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Does implementing social supplier development practices pay off?
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia ESADE Business School, Ramon Llull University, Barcelona, Spain
Abstract Purpose – The purpose of this paper is twofold. First is to investigate the impact of social supplier development practices on the suppliers’ social performance. Second is to analyze if the implementation of supplier development practices by Western buying firms pays off in terms of operational and economic results. Design/methodology/approach – Hypotheses are tested in a sample of 120 Spanish manufacturing firms using Path Analysis. Findings – The results suggest that while supplier development practices help to improve the suppliers’ social performance and the buying firm’s operational performance, they do not pay off in terms of economic performance. Research limitations/implications – The paper shows that supplier development practices help to improve the suppliers’ social performance while improving the operational performance of the buying firm. The study has two main limitations. First, because cross-sectional data are used, possible recursive relationships could not be accounted for. Second, the study is limited to the Spanish scope and, as such, results need to be interpreted in that context. Practical implications – The results of this study provide insights to managers with respect to the implementation of supplier development practices to make their suppliers more socially responsible. Furthermore, managers are shown the implications of implementing such practices in terms of operational and economic outcomes. Originality/value – This paper contributes to the existing literature on the effectiveness of sustainable supplier development practices by including the suppliers’ performance, which has been generally neglected. Objective measures for economic performance are also included.
Keywords Buying firm’s performance, Social supplier development practices, Suppliers’ performance
Paper type Research paper
Introduction
Nowadays, supply chains are becoming increasingly global. One example of this trend is that firms buy from suppliers located all over the world. In this context, it is important to highlight the key role that the suppliers’ performance plays on the long-term success of buying firms (Carter, 2005; Krause et al., 2000). For example, the quality level of the products served by suppliers as well as the on-time delivery of these products impact the operational performance of the buying firm. This key role of suppliers can also be translated to the sustainability arena. The increasing level of outsourcing to developing countries has emphasized the focus on sustainability (Andersen and Skjoett-Larsen, 2009). The concept of sustainability has been traditionally operationalized using the concept of the triple bottom line (TBL), which encompasses the combination of economic, environmental and social performances and relieves the key role of social and environmental aspects besides economical ones (Elkington, 1998).
In the context of supply chain management (SCM), when a firm aims to achieve sustainability, it is necessary that it extends it to all the members in their supply chain. In this paper, we will specifically focus on the extension of sustainability to suppliers and analyze the role played by the suppliers’ sustainability performance on the success of the buying firm in terms of operational and economic outcomes.
Suppliers’ poor environmental performance can damage the buying firm’s performance (Faruk et al., 2001). For example, in 2007, Mattel had to recall nearly one million toys due to its contract manufacturer using lead paint in their products (The New York Times, 2007). This caused Mattel not only an increase in their operational costs (i.e. products had to be recalled before they reached the stores) but it also damaged its reputation, leading to a potential decrease in sales. Recently, Bangladesh faced one of the worst industrial accidents in modern human history in which more than 2,500 people were injured and 1,000 killed. A factory collapsed due to its dilapidated conditions (The New York Times, 2013). At the
The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1359-8546.htm
Supply Chain Management: An International Journal 20/4 (2015) 389 –403 © Emerald Group Publishing Limited [ISSN 1359-8546] [DOI 10.1108/SCM-07-2014-0239]
The authors want to thank the editor and three anonymous reviewers for their valuable comments. The authors acknowledge financial support from research grant ECO2013-47794R from the Spanish Ministry of Science and Innovation and from research grant ECO/155/2012 (ref. 2013FI_B 00,281) from the Research and Universities Secretary, Economic Department, Generality of Catalonia as well as Social European Funds.
Received 18 July 2014 Revised 13 January 2015 8 March 2015 Accepted 9 March 2015
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same time, these poor conditions damaged the reputation of some apparel companies such as Gap, Primark and Benetton, who were sourcing from this factory. These real-life examples illustrate how the suppliers’ sustainability performance (i.e. environmental and social performance) impacts buying firms’ performance. That is, suppliers’ poor sustainability performance seems to not only impact buying firms’ reputation and hence sales but it could also create disruptions in their supply chains, damaging their operational performance. In that sense, it is necessary that buying firms make an effort to extend sustainability to suppliers with the aim of improving suppliers’ sustainability performance, as it appears to have an impact on their own performance.
To improve the suppliers’ sustainability performance, firms need to manage their supply chains (Andersen and Skjoett-Larsen, 2009; Beske and Seuring, 2014; Schaltegger and Burritt, 2014). To do so, they can rely on the use of supplier development practices such as supplier assessment and collaboration with suppliers (Gualandris and Kalchschmidt, 2014; Gualandris et al., 2014; Klassen and Vachon, 2003; Vachon and Klassen, 2006). Up until now, studies focusing on sustainable supplier development have been lacking (Akamp and Muller, 2013). Furthermore, the scarce literature that has looked at sustainable supplier development practices has mainly focused on the environmental dimension of sustainability (Ehrgott, et al. 2013; Klassen and Vachon, 2003; Yu et al., 2014), while literature that has investigated the role of these practices adopting a social focus is scarce (Gimenez and Tachizawa, 2012; Hoejmose and Adrien-Kirby, 2012; Moxham and Kauppi, 2014; Seuring and Muller, 2008).
In this research, we will focus on the social dimension, as the study of social sustainability has become a necessity in the SCM field because companies need to operate “in a responsible manner and take care of employees’ health and safety” (Kleindorfer et al., 2005). More specifically, we will follow Pagell and Gobeli’s (2009) approach and understand the social dimension of sustainability as the firm’s responsibility to protect employees’ working conditions. In our paper, we will focus on the employees’ working conditions in the suppliers’ premises and their impact on the buying firm’s performance. There is a variety of problematic issues for the buying firm that can appear in the suppliers’ premises such as the use of child labor or the existence of poor health and safety measures that can result in labor accidents (Awaysheh and Klassen, 2010; Klassen and Vereecke, 2012). Our objective in this paper is to analyze the impact that the suppliers’ social performance has on the buying firm’s performance, and to investigate how the suppliers’ social performance can be improved by the implementation of social supplier development practices.
As we have already mentioned, there is limited literature that has considered social supplier development practices (Akamp and Muller, 2013; Gallear et al., 2012; Gimenez et al., 2012; Hollos et al., 2012). This scarce literature has mainly analyzed the impact that social supplier development practices have on the buying firm’s economic and/or operational performance. However, this impact is not clear and mixed results have been found. While some papers have found that social supplier development practices lead to improvements
on buying firm’s performance (Akamp and Muller, 2013; Gimenez et al., 2012; Klassen and Vereecke, 2012), others have found no such support (Gallear et al., 2012; Hollos et al., 2012). We believe these contradictory results could be due to the following issues: ● They have neglected the role of the supplier’s social
performance improvement achieved with the implementation of social supplier development practices and/or;
● they have used different operationalization of the operational and economic performance constructs (being the economic construct mostly measured with subjective data).
To shed light on this existing debate, the aim of this paper is to include the impact of social supplier development practices on the suppliers’ social performance. We will also try to shed some light regarding the impact of these practices on the buying firm’s operational and economic results. Thus, we address the following research questions (RQs):
RQ1. Do social supplier development practices lead to an improvement in suppliers’ social performance?
RQ2. Does it pay off in terms of operational and economic outcomes for the buying firm to implement social supplier development practices? (i.e. What are the effects of social supplier development practices on buying firms’ operational and economic performance?)
By answering these questions we aim to make the following contributions: ● to extend the limited studies that have analyzed the impact
of social supplier development practices on performance; ● to have a better understanding of the implementation of
these practices by studying their impact on the suppliers’ performance; and
● to include objective indicators to measure the impact of these practices on the economic dimension of performance.
Apart from these contributions to research, we aim to provide managers with some recommendations that will help them in their effort to make their supply chains more socially responsible while achieving operational and economic improvements.
The paper is organized as follows: in the following sections, we present the related literature and our research hypotheses. Next, we describe the research methodology used in our study as well as data analysis. Then, we discuss the results. The paper finalizes with a conclusion section in which limitations and future lines of research are suggested.
Literature review and hypotheses development
Social supplier development and performance Several problematic issues related to social aspects can arise at the supplier’s premises: unsafe and harsh working conditions and employees’ safety, use of child labor, human rights abuses, low and unfair wages, unfair work/life balance policies, sanitation and housing and use of dangerous and poisonous
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
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materials (Klassen and Vereecke, 2012; Pagell and Gobeli, 2009; Pullman et al., 2009; Vachon and Mao, 2008).
To reduce these problematic issues and improve the suppliers’ social performance, buying firms implement supplier development practices. Supplier development is defined as “any activity undertaken by a buying firm to improve either the supplier performance, supplier capabilities, or both” (Krause et al., 2000, p. 34). These practices comprise the assessment of suppliers, the provision of training and/or incentives to suppliers, the promotion of competition among them and the direct work with suppliers (e.g. training suppliers’ personnel). In the sustainable supply chain literature, the concept of supplier development has mainly included supplier assessment and collaboration with suppliers (Gualandris and Kalchschmidt, 2014; Gualandris et al., 2014; Klassen and Vachon, 2003; Vachon and Klassen, 2006). In this paper, we have defined supplier development as those practices related to evaluations of suppliers’ social performance in the form of questionnaires and audits, visits to the suppliers’ premises, training in terms of social issues and the development of joint efforts between the buying firm and the supplier.
To the best of our knowledge, the impact of social supplier development practices on firms’ performance has been scantily studied in the literature (Akamp and Muller, 2013; Gallear et al., 2012; Gimenez et al., 2012; Hollos et al., 2012; Klassen and Vereecke, 2012). Akamp and Muller (2013), in their study about the implementation of supplier management practices, found support for the supplier development and suppliers’ operational performance relationship. Similarly, Hollos et al. (2012) studied how supplier cooperation impacts the buying firm’s operational and economic outcomes. However, contrary to the results of Akamp and Muller (2013), they found that the buying firm’s effort to induce socially responsible behavior in the supplier premises does not help the buying firm to reduce costs or improve its operational performance. Gallear et al. (2012) studied how a firm’s internal awareness on sustainability issues, the monitoring of the firm’s sustainability performance and the sharing of best practices with suppliers affect the firm’s financial performance. Similar to Hollos et al. (2012), no support was found for the relationship between supplier development practices and economic performance improvements. Gimenez et al. (2012) analyzed the impact of internal and external social programs – with an environmental and social focus – on each dimension of the TBL (environmental, social and economic performances). For the external programs (i.e. supplier development practices), they found mixed results. While collaboration with suppliers improves the buying firm’s economic performance, assessment does not. Finally, Klassen and Vereecke (2012) developed a framework based on case studies in which they explored the role of supplier development programs in achieving economic improvements. Their results suggest that joint efforts between buying firms and suppliers lead to improvements on economic performance.
From the abovementioned papers, the two following points need to be highlighted. First, the results found in the literature are mixed. While some papers have found that supplier development practices on social issues lead to improvements
on buying firm’s performance (Akamp and Müller, 2013; Gimenez et al., 2012; Klassen and Vereecke, 2012), others have found no such support (Gallear et al., 2012; Hollos et al., 2012). These contradictory results can be due to: ● different operationalization of the operational and
economic performance constructs; and ● the fact that the suppliers’ social performance has been
neglected.
Regarding the operationalization of the constructs, in our model, we will include both performance dimensions (i.e. operational and economic). For the operational one, we will consider traditional operational measures such as quality, delivery and costs as done by Akamp and Muller (2013) and Hollos et al. (2012). In the case of economic performance, we will follow Gallear et al. (2012) and include objective economic measures.
The existence of mixed results can also be explained by the fact that none of these papers, with the exception of Akamp and Muller (2013), has considered the role of suppliers in their models. That is, how suppliers are affected by the implementation of supplier development practices. We believe that supplier’s performance mediates the relationship between supplier development practices and buying firm’s performance. In other words, the buying firm’s performance will only improve once the supplier development practices have resulted in real improvements for the supplier. As stated by Bai and Sarkis (2014), suppliers’ sustainability performance is key in the management of the buying firm’s competitiveness.
In this sense, in this paper, we aim to consider the following issues: ● The impact of social supplier development practices on
suppliers’ social performance. ● How this affects the buying firm’s operational and
economic performance.
Hypotheses development To develop our hypotheses, we will adopt the lenses of the relational view, which has been used in the supplier development and sustainable SCM literatures (Cao and Zhang, 2011; Carter and Rogers, 2008; Simpson and Power, 2005). The relational view considers networks and dyads of firms (i.e. buyer–supplier relationships) to explain relational rents (Dyer and Singh, 1998). A relational rent is defined as:
[. . .] a supernormal profit jointly generated in an exchange relationship that cannot be generated by either firm in isolation and can only be created through the joint idiosyncratic contributions of the specific alliance partners (Dyer and Singh, 1998, p. 662).
Relational rents are then a result of collaborative activities (i.e. supplier development programs) in which partners exchange valuable knowledge and capabilities through relation- specific investments, inter-firm knowledge-sharing routines, complementary resource endowment and effective governance mechanisms (Cao and Zhang, 2011). A significant idea in the relational view is the fact that by collaborating, firms generate common benefits that collaborative partners cannot generate independently. In our paper, we will consider that the exchange relationship takes place when the buying firm implements the supplier development program with the supplier. In this way, the
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
391
relational rents will be the result of the valuable knowledge shared by the buying firm through the offering of training activities to the suppliers’ personnel, the visits to the suppliers’ premises and the monitoring of the suppliers’ performance.
In the sustainable SCM literature, different studies (most of them with an environmental focus) show the positive impact that supplier development programs have on the suppliers’ performance. Foerstl et al. (2010) show that the implementation of supplier development practices by a buying firm helps to diminish the suppliers’ use of un-environmental practices, improving their environmental performance. Similarly, Lee and Klassen (2008) claim that activities such as suppliers’ evaluations and/or providing training to suppliers’ personnel result in better suppliers’ environmental management capabilities and support their better environmental performance. As suggested by Lippmann (1999), to improve the supplier’s environmental performance, it is advisable that the buying firm organizes workshops and provides technical assistance on this dimension. In that sense, according to the relational view, the buying firm is an external source of resources and valuable knowledge for the supplier that will result in increased rents in the form of increased performance.
In the case of social issues, to the best of our knowledge, there is no paper that has empirically shown the relationship between social supplier development practices and the suppliers’ social performance. However, based on the relational view and the aforementioned empirical evidence, it is expected that evaluating suppliers, training the supplier’s personnel and working together with the supplier with respect to social issues will lead to improvements in their social performance. For instance, the evaluation of the suppliers’ social performance by the buying firm can be an effective mechanism to pressure suppliers so that they start considering social issues in their own supply chain. In addition, the knowledge generated as a result of the buying firm’s training to suppliers’ personnel will result in better working conditions at the suppliers’ premises and a reduction of the number of accidents. Accordingly, we hypothesize that:
H1. Social supplier development practices have a positive impact on the suppliers’ social performance.
Krause et al. (2000), in their definition of supplier development practices, state that buying firms’ motivation to implement these practices is twofold: 1 to improve the suppliers’ performance; and 2 to guarantee their own supply needs.
In that sense, supplier development practices seem to have an impact not only on the suppliers’ performance but also on the buying firm’s performance. In the literature, different authors have studied the impact of sustainable supplier development practices on the buying firm’s economic and operational performance dimensions with mixed results. For instance, Gimenez et al. (2012) show that the implementation of environmental supplier development programs lead to better economic results for the buying firm. Similarly, Klassen and Vereecke (2012), in what they call “development link”, explain that collaborative activities on social issues between
buyer and supplier lead to better economic results in the form of market expansion and cost reduction. On the contrary, Gallear et al. (2012) and Hollos et al. (2012) found no support for the relationship between sustainable supplier development practices and the buying firm’s performance. Despite these mixed results, on the basis of the relational view, we will hypothesize a positive relationship between social supplier development practices and buying firm’s performance. The relational view suggests that the result of the joint work between two partners (buyer and supplier) results in common benefits. This implies that by working together on improving social sustainability, not only the suppliers’ performance will improve but also the buying firm’s performance.
Social supplier development practices contribute to improve quality, cost and delivery because buying firm’s employees are more motivated, as they believe they are working on a more socially responsible firm. In addition, supplier development practices contribute to improve the buying firm’s economic performance through increasing sales because consumers may be willing to purchase goods that come from a more socially responsible firm (Andersen and Skjoett-Larsen, 2009; Carter and Jennings, 2004; Geffen and Rothenberg, 2000; Guoyou et al., 2013). This improvement in economic performance could also come from a reduction in cost. In a more socially oriented firm, employees are more motivated (Zukin and Szeltner, 2012) and therefore the cost of absenteeism could be reduced and productivity increased. Therefore, based on the relational view and on the empirical evidence provided by Gimenez et al. (2012) and Klassen and Vereecke (2012), we hypothesize that:
H2. Social supplier development practices have a positive impact on the buying firm’s operational performance.
H3. Social supplier development practices have a positive impact on the buying firm’s economic performance.
Suppliers’ performance has been described in the literature as playing a relevant role on the long-term success of buying firms, as it could impact its competitive dimensions (Krause et al., 2000; Tracey et al., 2005). This is also true in the case of the social dimension of sustainability. In fact, suppliers’ improved social performance can contribute to both the buying firm’s economic and operational performances in the following ways.
The supplier’s improved social performance can contribute to the competitive advantage of the whole supply chain and result in higher market share and reduced costs (Klassen and Vereecke, 2012; Rao and Holt, 2005). The fact that the buying firm employs suppliers that are socially oriented (i.e. have a higher social performance) results in a better social reputation and hence attracts socially conscious consumers (i.e. increasing sales). Furthermore, the improvement of the working conditions in the suppliers’ premises results in a reduction of accidents and suggests fewer disruptions in the supply process and less delays in product delivery, improving the operational performance of the buying firm (Freire and Alarcon, 2002; Yuan and Woodman, 2010). Moreover, if the working conditions of the suppliers’ employees are improved, the quality of the supplied product can increase due to an enhancement of employees’ motivation (Pagell et al., 2010).
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
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Based on the abovementioned arguments, we believe that improvements in the suppliers’ social performance will result in an enhanced economic and operational performance for the buying firm. Accordingly, we hypothesize that:
H4. Suppliers’ social performance has a positive impact on the buying firm’s operational performance.
H5. Suppliers’ social performance has a positive impact on the buying firm’s economic performance.
In summary, we have hypothesized the following effects. Based on the relational view and on empirical evidence, we have posited a direct and positive effect between social supplier development programs and the suppliers’ social performance (H1). In the same line and based on the same theoretical framework, we have also hypothesized a direct and positive effect between these programs and the buying firm’s operational and economic performances (H2 and H3, respectively). We also believe that the suppliers’ social performance has a positive impact on the buying firm’s performance (i.e. operational and economic) (H4 and H5). The combination of the aforementioned hypotheses results in a mediated model. This means that an indirect effect between supplier development programs and both buying firm’s performances through suppliers’ social performance (i.e. mediating variable) may exist. In other words, we expect that the supplier’s social performance mediates the relationship between supplier development programs and the buying firm’s operational and economic performances. This mediating effect could be explained as follows: once the supplier has achieved a better social performance due to the implementation of supplier development practices, the buying firm’s economic and operational performances will increase. It is important to mention that H2 and H3 (direct effect between supplier development practices and buying firm’s performances) suggest that suppliers’ social performance may function as a partial mediator rather than a full mediator (Baron and Kenny, 1986). This reasoning leads to the following two hypotheses:
H6. Suppliers’ social performance partially mediates the relationship between social supplier development practices and the buying firm’s operational performance.
H7. Suppliers’ social performance partially mediates the relationship between social supplier development practices and the buying firm’s economic performance (Figure 1).
Methodology
Questionnaire development To test our model, we first developed a questionnaire based on the literature review. To check the understanding and the clarity of the questions, we carried out a pre-test with academics, which resulted in minor changes in the wording of some items. The following constructs are used in this study: ● Social Supplier Development Practices: refers to the
evaluation of suppliers’ social performance as well as to
practices that entail a more direct involvement of the buying firm with the supplier;
● Suppliers’ Social Performance: refers to the working conditions, human rights compliance and use of child labor in the suppliers’ premises;
● Buying Firm’s Operational Performance: considers dimensions such as quality, delivery and cost; and
● Buying Firm’s Economic Performance: includes objective data on profit and sales (see Appendix 1 for the specific items used and their sources).
The first three constructs (i.e. Supplier Development Practices, Suppliers’ Social Performance and Buying Firm’s Operational Performance) have been adapted from available studies in the literature, and all used a seven-point Likert scale, where higher values indicated higher level of adoption or better performance. We measured the fourth construct (i.e. Buying Firm’s Economic Performance) via two commonly used objective indicators: sales and profit (Gallear et al., 2012). The data of these two variables were obtained from SABI Bureau Van Dijk Database. Following Peng and Lai (2012) suggestions, we have considered both the Buying Firm’s Operational and Economic Performance as formative constructs. In formative constructs, the direction of causality is from the indicators to the construct. In the case of a firm’s operational performance, the construct is defined by its costs, quality and flexibility performances, not the opposite way (Jarvis et al., 2003). In fact, the different dimensions that form the constructs are not expected to change in the same direction and the same magnitude (Peng and Lai, 2012). This is also clear in the case of economic performance; an increase in sales does not necessarily imply an increase in total benefits. Additionally, the items that form each of the constructs are not interchangeable with other items in the construct. For example, cost performance cannot be changed by quality or delivery performance (Peng and Lai, 2012). All these points suggest that the Buying Firm’s Economic and Operational Performance are formative constructs in which the combination of the considered items defines the concept by postulation. This is not the case for Supplier Development Practices and Suppliers’ Social Performance, which have been designed as reflective constructs. The interchangeability of their items as well as the high expected covariation among them suggest their reflective nature (Jarvis et al., 2003; Peter et al., 2007). For instance, in the case of Suppliers’ Social Performance, item
Figure 1 Describes the hypothesized relationships
Supplier Development
Practices
Buying firm’s Operational Performance
Buying firm’s Economic
Performance
H1
H3
H4
H6
H7
H5
H2
Suppliers’ Social
Performance
Direct effect
Mediating effect
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
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SuppSoc1 is expected to highly covariate with item SuppSoc2 because a violation on the compliance with the use of child labor (SuppSoc2) would imply no compliance with human rights (SuppSoc1). Regarding interchangeability, items Ext1 and Ext3 from Supplier Development Practices provide a good example. In addition, the elimination of any of the included items in the Suppliers’ Social Performance and Supplier Development Practices will not change the meaning of the underlying latent variables. For instance, if items Ext1 and/or SuppSoc2 are eliminated, the remaining items will be still referring to Supplier Development Practices and Suppliers’ Social Performance.
Sample and data collection To test our model, we decided to ask buying firms about the supplier development practices they were using, the social performance of their most critical supplier and their (buying firm’s) operational performance. This way, Spanish buying firms answered about their perceptions on: ● the level of implementation of supplier development
practices with their most critical supplier; ● their (buying firm’s) operational performance; and ● the social performance of their most critical supplier in
terms of sustainability.
The starting population in this study was made up of Spanish manufacturing companies that had at least 50 employees in the following sectors: ● textile (NACE codes 13-15); ● wood and wood products (16); ● paper and paper products (17); ● printing (18); ● chemical (20); ● pharmaceutical (21); and ● electronics (26-27).
We used SABI Bureau Van Dijk Database to extract this information. This database contains information of more than two million Spanish firms. We also extracted from this database the economic performance measures of the firms comprising our sample (i.e. profit and sales). SABI Bureau Van Dijk Database contains financial and economic information extracted from the firm’s P&L accounts. Data collection took place during March-June 2011. The original sample was made up of 580 firms. To increase the response rate, a phone call was made to all 580 firms to ask for participation in this study; however, 204 declined to participate. We conducted the survey using the telephone but gave firms the opportunity to answer the questionnaire by other means (mail/e-mail). Finally, 99 answered the questionnaire by phone and 21 by e-mail. In total, we obtained 120 responses, representing a response rate of 20.69 per cent. Table I shows the description of the sample. All buying firms were Spanish. However, the location of their most critical supplier in terms of sustainability varied across the final sample. Please see Table II for a summary on the location of suppliers.
To minimize key-informant bias, we contacted each firm by phone and identified the most suitable respondent with respect to sustainability issues in the supply chain (Kumar et al., 1993). As firms did not have a common position that
dealt with these issues, there is high diversity in terms of the position held by respondents (Table I).
In addition, the use of different data collection methods (i.e. phone and e-mail) may pose a threat to the validity of our results. To check for possible differences with respect to the data collection method, we randomly selected a subsample of
Table I Descriptions of the sample
Position n (%)
Health and safety director or manager 7 5.83 Environmental director or manager 14 11.67 Health, safety and environmental director or manager 13 10.83 Quality and environmental director or manager 23 19.17 Quality, health, safety and environmental director or manager 13 10.83 Managing director 7 5.83 Operations or supply chain director or manager 8 6.67 Quality director or manager 8 6.67 Human resources director or manager 16 13.33 Other 11 9.17 Total 120 100
Position in the supply chain End-consumer market 37 31 Not end-consumer market 83 69 Total 120 100
Industry Textile (NACE codes 13, 14 and 15) 12 10.00 Wood and products of wood and cork, except furniture (NACE code 16) 11 9.20 Paper and paper products (NACE code 17) 16 13.30 Printing (NACE code 18) 6 5.00 Chemical (NACE code 20) 25 20.80 Pharmaceutical (NACE code 21) 15 12.50 Electronics (NACE codes 26 and 27) 35 29.20 Total 120 100
Number of employees Less than 50 1 0.80 Between 50 and 249 75 62.50 Between 250 and 499 31 25.80 More than 500 13 10.80 Total 120 100
Table II Location of suppliers
Region n
Africa 1 Asia 20 Europe 80 USA 6 South America 1 Missing 12 Total 120
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
394
20 responses from each group and performed parametric and non-parametric tests. Results suggest that there are no significant differences between participants who answered by phone and those who answered by e-mail. Finally, non- response bias may also be a threat to the study. We performed non-response bias tests comparing the demographic data of respondents and non-respondents and found no statistically significant differences in the responses of the two groups.
Data analysis and results To simultaneously determine the effect of Supplier Development Practices and Supplier Social Performance on both the Buying Firm’s Operational and Economic Performances, we used path modeling analysis using hierarchical multiple regression. A single multiple regression model can only specify one response variable at a time. However, path analysis estimates as many regression equations as are needed to relate all the proposed theoretical relationships among the variables in the explanation at the same time. That is, we performed a set of multiple regressions to estimate the presence of relationships in the hypothesized structural model. This is an iterative algorithm that separately estimates the beta coefficients for every hypothesized relationship using ordinary least squares (OLS) regression.
The evaluation of our model followed a two-step approach. In the first step, we assessed the adequacy and quality of our measurement model, which specifies the relationships between indicators (i.e. observable variables) and latent constructs. In this evaluation, different measures for reflective and formative constructs were used. The second step includes the analysis of the structural model, which covers the estimation of direct and indirect path coefficients and tests the strength of the hypothesized relationships between constructs.
Measurement assessment To assess the adequacy of the reflective scales (i.e. Supplier Development Practices and Suppliers’ Social Performance), we analyzed convergent validity, discriminant validity and reliability. Convergent validity was checked both at the item and the construct levels. As shown in Table III, all items’ loadings are greater than the 0.70 suggested threshold level (Hulland, 1999). At the construct level, we checked that the average variance extracted (AVE) of each construct is greater than 0.50 (Chin, 1998; Fornell and Lacker, 1981). Table III
shows that convergent validity is met at both levels (i.e. item and construct). Discriminant validity is fulfilled if the square root of the AVE of each construct is greater than all the inter-construct correlations (Chin, 1998; Fornell and Lacker, 1981). Table III provides support for this condition and shows sufficient discriminant validity. Finally, to check the reliability of reflective constructs, we used the Cronbach alpha coefficient. All reflective constructs show values greater than the threshold value of 0.70 for Cronbach’s alpha (Table III), suggesting that they are all reliable.
The measurement assessment for formative scales is different than for reflective scales. Neither convergent validity and discriminant validity nor reliability can be used to assess their quality because formative indicators do not have to be strongly interrelated (Diamontopoulos, 1999). To evaluate the quality of formative measurement models, Chin (1998) suggests checking the following criteria: ● multicollinearity between indicators; ● indicators’ relative importance; and ● indicators’ absolute importance.
Regarding multicollinearity, high values indicate that the indicator’s information is redundant. As shown in Table IV, all variance inflation factor (VIFs) are lower than the boundary value of 5; therefore, multicollinearity is not a problem. To check for the indicators’ relative and absolute importance, we looked at the indicators’ outer weights and outer loadings, respectively. When an indicator’s weight is significant, there is empirical support to retain it. In case it is not significant but the corresponding loading is relatively high (� 0.5), the indicator should also be retained. In the case of the Buying Firm’s Operational Performance, although not all indicators’ weight are significant (i.e. opperf2 and opperf3), all loadings are greater than 0.5. In the case of the Buying Firm’s Economic Performance, there is one indicator (i.e. sales) that is non-significant and has a loading value of 0.410 (Table IV). However, formative indicators should not be eliminated based on statistical outcomes. In this sense, we have decided to keep it, as deleting it will change the construct under study (Chin, 1998).
Finally, common method variance (CMV) becomes a threat when two variables that have a hypothesized relationship are measured using the perceptions of the same individual. This is especially problematic when the variables are the independent and dependent variables of the study. To prevent and
Table III Assessment of reflective measurement model
Indicator Mean SD Standard loadings
Critical ratio
Lower-bound (95%)
Upper-bound (95%)
Cronbach’s alpha AVE �AVE Correlation
SD practices 0.890 0.698 0.835 0.097 sdp1 4.198 2.170 0.903 32.150 0.825 0.950 sdp2 3.789 2.230 0.848 22.647 0.743 0.914 sdp3 3.664 2.341 0.787 17.293 0.652 0.863 sdp4 3.319 2.058 0.816 23.191 0.743 0.883 sdp5 3.626 2.236 0.819 19.320 0.702 0.896 Supp’ soc perform 0.939 0.897 0.947 supperf1 3.319 2.096 0.956 75.439 0.930 0.979 supperf2 3.528 2.421 0.951 42.607 0.880 0.973 supperf3 3.191 2.025 0.937 71.306 0.912 0.961
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minimize CMV, the design of a survey study can be adjusted. In that sense, in the survey, the dependent variables were placed after the independent ones (Podsakoff et al., 2003). Additionally, after data have been collected, different statistical procedures can be performed to assess if CMV influences the study results. We performed the following tests suggested in the literature (Podsakoff et al., 2003): ● First, following Harmann’s single-factor test, we checked
that neither a single nor a general factor accounted for the majority of the covariance among measures. The results show that a single factor accounts for 34 per cent of the variance, confirming the absence of CMV.
● Second, we analyzed the correlation matrix between the different constructs in our study (Bagozzi et al., 1991).
The existence of high correlations (i.e. r � 0.90) between our constructs would be a signal of CMV. As shown in Table V, none of the values surpasses the suggested threshold, providing evidence that CMV is not a threat to the study. Third, we followed Lindell and Whitney’s (2001) method and examined the correlations between a marker variable (i.e. a variable that is theoretically unrelated to the constructs under study) and Supplier Development Practices, Suppliers’ Social Performance and Buying Firm’s Operational Performance. If the marker variable and the studied constructs are highly correlated, then CMV is present. However, results in Table VI suggest that CMV is not an issue in our study, as the highest value corresponds to Supplier Development Practices (Pearson’s r � �.147). If we square the Pearson correlation coefficient, we get the maximum percentage of variance shared by the marker and the construct (R2). CMV would be a threat if R2
shows high values. In our case, R2 equals 2 per cent, which is a low value and suggests that CMV is not an issue.
Structural model As we have already mentioned, to test the hypothesized relationships between our latent constructs, we used path modeling analysis by hierarchical multiple OLS regression.
Based on the estimated path coefficients, we can obtain the direct, indirect and total effects between variables. The total effect of one variable on another is the sum of the direct effect (i.e. no intervening variables involved) and indirect effect (i.e. through one or more intervening variables). This decomposition lets us check for the possible mediating effects of the variable Suppliers’ Social Performance between Supplier Development Practices and Buying Firm’s Operational and Economic Performance. It is also important to mention that to test our model, we controlled for the firm’s size using the number of employees (mean � 339.14; SD � 820.96).
Before looking at the results of the direct and indirect path coefficients, it is important to assess the structural model for multicollinearity issues. Because the estimation of the path coefficients is based on OLS regression, just as in regular multiple regression, the path coefficient might be biased if the estimation involves multicollinearity between the studied constructs. As shown in Table VII, VIFs between constructs are under the suggested threshold of 5, showing that multicollinearity is not an issue.
The analysis of the hypothesized relationships is divided in two sections. First, we will report the results related to the hypothesized direct effects, which correspond to H1-H5. Then we will discuss the results corresponding to the hypothesized mediating role of Suppliers’ Social Performance in the relationship between Supplier Development Practices and Buying Firm’s Operational and Economic Performance (H6 and H7).
Direct effect results As shown in Figure 2, our results provide support for four of the five hypotheses that correspond to the hypothesized direct effects between the constructs under study. Supplier Development Practices are positively related to both Suppliers’ Social Performance (� � 0.309, p � 0.001) and the Buying Firm’s Operational Performance (� � 0.396, p � 0.001), providing support for H1 and H2. In addition, Suppliers’ Social Performance is positively associated with both the Buying
Table IV Assessment of formative measurement model
Indicator Mean SD VIF
(maximum) Stand.
loadings Weight Critical ratio
Lower bound (95%)
Upper bound (95%)
BF’s operational performance 1.748 opperf1 5.692 1.094 0.779 0.543 3.324 0.200 0.875 opperf2 5.025 1.405 0.501 �0.106 �0.767 �0.372 0.134 opperf3 4.712 1.427 0.601 0.088 0.283 �0.199 0.349 opperf4 4.220 1.519 0.829 0.412 4.590 0.221 0.599 BF’s economic performance 1.285 sales (dif) 1868120 14594094.4 0.401 �0.058 �0.155 �1.203 1.550 ebit (dif) �642148 11165797.4 0.997 1.141 1.211 �1.260 3.272
Table V Correlations between constructs
Construct SuppDevPrac Supp’ soc perform BF’s operation performance BF’s economic performance
SuppDev practices 1.000 0.311 0.495 �0.115 Supp’ Soc perform 0.311 1.000 0.453 0.279 BF’s operational performance 0.495 0.453 1.000 0.097 BF’s economic performance �0.115 0.279 0.097 1.000
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
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Firm’s Operational (� � 0.326, p � 0.001) and Economic Performance (� � 0.412, p � 0.001), supporting H4 and H5, respectively. Regarding H3, which posited a direct and positive effect between Supplier Development Practices and Buying Firm’s Economic Performance, our results show that the effect is significant (p � 0.023). However, the direction of the effect is opposite to what we hypothesized (� � �0.188), meaning that Supplier Development Practices negatively impacts the Buying Firm’s Economic Performance. Thus, not providing support for H3.
Mediating effect results In the literature, different approaches to test for models that include mediating effects have been proposed: Causal steps, evaluating differences in coefficients and computing and testing indirect effects by the products of coefficients. Based in the last approach, we can also find different resources available for testing models with mediating effects (i.e. R, SAS and SPSS macros). In our study, we run the Sobel test described by Preacher and Hayes (2004) for bootstrapped mediation analysis. Table VIII shows the main numerical reports to analyze the mediation effect of Suppliers’ Social Performance between Supplier Development Practices and Buying Firm’s Operational and Economic Performance.
Supplier Development Practices was significantly predictive of the hypothesized mediating variable (a � 0.309, p � 0.001). When controlling for Supplier Development Practices, the mediator (Suppliers’ Social Performance) was significantly predictive of Buying Firm’s Operational Performance (b � 0.328, p � 0.001). The estimated direct effect of Supplier Development Practices on Buying Firm’s Operational Performance, controlling for mediator, was also significant (c’ � 0.396, p � 0.001). Based on these values, the total effect of Supplier Development Practices on Operational Performance takes a value of 0.497 (i.e. total effect: (a � b) � c’).
The mediating effect (ab) equals 0.101 (i.e. 0.309 � 0.328). This is judged to be statistically significant using the Sobel test (z � 2.66, p � 0.05). Bootstrapping procedure using 5,000 samples was performed, and a bias-corrected and accelerated confidence interval (CI) was created for ab. The lower and
Table VI Marker variable
Construct Correlation R2
SuppDevPrac �0.147 0.022 Supp’ soc perform �0.133 0.018 BF’s operational performance �0.122 0.015
Table VII VIF between constructs
Independent variable
Dependent VARIABLE BF’s operational
performance BF’s economic performance
SuppDev practices 1.128 1.259 Supp’ Soc performance 1.128 1.199 Buying Firm’s operational Performance – 1.265
Figure 2 Direct effect results
Buying firm’s Op. Performance R2 = 34.1% p < 0.001
Buying firm’s Eco. Performance R2 = 31.6% p < 0.001
H1 Reg (Std) = 0.309 Sig. < 0.001
Size Suppliers’ Social
Performance R2 = 9.5% p < 0.001
ze Supplier
Development Practices
H3
H2
H4
H5
Table VIII Results mediation effects
Relationships Direct effect coefficients (�) Indirect effect (mediation)
a b c’ ab Sobel test 95% IC
SuppDev -> mediator -> BF’s opp performance 0.309 (0.001)� 0.328 (0.001) 0.396 (0.001) 0.101 2.66 (0.004) [0.030: 0.184] SuppDev -> mediator -> BF’s econ performance 0.412 (0.001) �0.188 (0.023) 0.127 2.86 (0.002) [�0.014: 0.230]
Note: � p-value
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Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
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upper limits of the 95 per cent CI for the ab mediation effect ranges between 0.030 and 0.184.
To assess the significance of the mediating path, several criteria can be used. First, both a and b coefficients are statistically significant. Second, the Sobel test for the ab product is also significant. However, as several authors point out, the limitations related to the Sobel test power (i.e. power is low due to the test statistic not being really normally distributed), we have decided to additionally use boostraping procedures to compute CIs to be able to decide on the statistical significance of the mediating effect (MacKinnon et al., 2002; Shrout and Bolger, 2002). Therefore, as a third step, it is necessary to check that the boostrapped CI for ab does not include zero. Based on these criteria, we can state that the mediating effect of Suppliers’ Social Performance between Supplier Development Practices and Buying Firm’s Operational Performance is statistically significant. As the direct path from Supplier Development Practices and Buying Firm’s Operational Performance controlling for the mediating variable is also significant, Social Suppliers’ Performance is meant to be a partial mediator rather than a full mediator. These results provide support for H6.
The same analysis was carried out for the remaining independent variable (i.e. Buying Firm’s Economic Performance). The mediating role of Suppliers’ Social Performance in the relationship between Supplier Development Practices and Buying Firm’s Economic Performance was found to be non-significant for the following reasons: although the direct effects (a � 0.309 and b � 0.412) are both significant (p � 0.001) and, according to the Sobel test, the mediating effect (a � b � 0.127) is also found to be significant (p � 0.001), the CI for ab includes zero ([�.014 : 0.230]). This suggests that Suppliers’ Social Performance does not mediate the relationship between Supplier Development Practices and the Buying Firm’s Economic Performance. In other words, no support was found for H7 (Table IX for a summary of the hypotheses results).
Finally, to check for the predictive relevance of the model, it is important to consider the determination coefficient R2. An acceptable R2 should be greater than the suggested threshold of 10 per cent and significant (Falk and Miller, 1992). In our case, as shown in Figure 2, the R2 of all our dependent constructs are significant and with values close or above the suggested threshold.
Discussion Our discussion will be centered around two main points: 1 the impact of social supplier development practices on
suppliers’ social performance; and 2 the impact of supplier development practices on both the
buying firm’s operational and economic performance.
Supplier development practices and the suppliers’ social performance Supplier development practices are described as aiming to improve the suppliers’ performance and/or capabilities (Krause et al., 2000). In the sustainable SCM literature, the scarce research that has considered the suppliers’ performance is limited to the environmental dimension of sustainability, while the literature adopting a social focus has only considered the buying firm’s performance; hence, providing a partial view on the effectiveness of these practices. In our paper, we have studied this neglected relationship (i.e. social supplier development and suppliers’ social performance), and our results indicate that buying firms perceive that the implementation of these practices leads to an improvement on the suppliers’ social performance. That is, by auditing suppliers and by directly working with them with respect to social issues, the buying firm perceives improvements on the compliance of its suppliers’ facilities with human rights and child labor employment. These supplier development practices also contribute to improve the safety and labor conditions in the suppliers’ facilities. Our results extend the previous positive results of Foerstl et al. (2010), Lee and Klassen (2008) and Lippmann (1999) from the environmental stream of the literature and support the fact that the implementation of these supplier development practices helps to improve not only the suppliers’ environmental performance but also the social one.
Supplier development practices and the buying firm’s performance We hypothesized direct and indirect effects of supplier development practices on the buying firm’s operational and economic performance.
Regarding the buying firm’s operational performance, our results support the fact that supplier development practices have a direct and positive effect on operational performance and that this impact is also mediated by the suppliers’ social performance. The direct effect could be explained as follows: in a more socially responsible firm, employees are more motivated, increasing their productivity and quality outcomes (Pagell et al., 2010). Our results extend this idea and suggest that better operational results can be achieved if these supplier development practices really contribute to improve the suppliers’ social performance. Buying firms will experience operational improvements not only because their own
Table IX Hypotheses: results
Hypotheses Result
Direct effects H1. Supplier development practices -> suppliers’
social performance Supported H2. Supplier development practices -> buying
firm’s operational performance Supported H3. Supplier development practices -> buying
firm’s economic performance Not supported H4. Suppliers’ social performance -> buying
firm’s operational performance Supported H5. Suppliers’ social performance -> buying
firm’s economic performance Supported
Mediating effects H6. Supplier development practices -> suppliers’
social performance -> buying Firm’s operational performance Supported
H7. Supplier development practices -> suppliers’ social performance -> buying Firm’s economic performance Not supported
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
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employees are motivated because of the implementation of these practices but also because the working conditions on the suppliers’ premises have improved. In addition, better working conditions at the suppliers’ premises lead to a reduction in the number of accidents and hence fewer disruptions in the supply chain leading to better delivery outcomes (Freire and Alarcon, 2002; Yuan and Woodman, 2010).
Regarding the buying firm’s economic performance, contrary to what we expected, our results show that there is a negative relationship between the implementation of supplier development practices and the buying firm’s economic performance. To better understand this unexpected result and the impact of social supplier development practices on the buying firm’s economic performance, we also run the model considering only the sales indicator in the economic performance construct (see Appendix 2 for further details on the results). The results of the sales model indicate that the social supplier development practices – buying firm’s economic performance (only sales) relationship – is not significant. This together with the results of our initial model, which indicated a significant and negative impact of these practices on economic performance (i.e. sales and EBIT) can be interpreted as follows: ● the implementation of social supplier development
practices does not lead to an increase in sales; and ● the implementation of these practices implies a cost for the
buying firm in the short term, negatively affecting its economic performance (i.e. EBIT).
Our results also show that suppliers’ social performance has a positive impact on the buying firm’s economic performance when we consider both EBIT and sales. However, the results for the model that considers only the sales figure indicate that the relationship between suppliers’ social performance and buying firm’s economic performance is non-significant. These results suggest that an improvement in the suppliers’ social performance does not lead to an increase in sales but to an improvement in EBIT by reducing costs and increasing productivity. In terms of sales, this means that “working with suppliers that are socially oriented” can be described as an order qualifier rather than an order winner.
In addition, contrary to what we expected, suppliers’ social performance does not mediate the relationship between supplier development practices and the buying firm’s economic performance. Taken together, these results imply that although supplier development practices help to improve the suppliers’ social performance, and the suppliers’ social performance has a positive impact on the buying firm’s economic performance (trough increased EBIT), this latter positive impact is not explained by the implementation of these supplier development practices (i.e. no mediating role of suppliers’ social performance) but by other factors such as the implementation of internal social practices in the suppliers’ premises and/or the suppliers’ sustainability commitment. Further research should consider including these variables in the model.
In summary, from an economic point of view, our results suggest that the implementation of supplier development practices does not pay off in the short term. These results position us on the stream of the literature that advocates for a
negative effect on economic outcomes, and these are in line with the results of Gallear et al. (2012) who also used objective measures for the economic performance construct. The differences in the results from Gimenez et al. (2012), who found a positive relationship, could be explained because these authors measured economic performance using a single and self-reported indicator related to manufacturing costs, which is more in line with operational measures rather than economic. As mentioned before, our results indicate that, in the short-run, the implementation of these practices implies higher cost, which could be related to the cost of evaluating suppliers or to the provision of training. However, in the literature, there are authors who state that when firms work with their suppliers for more than short periods both buying firms and suppliers are able to achieve cost reductions through reduced evaluative and control costs (Hakansson, 1982). Over time, both parties develop trust, which allows them to better adapt to the needs of the counterpart and reduce transaction costs in the relationship (Hakansson and Sharma, 1996; Ganesan, 1994; Gold et al., 2010). In that sense, it could be the case that when the buying firm has developed a strong relationship with its suppliers, the cost of evaluation diminishes, as the supplier may have adapted to the buying firm’s requirement with respect to social compliance. Future studies should consider the role of supplier development practices taking a long-run perspective.
Based on our results, the implementation of social supplier development programs such as audits to suppliers or the joint collaboration with them contributes to improve the suppliers’ social performance and the buying firm’s operational performance, but it worsens the buying firm’s economic performance in terms of increased cost in the short term. As suggested by the relational view, the joint collaboration between two partners (i.e. supplier and buying firm) results in rents for both parties (Dyer and Singh, 1998). Our results are in line with this statement and have shown that when implementing supplier development practices, the supplier experiences improvements on its social performance and the buying firm is able to improve its operational outcomes. Additionally, our results also serve to emphasize that, in the case of buying firms, these higher rents, in the short term, take the form of operational improvements rather than economic.
Conclusions The objective of this paper was to investigate the impact of social supplier development practices on the suppliers’ social performance and to analyze if the implementation of these practices pays off in terms of operational and economic outcomes. These two objectives have been analyzed for the context of manufacturing firms. Regarding the first objective, we have found that the implementation of social supplier development practices contributes to improve the suppliers’ social performance. These results have helped contribute to the existing literature on the effectiveness of sustainable supplier development practices by analyzing their role with respect to the suppliers’ performance, which has been generally neglected. Regarding our second objective, our results show that, while implementing, supplier development practices pays off in terms of operational performance (i.e. improved quality and delivery times and reduced costs), but it
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
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does not in terms of economic outcomes in the short term. By including objective measures for economic performance, we have been able to overcome the limitations of previous studies which included self-reported measures for this construct. Our results have some managerial implications. First, if buying firms aim to make their suppliers more socially responsible, they can rely on the use of supplier development practices such as auditing suppliers and/or working directly with them in terms of social issues. Second, it is important that managers care about the suppliers’ social performance. The buying firm can achieve better operational results if the implementation of the aforementioned practices leads to real improvements in the suppliers’ facilities. In the case of economic results, selecting suppliers with high social performance levels can result in better economic outcomes for the buying firm. Finally, managers should bear in mind that although implementing supplier development practices may damage the firm’s economic performance in the short term, it is important to acknowledge that it helps to improve the working conditions in the suppliers’ premises. Therefore, managers may decide which cost is more important to bear: the cost of implementing these practices or the cost of their suppliers acting unethically.
Besides these contributions, our study has some limitations that need to be acknowledged. Our study uses cross-sectional data and therefore we are not able to account for possible recursive relationships. Future research should consider the use of longitudinal data to study the relationship between these constructs. Our study is limited to the Spanish scope as data was only collected in Spain. Future research should try to replicate the presented research in other countries, especially countries that differ in the level of social risk. An additional limitation of our study is that, in our sample most of the buying firm’s suppliers are located in Europe. It could be the case that the positive effect of supplier development practices on the supplier’s social performance may not be significant in a sample in which suppliers are mostly located in developing countries. Thus, further research should analyze the effectiveness of these practices in the context of suppliers located in developing countries. Finally, as we already mentioned, our sample considers only manufacturing firms. Therefore, our results are not applicable to the case of service firms. Future research should include both type of firms and analyze the differences between both sectors.
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Corresponding author
Cristina Sancha can be contacted at: cristina.sancha@ esade.edu
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
402
Appendix 1
Appendix 2
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Table AI Measures
Construct No. Phrase Sources
Social supplier development practices SDP1 We assess our suppliers’ performance through formal evaluation, using established guidelines and procedures
Adapted from Krause et al. (2000), Bowen et al. (2001)
SDP2 We provide suppliers with feedback about the results of their evaluation
SDP3 We perform audits for suppliers’ internal management systems
SDP4 We visit our suppliers’ facilities to help them improve their performance
SDP5 We make joint efforts with these suppliers to improve results
BF’s operational performance OpPerf1 The company has improved its product/service quality Adapted from Rao and Holt (2005) and Cruz and Wakolbinger (2008)
OpPerf2 The company has reduced delivery times to clients OpPerf3 The company has reduced total costs OpPerf4 The company has reduced purchasing costs
BF’s economic performance Sales Difference on sales figure 09 and 10 SABI database EBIT Difference on EBIT figures 09 and 10
Suppliers’ social performance SupPerf1 We have improved compliance with human rights in the suppliers’ facilities
Adapted from Maxwell et al. (2006)
SupPerf2 We have improved compliance with child labor employment in the suppliers’ facilities
SupPerf3 We have improved safety and labor conditions in the suppliers’ facilities
Figure A1 Model with BF’s economic performance including only sales
Social supplier development practices
Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia
Supply Chain Management: An International Journal
Volume 20 · Number 4 · 2015 · 389 –403
403
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
- Does implementing social supplier development practices pay off?
- Introduction
- Literature review and hypotheses development
- Social supplier development and performance
- Hypotheses development
- Methodology
- Questionnaire development
- Sample and data collection
- Data analysis and results
- Measurement assessment
- Structural model
- Direct effect results
- Mediating effect results
- Discussion
- Supplier development practices and the suppliers’ social performance
- Supplier development practices and the buying firm’s performance
- Conclusions
- References
- Appendix 1
- Appendix 2