier's firm, the lead firm's focus on the triple-bottom-line dimension (i.e., environmental or social), the lead firm's use of power, and the lead firm's internal alignment of the sustainability and purchasing function. We integrate our findings in a conceptual framework that advances the research agenda on multi-tier sustainable supply chains, and we subsequently outline the practical implications of assigning the double agency role to first tier suppliers.     

Structural drivers of upstream supply chain complexity and the frequency of supply chain disruptions

A great deal of research has focused on supply chain risk management, but the question “Which supply chain characteristics increase the frequency of supply chain disruptions?” has not received much attention from empirical research. This is a relevant question, because firms seek stability in their operations, and therefore managers need to know how the structure of their supply chains affects the occurrence of disruptions. The present study addresses this issue with a specific focus on upstream supply chain (supply-side) disruptions. Drawing on the literature on supply chain complexity, we devise and test a model that predicts the frequency of supply chain disruptions based on a multi-dimensional conceptualization of upstream supply chain complexity. Not only do the empirical findings suggest that all of the three investigated complexity drivers – horizontal, vertical, and spatial complexity – increase the frequency of disruptions, but also that they interact and amplify each other's effects in a synergistic fashion.     

Environmental Innovations and Internationalization: Theory and Practices

Based on original data on Italian firms specializing in medium‐ and low‐tech industries, we study the relationship between firms’ upstream and downstream internationalization and their propensity to introduce products or processes that reduce environmental impact. Preliminary evidence suggests that geography plays an important role in green firms’ activities and supply chains. More precisely, results suggest that firms that outsource to and rely on non‐local suppliers are less likely to engage in environmental innovations. Moreover, we verify that firms engaged in export activities play a similar and negative role, regardless of the export intensity and typology of foreign markets (i.e. developed versus emerging). Tapping global flows of knowledge by being a part of a multinational group positively spurs the development of green innovations, as for FDIs. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Making tough choices: A policy capturing approach to evaluating the tradeoffs in sustainable supplier development initiatives

This research explores the tradeoffs that decision makers are willing to make when implementing development initiatives to improve supplier sustainability performance. We employ a policy capturing methodology in which respondents are forced to choose between multiple potential sustainable supplier development initiatives. Data were collected from traditional and executive MBA students. The results suggest that when confronted with tradeoffs, decision makers value improvements in supplier cost savings and injury reduction equally, which was somewhat unexpected. Further, both improvements in supplier cost savings and injury reduction were valued over supplier emissions performance. Because we measure individual tradeoff preferences, multi-level regression analysis was used to better understand the impact of respondent value structure regarding sustainably developing suppliers. Our findings suggest a hierarchy of tradeoff preferences for decision makers as they pertain to sustainable supplier development. As the pressure to ensure supply chain sustainability increases, more firms will engage in sustainable supplier development. The outcomes of the choices they make when choosing between initiatives, and how managers make these choices, will be of increasing interest in both industry and academia. This research answers previous calls for further examination of decision maker tradeoff preferences in sustainable supply chain development.     

Sustainable evaluation and verification in supply chains: Aligning and leveraging accountability to stakeholders

Managers are being challenged by multiple (and diverse) stakeholders, which have variety of expectations and informational needs about their firm’s supply chains. Collectively, these expectations and needs form a multi-faceted view of stakeholder accountability, namely the extent to which a firm justifies behaviors and actions across its extended supply chain to stakeholders. To date, sustainable supply chain management research has largely focused on monitoring as a self-managed set of narrowly defined evaluative activities employed by firms to provide stakeholder accountability. Nevertheless, evidence is emerging that firms have developed a wide variety of monitoring systems in order to align with stakeholders’ expectations and leverage accountability to stakeholders. Drawing from the accounting literature, we synthesize a model that proposes how firms might address accountability for sustainability issues in their supply chain. At its core, the construct of sustainable evaluation and verification (SEV) captures three interrelated dimensions: inclusivity, scope, and disclosure. These dimensions characterize how supply chain processes might identify key measures, collect and process data, and finally, verify materiality, reliability and accuracy of any data and resulting information. As a result, the concept of monitoring is significantly extended, while also considering how different stakeholders can play diverse, active roles as metrics are established, audits are conducted, and information is validated. Also, several antecedents of SEV systems are explored. Finally, the means by which an SEV system can create a competitive advantage are investigated.     

Institutional Reforms and Investor Reactions to CSR Announcements: Evidence from an Emerging Economy

This study contributes to the limited established empirical research on the impact and relevance of corporate social responsibility (CSR) in the capital markets of emerging economies. We conducted an event study to demonstrate how the timing of CSR announcements by firms that have aligned their strategies to newly instituted social regulations in South Africa influenced stock prices. Using a unique dataset of publicly listed South African enterprises that undertook CSR initiatives during the ten year period from 1996 to 2005, we found that investor reactions to CSR announcements concluded during the late phase of institutional reforms are viewed positively by investors. Furthermore, CSR announcements of substantive monetary value result in significantly higher shareholder returns.