Cascading Sustainability in Multi‐tier Supply Chains: When Do Chinese Suppliers Adopt Sustainable Procurement?

Abstract

A s global brands assume more accountability for their extended supply chains, some request that their first-tier suppliers in turn adopt sustainable procurement practices, thereby "cascading" sustainability requirements to secondtier suppliers. However, such cascading has not yet become institutionalized. We partnered with a leading sustainability electronics company-here called "Tronics"-to investigate which Chinese suppliers are more likely to adopt sustainable procurement and when Tronics' power-measured by its percentage of its Chinese suppliers' business-is more/less relevant. We gathered secondary (audit and company records) and primary (survey) data on Tronics' relationship with 134 Chinese suppliers, and complemented these sources with three archival datasets from CDP's Supply Chain Program, the National Enterprise Credit Information Publicity System of China, and the World Economic Reports. The results show that Chinese suppliers that either have an integrated management system composed of economic, environmental, and social pillars or engage with key stakeholder networks are more likely to adopt sustainable procurement practices, and that these effects are boosted when Tronics' power is low to moderate. Interestingly, Chinese suppliers with sustainability violations are not necessarily less likely to adopt sustainable procurement practices. When Tronics represents a large percentage of a supplier's business, it can persuade a noncompliant supplier to adopt sustainable procurement practices, though it has limited power over suppliers that exhibit critical violations.

Toward sustainable supply chains: impact of buyer's legitimacy, power and aligned focus on supplier sustainability performance

“…The results from this secondary panel data indicate that sustainability is different from traditional areas of buyer-supplier collaboration, and while power may have worked in other domains, it requires legitimacy to be potent for sustainability. While the use of power may create a perception of supplier compliance that surveys have measured, this effect does not show up with when using more objective measures (Wilhelm and Villena, 2021). Our finding is supported by recent BSR work Zorzini et al, 2015), that has highlighted the need for the development of relational mechanisms, rather than power, to influence supplier's sustainability performance.…”

“…Thus, firms with market power are able to influence, and in some cases set, industry standards (Kennedy and Fiss, 2009). Pressure for sustainability from such a buyer will be potent, as the supplier will have high switching costs (Pick and Eisend, 2014;Wilhelm and Villena, 2021). In addition to this direct pressure, firms with market power are able to indirectly influence other firms within and beyond the firm's industry to adopt sustainable practices.…”

Smart green supply chain management: a configurational approach to enhance green performance through digital transformation

“…As smart supply chain consolidates the use of base technologies to improve relationships, companies are using base technologies to collect and analyze data that could create new opportunities for data management and integration towards sustainability (Frank et al , 2019; (Wilhelm and Villena, 2021). In addition, front-end technologies can enhance green relationships with suppliers because companies can use these technologies to better select green supplies.…”

Managing a portfolio of environmental projects: Focus, balance, and environmental management capabilities

“…In other words, our measure of EMC based on years of ISO 14001 certification can validly capture the maturity and capability of the firm's ability to manage environmental issues. Similar measures can be found in Su et al (2015) and Wilhelm and Villena (2021), which used ISO 14001 certification as a proxy for an organization's environmental management capability.…”

“…Consequently, resources and management dedicated to implementing these projects might get overloaded, while capable resources in other parts of the firm may be underutilized 1 (Pike et al, 2005). However, we contend that firms (especially in emerging countries) must tackle a host of environmental issues (e.g., Wilhelm & Villena, 2021) while fully utilizing their limited resources. Thus, it is less likely that a focused portfolio would leave the other resources and management of the firm underutilized.…”