Decomposing Social Sustainability: Signaling Theory Insights into Supplier Selection Decisions

Abstract

Social sustainability has emerged as a key determinant in supplier selection. However, firms may approach social sustainability in varying ways such as investments in employee welfare or philanthropy. Little is known about how supply chain managers consider these individual dimensions when making sourcing decisions. Therefore, this research decomposes social sustainability into dimensions of employee welfare and philanthropy to determine their effects on supplier selection. Vignette-based experiments in a transportation context test a priori hypotheses derived from signaling theory, and post hoc qualitative insights reveal deeper understanding. Results show buyers have significant preferences to select, trust, and collaborate with suppliers who have desirable levels of employee welfare, philanthropy, and pricing. However, these findings are tempered by differential effect sizes and suggest that the practical significance of hypothesized relationships vary. These findings help refine our understanding of social sustainability conceptualizations and evolving supplier selection criteria, as well as offer timely insights for suppliers, buyers, and policymakers amidst surging demand for social sustainability.

Exploring blockchain adoption intentions in the supply chain: perspectives from innovation diffusion and institutional theory

“…Barker and Brau, 2020; Fugate et al. , 2012; Thomas et al , 2021) and allow for control over differences in organizations and supply chains that naturally occur in survey and case-based research. In experiments, vignettes contain common elements but have scenarios in which the variables of interest have different levels (Rungtusanatham et al.…”

Leveraging digital and relational governance mechanisms in developing trusting supply chain relationships: the interplay between blockchain and norm of solidarity

“…Therefore, signaling theory underpins the idea that the buyer's trust toward the supplier is associated with various trustworthiness signals in the buyer-supplier relationship. Previous supply chain studies have identified reputation (Wagner et al, 2011) and social sustainability initiatives (Thomas et al, 2021) as signals leading to supplier trust. In our context, following recent literature proposing blockchain implementation as a creditworthiness signal in supply chain finance (Chod et al, 2020), we further extend this signaling effect to the context of buyer-supplier relationship governance and argue that the implementation of blockchain can also signal the trustworthiness of the supplier.…”

“…By exploring blockchain's role as a trustworthiness signal, we extend the emerging research stream on the signaling effects of blockchain to the relational dimension of supply chain management (Chod et al, 2020). Moreover, previous supply chain research has explored some signaling antecedents of trust in a buyer-supplier relationship like supplier reputation (Wagner et al, 2011) and social sustainability (Thomas et al, 2021), yet our understanding of the interaction between trustworthiness signals and other antecedents of trust like norms are limited. This knowledge gap also echoes the emerging debate around (in)congruence across multidimensional signals describing similar characteristics (Paruchuri et al, 2021).…”

“…Previous supply chain studies have identified reputation (Wagner et al. , 2011) and social sustainability initiatives (Thomas et al. , 2021) as signals leading to supplier trust.…”

Supply chain transparency: Consumer reactions to incongruent signals

“…We employ middle‐range theorization, using top–down theoretical contextualization (Craighead et al, 2016; Stank et al, 2017) to explain how the positive signal of SCT and the negative signal of a product recall constitute an interdimensional set of incongruent signals that impacts consumers' product quality perceptions and repurchase intentions. Signaling theory is well established in management research, and increasingly being employed in supply chain management research to explore sustainability issues (e.g., Duan, Aloysius, & Mollenkopf, 2022; Duan, Hofer, & Aloysius, 2021; Hofer et al, 2012; Jacobs, 2014; Ketchen et al, 2014; Thomas et al, 2021). Therefore, the sustainable supply chain context provides fertile ground for examining SCT as a mechanism for constructive engagement between firms and consumers.…”