Purpose
Firms are increasingly being pressured by the public, regulators and customers to ensure that their suppliers behave in a socially and ecologically sound manner. Yet, the complexity and risks ...embedded in many supply chains makes this challenging, with monitoring practices offering one means to attenuate supply sustainability risk. Drawing on agency theory, the purpose of this paper is to examine the relationship between sustainability and operations risk, supplier sustainability monitoring practices, supply improvement initiatives and firm performance.
Design/methodology/approach
This research uses data from a survey and archival sources from a sample of large US firms to empirically examine the relationship between sustainability and operations risk, supplier sustainability monitoring practices, supply improvement initiatives and firm performance.
Findings
Findings indicate that higher levels of perceived sustainability risk is related to greater monitoring of supplier sustainability practices by focal firms. Perceptions of higher operations risk are indirectly related to greater social monitoring through investment in supply improvement initiatives. Monitoring of supplier sustainability practices is also found to have a positive effect on focal firm performance.
Practical implications
Findings suggest that managers process operations risks and sustainability risks independently. Greater sustainability risk leads to increased sustainability monitoring, while greater operations risk leads to increased investment in supply improvement initiatives, which in turn leads to increased social monitoring. The research also indicates that behavior-oriented approaches, such as monitoring of supplier environmental and social practices, are an effective approach to improving firm sustainability performance. However, due to resource constraints, a challenge for supply chain managers is where and when to invest in behavior-oriented approaches for suppliers.
Originality/value
This research advances supply risk literature by exploring the effects of supply sustainability risk on the use of monitoring practices to manage supplier environmental and social behavior. Using a combination of survey and archival data to independently assess the implications of sustainability monitoring practices on firm sustainability performance, this study provides a methodology for evaluating the impact of sustainability monitoring practices on the triple bottom line in supply chain management.
This paper presents findings from an exploratory study that analyzes the drivers and outcomes of e-business technology use in the supply chain. Using a combination of case studies and survey data ...from a diverse sample of industries, the research examines how industry context, firm characteristics and firm-level strategic resources, such as purchasing teams, influence the exploitation of e-business technologies and the relationship between e-business technology use and firm performance. Based on a synthesis of related literatures from transaction cost economics and the relational view of the supply chain, a two-dimensional framework for e-business technology is proposed with transactional and relational dimensions. However, empirical analysis indicated that transactional technologies can be further subdivided into two factors: dyadic cooperation and price determination. Significant differences were found between the two dimensions in terms of their overall levels of adoption, with dyadic coordination being the most widely adopted. In addition, the development of strategic resources expanded, in particular internal and customer teams, the use of e-business technologies expanded. Purchasing organizational structure and firm size also were positively related to the adoption of transactional e-business technologies. Finally, of particular importance to practitioners, e-business technologies targeted at reducing dyadic coordination costs lead to improved financial performance.
Research Summary
This study reexamines the relation between corporate social responsibility (CSR) and financial performance by benchmarking firms against industry peers in a given year to identify ...best‐in‐class and worst‐in‐class firms. We also address distributional issues when using CSR ratings (clustering of CSR scores around the median and material differences across industries and time) and financial performance ratios (the possible influence of extreme values). We find that the best‐in‐class firms outperform their industry peers in terms of operating performance and have higher relative market valuations (Tobin's Q). When we control for endogeneity, we find that the significant relation between operating performance and CSR categories disappears, calling into question whether this relation is causal. However, we continue to find that best‐in‐class firms receive higher relative market valuations than industry peers.
Managerial Summary
The conflicting evidence on the relation between CSR and firm performance may influence a manager's decision to invest in CSR activities and an investor's decision to invest in a firm. Our research provides managers and investors with important implications regarding the value of relative benchmarking. Managers should understand that expectations of CSR performance evolve over time and that investors place higher valuations on the best‐in‐class CSR firms within an industry.
Purpose - This paper seeks to explore the integration of social issues in the management of supply chains from an operations management perspective. Further, this research aims to develop a set of ...scales to measure multiple dimensions of supplier socially responsible practices. Finally, the paper examines the importance of three dimensions of supply chain structure, namely transparency, dependency and distance, for the adoption of these socially responsible practices.Design methodology approach - Drawing on literature from several theoretical streams, current best-practice in leading firms and emerging international standards, four dimensions of supplier socially responsible practices were identified. Also, a multi-dimensional conceptualization of supply chain structure, including transparency, dependency and distance, was synthesized from earlier research. Using this conceptual development, a large-scale survey of plant managers in three industries in Canada provided an empirical basis for validating these constructs, and then assessing the relationships between structure and practices.Findings - Multi-item scales for each of the four dimensions of supplier socially responsible practices were validated empirically: supplier human rights; supplier labour practices; supplier codes of conduct; and supplier social audits. Increased transparency, as reflected in greater product visibility by the end-consumer was related to increased use of supplier human rights, which in turn can help to protect a firm's brands. Organizational distance, as measured by the total length of the supply chain (number of tiers in the supply chain), was related to increased use of multiple supplier socially responsible practices. Finally, as the plant was positioned further upstream in the supply chain, managers reported increased use of supplier codes of conduct.Practical implications - As senior managers extend, redesign or restructure their supply chains, the extent to which social issues must be monitored and managed changes. The four categories of supplier socially responsible practices identified help managers characterize their firm's approach to managing social issues. Furthermore, managers must more actively manage the development of supplier socially responsible practices in their firms when the supply chain has more firms; and when brands have stronger recognition in the marketplace.Originality value - The paper makes three contributions to the extant literature. First, the construct of social issues is defined and framed within the broader debate on sustainable development and stakeholder management. Second, social practices are delineated for supply chain management, and a set of scales is empirically validated for assessing the degree of development of supplier socially responsible practices. Finally, the link between supply chain structure and the adoption of supplier socially responsible practices is examined. This last contribution provides a basis for understanding, so that managers can extend and reshape current views about how social issues must be managed.
Social entrepreneurship in business education is growing in importance as a way to teach ethics and instill high ethical standards in individuals. One effective way to integrate social ...entrepreneurship is through experiential learning; where the participant is actively involved in processing the knowledge and developing skills, while being involved in the learning situation. MBA programs are currently beginning to incorporate social entrepreneurship into their curricula to teach their students, as well as developing students’ intercultural skills. An examination of the current trends will be followed by an analysis of how business schools can effectively incorporate social entrepreneurship into the MBA curriculum. To tie these concepts together, the paper provides a case study of a program run by Emzingo, a leadership development company, and IE Business School. The reasons for the in-depth case study are three-fold. First, it provides an example of how business schools can use experiential learning to incorporate social entrepreneurship in an international context. Second, it highlights the benefits of incorporating social entrepreneurship in MBA programs. Finally, it provides a general framework for business programs that are looking to integrate various social entrepreneurship elements in their MBA programs.
•Teaching social entrepreneurship can instill high ethical standards in students.•Social entrepreneurship is important to teach in business schools.•Experiential learning happens when the participant is actively involved in learning.•Experiential learning can be ideal to teach social entrepreneurship to MBA's.•A case study that enhances participants' intercultural skills is discussed.
Using factory-level data from a large multinational manufacturer, we examine the effects of both organizational experience and knowledge transfer on an increasingly critical environmental performance ...measure, the consumption of water required for manufacturing. We estimate the direct effects on water consumption from in-factory cumulative production experience and the vicarious learning from peer factories in the same product category. We consider vicarious learning from three potential sources: observation of peer factories’ cumulative production experience; and benchmarking of water consumption performance with the best and worst performing peer factories. For each learning channel, we test for the moderating effects of water scarcity and geographic proximity. We find that factories learn to reduce their water consumption from their own experience but at a greater rate in water-scarce locations. Although we find that factories learn significantly from observing the cumulative production experience of peer factories, this effect does not hold in water-scarce locations or across geographic regions. We document that learning effects from observing others’ experience are quite distinct from learning effects by benchmarking others’ performance. We find vicarious learning effects from benchmarking the best-performing peer factories result in significant reductions in water consumption, and this effect is greater when the factory is in a water-scarce location, and when benchmarking other regions rather than within the same region. Finally, we find less significant vicarious learning from observing the worst-performing factories.
We argue that in analyzing panel‐data econometric models, researchers rely excessively on statistical criteria to determine model specification, treating it primarily as a matter of statistical ...inference. This inferential emphasis is most obvious in the common practice of using statistical tests (e.g., the Hausman test) to choose between fixed‐ and random‐effects specifications, often ignoring the assumptions underpinning these tests. For instance, the Hausman test depends on the true within‐panel (longitudinal) and between‐panel (cross‐sectional) parameters being equal. This assumption is often not justified, because longitudinal and cross‐sectional variances and covariances may manifest different underpinning mechanisms. In addition to different mechanisms often resulting in different variables determining within and between effects, within and between variables may also have different meanings. To help researchers make theoretically informed choices, we formulate five questions that can guide researchers to think of model specification in a theoretically rigorous way. We examine these issues with examples from both general management and operations management research. Importantly, we argue that addressing the questions regarding model specification must involve primarily theoretical and contextual judgment, not statistical tests.
We theorize that employees use the performance feedback they receive to reassess their beliefs about the marginal benefit of their effort, which may lead them to increase or reduce their effort. To ...test our model, we conduct a field experiment at the distribution center of a Fortune 500 firm where employees receive individual performance pay, and we study two types of feedback, individual and relative. The results show that employees react to feedback content in a way that is consistent with the model: They increase their effort if the information provided implies that the marginal benefit of increasing effort is high and decrease it if they learn that it is low. Moreover, performance feedback has a greater impact on the lower quantiles of the distribution of productivity.
As firms search the world for suppliers that provide the best combination of cost, quality and latest technology, they have been confronted with the challenges of managing the sustainability ...performance of their global supply chains. Specifically, companies have come under increased scrutiny from various stakeholder groups for the labour and human rights practices of suppliers located in emerging economies. Drawing on the sustainability, supplier relationship management, and stakeholder literature, this research examines the relationship between emerging economy sourcing, the use of purchasing teams, and the impact on enforcement of supplier social practices, and firm financial performance. Using data from a survey and archival sources from a sample of large U.S. firms, findings confirm the mediated role of the use of purchasing teams resulting in better enforcement of supplier social practices and improved firm performance. Findings also provide important implications for supply chain and purchasing executives. While the results of this research demonstrate the performance benefits of sourcing from emerging economies, findings also suggest that organizations should make investments to support capabilities related to enforcement of supplier social practices. Opportunities for future research are also identified.
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