Administrative environmental innovations, supply network structure, and environmental disclosure

Abstract

This study contributes to a theoretical and empirical understanding of whether and how administrative environmental innovations (AEIs)-implemented to help track and manage a firm's environmental impacts-are related to environmental disclosure. Drawing on the Belief-Action-Outcome framework, we posit that the motivation of individuals (employees, managers, and the leadership) within the firm to access, use, and act on the environmental information available to them would be enhanced by the firm's implementation of AEIs, resulting in more extensive environmental disclosure by the firm. Additionally, building on the literature on supply chain networks, we posit that the structural position of the firm vis-à-vis its supply network-reflecting information flows, network learning, and status-moderates the AEI implementationenvironmental disclosure relationship. To test our hypotheses, we build a multi-industry dataset of 3,106 firm-year observations based on 67,809 dyadic cost-of-goods-sold-based relationships obtained from Bloomberg's supply chain relationships database to construct the supply networks of focal firms. We also draw on Bloomberg's environmental, social, and governance (ESG) data for our AEI implementation and environmental disclosure measures. We find significant evidence to support our hypothesis that AEI implementation is positively associated with the extent of environmental disclosure. However, the implementation of both internal and external forms of AEIs has a more pronounced positive relationship with the extent of environmental disclosure, compared to the implementation of either form alone. With regard to supply network structure, we identify three principal variables-accessibility, control, and interconnectedness-that influence network learning and status of the focal firm and find that they moderate the AEI implementation-environmental disclosure relationship. We provide insights for theory and practice based on our findings.

The association between supply chain structure and transparency: A large‐scale empirical study

“…We posit that a quantitative study focusing on structural measures will be useful to provide a better understanding of the structure-collective outcome association. To date, the only quantitative studies relating supply chain structure and supply chain transparency are in the context of environmental disclosure and takes the focal firm's perspective, without investigating supply chain collective outcomes (Bellamy et al, 2020;Kim & Davis, 2016). Research on supply chain transparency has made good progress; however, no large-scale study has investigated it from a collective perspective that considers the interrelations between customers, suppliers, and subsuppliers that comprise a focal firm's extended supply chain.…”

“…Thus, the competing formulation of our third hypothesis is: (Osadchiy et al, 2016), we find that structure changes only minimally in the short term. The Bloomberg ESG database has been extensively used in operations management and accounting research (e.g., Bellamy et al, 2020). It gathers data about firms' internal ESG practices and performance through direct communications, including meetings, phone interviews and surveys with firms, but also from corporate sustainability reports, regulatory filings, web pages, and news articles.…”

Structural characteristics of complex supply chain networks

“…Empirically supported network research to date has also helped establish an excellent jumping‐off point for this research (Basole & Bellamy, 2014; Brintrup et al 2016; Choi & Hong, 2002; Kim et al 2015), although data considering both the supplier and customer sides of the supply chain are scarce. Recent works have expanded the amount of data examined (Bellamy et al 2020; Brintrup et al 2016; Dong et al 2020; Lu & Shang, 2017; Sharma et al 2019). However, empirical studies that incorporate both supply networks, customer networks, and partner networks, including exchange relationships within and across various tiers, are absent.…”

“…They also help firms form alliances by leveraging their favorable positioning (Gulati, 1999). Interconnectedness in a supply network also enables firms to benefit from a higher degree of supplier–supplier innovation (Potter & Wilhelm, 2020) and increased network learning resulting in, for example, a higher propensity for environmental disclosures (Bellamy et al 2020). Third, research has focused on the role of structural SCN characteristics in ensuring resilience to disruptions ( e.g., Kim et al 2015) as structural properties influence firm performance amid disruptions (e.g., Bode & Wagner, 2015; Choi & Krause, 2006; Craighead et al 2007).…”

Innovation in supply networks—A research framework and roadmap

“…It embraces administrative activities such as environmental management (Doherty & Hoyle, 2009) and environmental protection (Hoffman, 2001). In this special issue, Bellamy, Dhanorkar, and Subramanian (2020) focus on administrative environmental innovations such as establishing policies for managing a firm's own environmental impact (e.g., ISO 14001) and that of its suppliers (involvement in supplier development activities related to the environment, such as waste and emission reduction). They find that a firm's implementation of environmental innovations—internally within the firm, externally with suppliers, or both—positively influences environmental disclosures by the firm, highlighting the synergistic importance of not only internal but also external administrative innovations to the quality of environmental disclosure.…”