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Does Sustainable Supplier Cooperation Affect Performance? Daniel Hollos, Constantin Blome, Kai Foerstl

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Does Sustainable Supplier Cooperation Affect Performance? Daniel Hollos, Constantin Blome, Kai Foerstl Does Sustainable Supplier Cooperation Affect Performance? Daniel Hollos, Constantin Blome, Kai Foerstl To cite this version: Daniel Hollos, Constantin Blome, Kai Foerstl. Does Sustainable Supplier Cooperation Affect Performance?. International Journal of Production Research, Taylor & Francis, 2011, pp.1. 10.1080/00207543.2011.582184. hal-00724177 HAL Id: hal-00724177 https://hal.archives-ouvertes.fr/hal-00724177 Submitted on 19 Aug 2012 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. International Journal of Production Research For Peer Review Only Does Sustainable Supplier Cooperation Affect Performance? Journal: International Journal of Production Research Manuscript ID: TPRS-2010-IJPR-0698.R2 Manuscript Type: Original Manuscript Date Submitted by the 10-Feb-2011 Author: Complete List of Authors: Hollos, Daniel; EBS Business School, Supply Chain Management Institute Blome, Constantin; EBS Business School, Supply Chain Management Institute Foerstl, Kai; Frauenhofer IIS, Center for Applied Research on Supply Chain Services SCS SUSTAINABILITY, SUPPLY CHAIN MANAGEMENT, PROCUREMENT, Keywords: EMPIRICAL STUDY Sustainability; Supplier Cooperation; Sustainable Procurement; Keywords (user): Triple Bottom Line; Structural Equation Model http://mc.manuscriptcentral.com/tprs Email: [email protected] Page 1 of 44 International Journal of Production Research 1 2 3 4 Does Sustainable Supplier Cooperation Affect Performance? Examining 5 Implications for the Triple Bottom Line 6 7 8 9 a a b 10 Daniel Hollos *, Constantin Blome *, Kai Foerstl 11 12 13 14 a 15 Supply Chain Management Institute, EBS Business School, Wiesbaden, Germany 16 For Peer Review Only 17 b Fraunhofer IIS – Center for Applied Research on Supply Chain Services SCS, Nuremberg 18 Germany 19 20 21 a EBS University, Soehnleinstr. 8F, 65201 Wiesbaden, Tel.: +49 611 7102 2100, 22 23 [email protected], [email protected] 24 25 b Frauenhofer IIS – Center for Applied Research on Supply Chain Services SCS, Nordostpark 26 93, 90411 Nuremberg, Germany, Tel.: +49 911 58061 9500 [email protected] 27 28 29 * These authors equally contributed to the paper. 30 31 32 33 (Received XX Month Year; final version received XX Month Year) 34 35 36 37 38 The increasing importance of sustainable behavior in business has enhanced its impact on supply 39 chain management. Firms foster sustainability in their supplier base in reaction to growing 40 sustainability requirements in various ways, including sustainable supplier cooperation. 41 Knowledge about the effects of sustainable supplier cooperation on firm performance is limited; 42 therefore, this study tests antecedents and implications of sustainable supplier cooperation 43 according to the triple bottom line. A survey of Western European firms reveals that sustainable 44 supplier cooperation has generally positive effects on firm performance across social, green, and 45 economic dimensions. However, only green practices have positive significant effects on 46 economic performance not social practices (e.g., child labor rules). In contrast to practitioner 47 perceptions, investments in sustainability, for example through sustainable supplier cooperation 48 does indeed result in sufficient returns. 49 50 Keywords: Sustainability; Supplier Cooperation; Sustainable Procurement; Triple Bottom Line; 51 Structural Equation Model 52 53 54 55 56 57 58 59 60 http://mc.manuscriptcentral.com/tprs Email: [email protected] International Journal of Production Research Page 2 of 44 1 2 3 4 Does Sustainable Supplier Cooperation Affect Performance? Examining 5 Implications for the Triple Bottom Line 6 7 8 9 a a b 10 Daniel Hollos *, Constantin Blome *, Kai Foerstl 11 12 13 14 a 15 Supply Chain Management Institute, EBS Business School, Wiesbaden, Germany 16 For Peer Review Only 17 b Fraunhofer IIS – Center for Applied Research on Supply Chain Services SCS, Nuremberg 18 Germany 19 20 21 a 22 EBS University, Soehnleinstr. 8F, 65201 Wiesbaden, Tel.: +49 611 7102 2100, 23 [email protected], [email protected] 24 25 b Fraunhofer IIS – Center for Applied Research on Supply Chain Services SCS, Nordostpark 26 93, 90411 Nuremberg, Germany, Tel.: +49 911 58061 9500 [email protected] 27 28 29 * These authors equally contributed to the paper. 30 31 32 33 34 35 36 The increasing importance of sustainable behavior in business has enhanced its impact on supply 37 chain management. Firms foster sustainability in their supplier base in reaction to growing 38 sustainability requirements in various ways, including sustainable supplier cooperation. 39 Knowledge about the effects of sustainable supplier cooperation on firm performance is limited; 40 therefore, this study tests antecedents and implications of sustainable supplier cooperation according to the triple bottom line. A survey of Western European firms reveals that sustainable 41 supplier cooperation has generally positive effects on firm performance across social, green, and 42 economic dimensions. However, only green practices have positive significant effects on 43 economic performance, not social practices (e.g., child labor rules). In contrast to practitioner 44 perceptions, investments in sustainability, for example through sustainable supplier cooperation 45 does indeed result in sufficient returns. 46 47 48 Keywords: Sustainability; Supplier Cooperation; Sustainable Procurement; Triple Bottom Line; 49 Structural Equation Model 50 51 52 53 54 1. Introduction 55 56 57 The disintegration of vertically integrated value chains into globally dispersed supply chains 58 59 has led to a greater appreciation of the purchasing and supply management (PSM) function as 60 a source of competitive advantage (Carter and Narasimhan, 1996; Krause, Pagell, and 1 http://mc.manuscriptcentral.com/tprs Email: [email protected] Page 3 of 44 International Journal of Production Research 1 2 3 Curkovic, 2001). Scholars have found empirical support for the link between supply 4 5 6 management proficiency and the company’s economic performance (e.g., Cousins, Lawson, 7 8 and Squire, 2006; González-Benito, 2007), in particular due to the significant economic 9 10 11 benefits earned from effective management of buyer–supplier relationships (Narasimhan and 12 13 Das, 2001). 14 15 The ongoing sustainability movement requires companies to extend their focus beyond 16 For Peer Review Only 17 18 traditional economic objectives to a triple bottom line (TBL) approach that simultaneously 19 20 accounts for economic, ecological, and social performance. For this study, we use the term 21 22 ‘sustainability’ in accordance with Elkington’s definition (1994, 1998) of sustainability 23 24 25 comprising people, planet, and profit (Carter and Rogers, 2008; Kleindorfer, Singhal and Van 26 27 Wassenhove, 2005). There is empirical support that firms with higher levels of sustainability 28 29 experience competitive advantages (Campbell, 2007; Russo and Fouts, 1997) which makes it 30 31 32 imperative for supply chain management to deal with green and social issues (Carter and 33 34 Rogers, 2008). In particular for firms selling branded products to the end consumer, 35 36 37 customers and other stakeholders are inclined to punish these firms if their products and 38 39 production processes fail to comply with accepted sustainability standards (Francés-Gómez, 40 41 2008). Thus, in order to ensure ecologically and socially viable production methods at 42 43 44 supplier premises, the PSM function must encourage and enforce a high level of 45 46 sustainability across the entire supply chain (Foerstl et al., 2010; Pagell and Wu, 2009). 47 48 Firms increasingly respond to the need for sustainability in their upstream supply chain. 49 50 51 For example, E.ON U.K. recently implemented a ‘Responsible Procurement’ policy which 52 53 focuses on (1) human rights, (2) minimization of environmental impacts, and (3) maintenance 54 55 of high standards of ethics and business integrity. To implement its policy, E.ON U.K. 56 57 58 cooperates with its suppliers developing joint social and environmental standards. Another 59 60 prominent example is BASF. BASF’s supply management function runs a selection, 2 http://mc.manuscriptcentral.com/tprs Email: [email protected] International Journal of Production Research Page 4 of 44 1 2 3 evaluation, and development program to ensure supplier sustainability compliance. The 4 5 6 sustainability performance measurement system enables continuous sustainability 7 8 improvements in the global supply base. In case of non-compliance, suppliers may be 9 10 11 blacklisted. 12 13 Sustainable suppliers appear to be a scarce resource. Therefore, there is a need to 14 15 jointly improve sustainability with suppliers of the global supply base because suppliers in 16 For Peer Review Only 17 18 developing nations tend to create greater idiosyncratic sustainability risks (Reuter et al., 19 20 2010). Prior empirical studies indicate a positive impact of supplier cooperation on the 21 22 (economic) bottom line without assessing
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