When suppliers engage in sustainable supply chain management: how does the stock market react?

Wang, Jason X ORCID: 0000-0001-6807-5496, Choi, Tsan-Ming ORCID: 0000-0003-3865-7043, Wood, Lincoln C ORCID: 0000-0003-3385-6561, Olesen, Karin and Reiners, Torsten (2024) When suppliers engage in sustainable supply chain management: how does the stock market react? International Journal of Operations & Production Management, 44 (3). pp. 699-727.

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Abstract

<jats:sec><jats:title content-type="abstract-subheading">Purpose</jats:title><jats:p>Sustainable supply chain management (SSCM), driven by the downstream buyers' power, transfers sustainability responsibilities to the upstream supplier. In contrast to the heavily-focused buyers' perspective in the literature, the authors investigate how this buyer-driven SSCM influences suppliers' performance, using the measure of stock market reaction.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title><jats:p>Grounded by the resource dependence theory (RDT), the authors empirically analyze the power effect on suppliers. Event study methodology and regression analysis are used, based on a sample of 1977 paired supplier observations from 1990 to 2016.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Findings</jats:title><jats:p>The result suggests that although a negative stock market reaction for suppliers in SSCM exists, the effect is less negative at a high level of buyer and supplier dependence. For the investigation of the “consolidated SSCM initiative,” where buyers acquire exogenous power by collaboratively managing SSCM with their peers, the authors uncover that the negative impact of this consolidated SSCM initiative can be mitigated by the high interdependence that generates relational norms in the dyads.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Research limitations/implications</jats:title><jats:p>The authors focus on dyadic relationships. Future research can use the study's findings to study the SSCM diffusion to lower-tier suppliers.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Practical implications</jats:title><jats:p>This paper has good managerial implications for both suppliers and buyers. The authors propose dependence-based strategies for supplier managers to reduce uncertainty in SSCM. Moreover, buyer managers can use the study's findings to strengthen suppliers' commitment.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Originality/value</jats:title><jats:p>The novelty of examining the suppliers' perspective contributes to exploring the supply chain impact of SSCM. The authors extend RDT and show that high dependence is not necessarily detrimental to suppliers in this buyer-driven SSCM context. The interesting finding of interdependence in the context of the consolidated SSCM initiative brings new insights that relational norms constrain the leverage of power in the dyads and are beneficial to the power-disadvantageous suppliers.</jats:p></jats:sec>

Item Type:	Article
Uncontrolled Keywords:	9 Industry, Innovation and Infrastructure, 12 Responsible Consumption and Production
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	08 Sep 2023 07:44
Last Modified:	15 Mar 2024 19:23
DOI:	10.1108/ijopm-01-2023-0001
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3172596