The Relationship Between Sustainable Supply Chain Management Sta

Problem Statement

Short-term financial performance to meet stakeholders’ expectations no longer

guarantees an organization’s long-term survival (Sezen & Cankaya, 2013). Proactively

sustainable organizations outperform their counterparts in terms of accounting

performance, with average annual abnormal performance 4.8% higher on a value-

weighted base, and 2.3% higher on an equally-weighted base (Eccles et al., 2014). The

general business problem was that supply chain managers in organizations are negatively

affected by stakeholder pressures for short-term profitability rather than sustainable

profitability, which results in a decrease in long-term performance for the business. The

specific business problem was that some global supply chain managers in different

industries and organizational sizes lack understanding of the relationship between

sustainable SCM, stakeholder pressure, and corporate sustainability performance.

Purpose Statement

The purpose of this quantitative correlation study was to examine the relationship

between sustainable SCM, stakeholder pressure, and corporate sustainability performance

while controlling for industry and organizational size. The first independent composite

variable was sustainable SCM, as measured by Sustainalytics dimensions of: (a) social

supply chain standards, (b) supply chain monitoring systems, and (c) green procurement.

The second independent composite variable was stakeholder pressure, as measured by

Sustainalytics dimensions of: (a) social supply chain related issues and controversies, (b)

operations and product related issues and controversies, and (c) environmental supply

chain related issues and controversies. Stakeholder pressure also took the roles of

moderator and mediator. The dependent variable was corporate sustainability

performance, as measured by Standard and Poor’s credit rating. The control variables

were industry and organizational size, measured by the number of employees. For this

study, I obtained secondary data on organizations located in North America, South

America, and Eurasia, identified in a Newsweek Green Rankings Global 2016 list. This

study’s implications for positive social change include the potential to provide a better

understanding of the correlates of corporate sustainability performance by organization

managers, which encourage long-term sustainable profitability that improves

environmental, social, and economic standards of living.

Nature of the Study

I chose a quantitative methodology for this study. Researchers conduct

quantitative studies to statistically confirm causal linkages among sets of accounting

information, business factors and financial success, management systems and

performance, and strategy and performance (Field, 2013; Leedy & Ormrod, 2015;

Makrakis & Kostoulas-Makrakis, 2016; Yilmaz, 2013). The quantitative method was

appropriate for this study because the purpose of the study was to statistically confirm

causal linkages among sustainable SCM, stakeholder pressure, and corporate

sustainability performance while controlling for industry and organizational size. A

qualitative method provides answers to how and why, bringing meaning and

understanding to the research question, which comes from the human judgment of

context (Kaivo-oja, 2016; Makrakis & Kostoulas-Makrakis, 2016; Yilmaz, 2013). The

qualitative method was not applicable to this study since the variables in the study were

numerical in nature. Mixed method studies combine qualitative and quantitative methods

to address a range of complex research questions demanding inductive and deductive

research logic in a more flexible, integrative, and holistic manner to create divergent

views and findings (Kaivo-oja, 2016; Mayoh & Onwuegbuzie, 2013; Makrakis &

Kostoulas-Makrakis, 2016; Venkatesh, Brown, & Bala, 2013). The mixed method

approach was not applicable to this study because a mixed study requires the collection of

both qualitative and quantitative data, while in this research I only sought to investigate if

causal linkages among the numerical variables could be statistically confirmed.

I selected a correlational design for this study. Researchers use correlation design

to examine the relationship between variables by characterizing the nature and magnitude

of the relationship between two quantitatively coded variables (Field, 2013; Grange,

Lewis, & Carslaw, 2016; Leedy & Ormrod, 2015). Correlation does not prove causation,

while the absence of correlation implies the absence of the existence of a causal

relationship (Field, 2013; Cohen, Cohen, West, & Aiken, 2013; Leedy & Ormrod, 2015).

The correlation design was appropriate for this study because my aim was to determine

the relationship between a set of predictor composite variables (sustainable SCM and

stakeholder pressure), a moderator and a mediator (stakeholder pressure), and a

dependent variable (corporate sustainability performance). Experimental and quasi-

experimental designs are applicable when the researcher’s aim is to assess uncontrollable

environmental events or certain conditions when randomization is not possible (Field,

2013; Leedy & Ormrod, 2015; Rideout & Gray, 2013). The experimental and quasi-

experimental designs were not applicable to this study because the research was focused

on identifying a predictive model.

Research Question

A research question is an issue of interest to the researcher presented in the form

of a clear statement of what the researcher wants to know (Bryman & Bell, 2015; Field,

2013). The main research question in this study was: What is the relationship between

sustainable SCM, stakeholder pressure, and corporate sustainability performance while

controlling for industry and organizational size? From the main research question, I

developed the following research sub-questions:

Research Question 1: What is the relationship between sustainable SCM and

corporate sustainability performance, while controlling for industry and organizational

size?

Research Question 2: What is the relationship between stakeholder pressure and

corporate sustainability performance, while controlling for industry and organizational

size?

Research Question 3: What is the relationship between sustainable SCM,

stakeholder pressure as a moderator, and corporate sustainability performance, while

controlling for industry and organizational size?

Research Question 4: What is the relationship between sustainable SCM,

stakeholder pressure as a mediator, and corporate sustainability performance, while

controlling for industry and organizational size?

Hypotheses

Hypotheses are formal statements of logical suppositions, reasonable guesses, or

educated conjectures that propose some form of relationship between one or more factors

of interest (independent variables) and an outcome (dependent) variable (Cohen et al.,

2013; Field, 2013; Leedy & Ormrod, 2015). I formulated the following hypotheses based

on the research questions posed above:

1: There is no statistically significant relationship between sustainable SCM

and corporate sustainability performance while controlling for industry and

organizational size.

1: There is a statistically significant relationship between sustainable SCM and

corporate sustainability performance while controlling for industry and organizational

size.

2: There is no statistically significant relationship between stakeholder pressure

and corporate sustainability performance while controlling for industry and

organizational size.

2: There is a statistically significant relationship between stakeholder pressure

and corporate sustainability performance while controlling for industry and

organizational size.

3: There is no statistically significant relationship between sustainable SCM,

stakeholder pressure as a moderator, and corporate sustainability performance while

controlling for industry and organizational size.

3: There is a statistically significant relationship between sustainable SCM,

stakeholder pressure as a moderator, and corporate sustainability performance while

controlling for industry and organizational size.

4: There is no statistically significant relationship between sustainable SCM,

stakeholder pressure as a mediator, and corporate sustainability performance while

controlling for industry and organizational size.

4: There is a statistically significant relationship between sustainable SCM,

stakeholder pressure as a mediator, and corporate sustainability performance while

controlling for industry and organizational size.

Theoretical Framework

I used resource dependence theory (RDT) as the theoretical framework for this

study. RDT has its roots in Emerson’s classic “Power-Dependence Relations” (1962)

article, and Pfeffer and Salancik’s The External Control of Organizations: A Resource

Dependence Perspective (1978). Davis and Cobb (2010) used the RDT to seek an

explanation of the behavior of an organization in terms of its context. Key constructs

underlying the theory are that resources are anything that is valuable to an organization,

and that an organization depends on others to gain access to valuable resources (Emerson,

1962; Pfeffer & Salancik, 1978). Resource dependency directions are valuable for

understanding the complexity of external dependencies, which is fundamental for supply

chains (Malatesta & Smith, 2014; Pfeffer & Salancik, 1978; Wry, Cobb, & Aldrich,

2013). RDT is a central theory in scholarly and applied understandings of the relationship

between sustainable SCM, stakeholder pressure, and corporate sustainability

performance. RDT lends support to the concept that organizations should proactively

engage in sustainable SCM because sustainable SCM resolves a resource dependency

problem, ameliorates stakeholder pressure, and ensures sustainable profitability.

Operational Definitions

Corporate sustainability performance: The strategies, practices, and tactics

employed by an organization with the objective of improving its relationships with the

social and natural environment (Wolf, 2014).

Credit ratings: A forward-looking opinion about credit risk such as the capacity

and willingness of an entity to meet its financial commitments as they come due

(Standard & Poor’s, 2015).

Issuer credit ratings: The forward-looking opinions concerning an obligor’s

overall creditworthiness (Standard & Poor’s, 2015).

Stakeholder pressure: The situation in which an organization is held accountable

by stakeholders for its actions and decisions regarding product design, sourcing,

production, or distribution (Parmigiani, Klassen, & Russo, 2011).

Supply chain management: The management of physical, logical, and financial

flows within the organization and supply chain (Taticchi, Tonelli, & Pasqualino, 2013).

Sustainable supply chain management: The strategic integration and achievement

of the long-term economic, social, and environmental objectives of the individual

organization and its supply chains (Carter & Rogers, 2008).

Sustainability: Sustainable development by meeting the needs of the present

generation without compromising the needs of the future generation (World Commission

on Environment and Development, 1987).

Assumptions, Limitations, and Delimitations

Assumptions

Assumptions are beliefs that are taken as given and are usually not subject to

empirical testing (Field, 2013; Leedy & Ormrod, 2015). My first assumption in this study

was that the archival data I collected from Sustainalytics and Standard and Poor’s (S&P)

databases had been obtained by Sustainalytics and S&P from valid and reliable sources.

Another assumption was that the data from analysis providers with substantial experience

and expertise in evaluating publicly traded organizations were based on financial

accounts, organizational documentation, databases, media reports, and stakeholder

interviews. My third assumption was that organizations I examined in the study had

reported accurate data in their corporate annual reports.

Limitations

Limitations are weaknesses of a study related to the proposed sample, data

collection environment, measurement techniques, and personal biases that may affect the

quality of the results and credibility of the conclusions (Field, 2013; Leedy & Ormrod,

2015). I identified two limitations to this study. The first limitation was that the measure

of corporate sustainability performance captured only the economic dimension of

sustainability. The second limitation of the study was that there could be a lagged effect

of stakeholder pressure on sustainable SCM-corporate sustainability performance

relationship, which is outside of the focus of the study.

Delimitations

Delimitations mark how far the research effort extended, into what relevant areas

the researcher did not inquire, and what the researcher never intended to do (Field, 2013;

Leedy & Ormrod, 2015). In this research, my focus was on the contribution of

sustainable SCM to an organization’s corporate sustainability performance. Thus study

was delimited to only the economic dimension of sustainability, and did not include

social and environmental dimensions of sustainability.

Significance of the Study

The purpose of this study was to examine the relationship between sustainable

SCM, stakeholder pressure, and corporate sustainability performance, while controlling

for industry and organizational size. Considering the complexity and the insufficient

theoretical development of an original approach to sustainability, the findings of this

study could be a significant contribution to academic literature related to corporate

sustainability performance. The results of the study could be of value both to business

organizations and society because corporate sustainability integrates corporate financial

performance, social performance, and environmental performance. Effective decision-

making requires the manager-researcher relationship. Thus, this study could be a

significant contribution both to business practice and to social change.

Contribution to Business Practice

The results of this study could be of benefit to business organizations—and

particularly to supply chains—because there is insufficient theoretical development or

empirical analysis of the integrative sustainability logic. The findings of the study could

prove critical for supply chains managers’ understandings of the relationship between

sustainable SCM, stakeholder pressure, and corporate sustainability performance. The

results of the study could be of value to practitioners considering that the primary

objective of organizations is sustainable financial performance. The outcome of the study

may assist business decision-makers to become more effective in integrating corporate

financial performance, social performance, and environmental performance as a part of a

system. Thus, the findings of the study might assist organizational leaders in the decision-

making process in pursuit of long-term business sustainability.

Implications for Social Change

The findings of this study might further challenge managerial decision makers to

rethink management approaches to corporate sustainability. The results of the study

might also help organization managers acknowledge potential benefits of deploying

sustainability in supply chains in an integrated manner, and understand how companies

contribute individually and collectively to sustainability, which incorporates people,

planet, and profit. A deep understanding of the very nature of sustainable development

could lead supply chain managers across the world to manage economic, social, and

environmental dimensions of business operations by considering the needs of the present

generation without compromising the needs of future generations. Sustainable

development of supply chains supports the conservation of natural resources, the

improvement of working conditions and living standards of stakeholders, and

corporations’ involvement in philanthropic activities in an integrated manner.

A Review of the Professional and Academic Literature

In this study, I attempted to extend Davis and Cobb’s (2010) RDT, which holds

that sustainable SCM and stakeholder pressure influence the strategies that organizations

employ to improve their corporate sustainability performance. The purpose of this

literature review was to identify the existing research to provide a substantial basis for

investigating the primary research question: What is the relationship between sustainable

SCM, stakeholder pressure, and corporate sustainability performance, while controlling

for industry and organizational size? I formulated the following four research sub-

questions and associated hypotheses:

Research Question 1: What is the relationship between sustainable SCM and

corporate sustainability performance, while controlling for industry and organizational

size?

1: There is no statistically significant relationship between sustainable SCM

and corporate sustainability performance while controlling for industry and

organizational size.

1: There is a statistically significant relationship between sustainable SCM and

corporate sustainability performance while controlling for industry and organizational

size.

Research Question 2: What is the relationship between stakeholder pressure and

corporate sustainability performance, while controlling for industry and organizational

size?

2: There is no statistically significant relationship between stakeholder pressure

and corporate sustainability performance while controlling for industry and

organizational size.

2: There is a statistically significant relationship between stakeholder pressure

and corporate sustainability performance while controlling for industry and

organizational size.

Research Question 3: What is the relationship between sustainable SCM,

stakeholder pressure as a moderator, and corporate sustainability performance, while

controlling for industry and organizational size?

3: There is no statistically significant relationship between sustainable SCM,

stakeholder pressure as a moderator, and corporate sustainability performance while

controlling for industry and organizational size.

3: There is a statistically significant relationship between sustainable SCM,

stakeholder pressure as a moderator, and corporate sustainability performance while

controlling for industry and organizational size.

Research Question 4: What is the relationship between sustainable SCM,

stakeholder pressure as a mediator, and corporate sustainability performance, while

controlling for industry and organizational size?

4: There is no statistically significant relationship between sustainable SCM,

stakeholder pressure as a mediator, and corporate sustainability performance while

controlling for industry and organizational size.

4: There is a statistically significant relationship between sustainable SCM,

stakeholder pressure as a mediator, and corporate sustainability performance while

controlling for industry and organizational size.

In this literature review section, I provide a synthesis of ideas and concepts from

the perspective of RDT concerning reactive and proactive approaches to sustainable

SCM, the effect of stakeholder pressure on sustainable practices, and corporate

sustainability performance. To ensure validity and credibility of the information, I

reviewed peer-reviewed journal articles that I retrieved from online journal databases

such as Emerald, ProQuest, and SAGE. The keywords I used to filter results that were

more relevant to the research topic were: supply chain management, sustainable supply

chain management, impact of sustainable SCM, stakeholder pressure, economic

sustainability, and corporate sustainability performance. The literature review included

136 peer-reviewed journal articles. One hundred and twenty-two of these 136 peer-

reviewed journal articles were published in the last 5 years, representing 90% of the total

sources used in the study.

Communities and governments around the world demand environmentally

friendly businesses, quality products and services, and organizational compliance with

regulations concerning the socio-environmental impact of the supply chain (Ding, Liu, &

Zheng, 2016; Gopalakrishnan et al., 2012; Sebastianelli, Tamimi, & Iacocca, 2015). The

evolutionary nature of supply chains requires continuous improvement of practices for

sustaining the business operations (Gopalakrishnan et al., 2012). More organization

managers are striving to embrace and transcend contradictions in operational and

organizational activities regardless of the challenges in the process of implementing

sustainability due to the complexity of issues, difficulties in capturing this complexity,

and continuously emerging new areas of concern (Gopalakrishnan et al., 2012;

Schaltegger & Burritt, 2014). Often organizational leaders attempt to develop creative

solutions to not only build a competitive advantage, but also to do so in harmony with the

planet and society (Elliot, 2013; Gao & Bansal, 2013). The implementation of any

sustainability agenda in supply chains requires formulation and operationalization of an

integrated approach that addresses the relevant social, economic, and environmental

issues (Hahn, Pinkse, Preuss, & Figge, 2015; Whiteman, Walker, & Perego, 2013).

Resource Dependence Theory

RDT was the basis for this study’s theoretical framework. The strong principles of

RDT present a premier framework for understanding the relationship between the

organization and the environment (Drees & Heugens, 2013; Esfahbodi, Zhang, &

Watson, 2016). Davis and Cobb (2010) claimed that there is evidence of the need for

more attention to RDT. RDT facilitates understanding of the relationship between

sustainable SCM, stakeholder pressure, and corporate sustainability performance. In this

study, I attempted to extend Davis and Cobb’s (2010) RDT, which holds that sustainable

SCM and stakeholder pressure influence the strategies that organizations employ to

improve their economic sustainability.

One of the fundamental assumptions of RDT is that organizations are not self-

sufficient, but rely on their environment and its resources for survival and achievement of

long-term objectives (Brettel & Voss, 2013; Kisaka & Anthony, 2014; Parastuty,

Schwarz, Breitenecker, & Harms, 2015; Pfeffer & Salancik, 1978). Organizations obtain

critical resources by looking outside their boundaries (Malatesta & Smith, 2014;

Nuruzzaman, 2015). Interdependence over needed resources produces inter-

organizational power that drives organizational behavior and buyer-supplier relationships

(Gaffney, Kedia, & Clampit, 2013; Pfeffer, 1987 as cited in Gaffney et al., 2013).

Organizations with a power advantage gain a dominant position in the network and often

exploit their power of resources, which results in a competitive advantage (Green, Toms,

& Clark, 2015; Nuruzzaman, 2015; Tachizawa & Yew Wong, 2014). Distribution of

power and the ability to influence the activities of other members of the network

influences the depth of collaboration between buyers and suppliers in networks

(Kähkönen, 2014; Tachizawa & Yew Wong, 2014). Organizations employ different

strategies to acquire needed resources that require different levels of coordination

(Malatesta & Smith, 2014).

Another fundamental assumption of RDT is that uncertainty in the internal and

external environment of the organization is responsible for the internal power distribution

within the organization and the external power distribution between organizations

(Brettel & Voss, 2013; Kisaka & Anthony, 2014; Parastuty et al., 2015; Pfeffer &

Salancik, 1978). The difficulty any organization faces creates the uncertainty and

dependence of an organization (Vecchiato, 2015). A lack of autonomy also creates the

dependence of the organization and the external power (Brettel & Voss, 2013; Kisaka &

Anthony, 2014; Parastuty et al., 2015; Pfeffer & Salancik, 1978).

Power relationships are intrinsic to global supply networks (Tachizawa & Yew

Wong, 2014). Competition and innovation are no longer just between single

organizations, but between supply chain networks. Supply chain systems of

interdependencies make inter-organizational relationships increasingly challenging

(Malatesta & Smith, 2014). Dependency on suppliers for critical resources directly

affects the adoption of environmentally and socially responsible practices (Hoejmose,

Grosvold, & Millington, 2013; Tachizawa & Yew Wong, 2014). Organizations’

application of RDT to supply chains is evident as organizations consistently purchase

strategically critical resources (e.g. standards, procedures, technologies, material sources,

distribution channels) and depend on contingencies in the external environment

(Malatesta & Smith, 2014; Pfeffer & Salancik, 1978; Tachizawa & Yew Wong, 2014). A

few strong principles of RDT apply to sustainable SCM. The theory’s directions are

valuable for understanding the complexity of external dependencies, which is

characteristic of supply chains, by emphasizing that every organization in the network

pursue a different strategy and objectives (Malatesta & Smith, 2014; Pfeffer & Salancik,

1978; Wry et al., 2013).

Managers use RDT to guide organizational strategy from short-term survival to

long-term organizational growth (Malatesta & Smith, 2014). RDT is highly relevant to

the study of contemporary organizations, and specifically to the study of the supply chain

relations (Tachizawa & Yew Wong, 2014). Wry et al. (2013) argued that resource

dependency’s unique insights on the complexity of an organization’s external

environment are the keys to unlocking its contemporary relevance. Thus, the resource

dependence perspective has the potential to become a strongly developed theoretical

perspective (Wry et al., 2013). A few researchers have already applied the insights of

RDT in the supply chain management field. Paulraj and Chen (2007) developed a

strategic supply management model based on uncertainty and concluded that the

relationship between environmental uncertainty and strategic supply management

supports the claims of RDT. Wolf (2014) applied RDT to a sustainable SCM context,

broadening the range of theories currently employed in the field. Ramanathan,

Poomkaew, and Nath (2014) conducted a holistic analysis considering a variety of

stakeholder pressures in a single framework, and extended the application of the RDT.

Esfahbodi et al. (2016) applied RDT to examine relationships between the

implementation of sustainable SCM practices and organizational performance.

Opponents of RDT argue that resource dependence key principles are near

obvious and accepted, but at the same time lacking (Malatesta & Smith, 2014).

Additionally, according to Malatesta and Smith (2014), empirical researchers largely

support the RDT’s main assumptions and principles but often report that it is difficult to

rule out alternative explanations and compare findings across studies. According to

Hillman, Withers, and Collins (2009), basic arguments of RDT and inter-organizational

relations are not sufficient on their own. Integration of RDT with other theoretical

frameworks may prove to be more productive in researching the relationship between an

organization and its environment. RDT has been integrated with other theoretical

perspectives in examining the phenomenon of interest (Hillman et al., 2009).

The resource-based view of the organization, stakeholder theory, real options

theory, population ecology perspective, niche theory, and institutional theory are several

concepts related to RDT (Hillman et al., 2009). The integration of the resource-based

view of the organization with RDT has enhanced organizational understanding in the area

of organizational resource endowment. RDT merged with stakeholder theory may offer

greater insights for managing dependencies (Hillman et al., 2009). The application of

RDT and real options theory may show resource dependence-reducing strategies and

approaches to reducing uncertainty. The combination of RDT with the population

ecology perspective may help to address the role of the external environment more

effectively, which in turn may help to develop a meta-theoretical perspective for

organizations (Hillman et al., 2009). The niche theory offers a combination of resources

needed for survival and insights into resource dependence relationships. Integration of

RDT with institutional theory may also offer solutions for issues concerning uncertainty

and dependency by taking into consideration the country’s institutional environment

(Hillman et al., 2009). Thus, comparing and integrating RDT with other complementary

perspectives or competing theories may guide a better understanding of environmental

interdependence and uncertainty. These identified theories are relevant to sustainable

SCM. Examining such perspectives can help identify the drivers for sustainability

initiative and provide insights on how organizations can benefit from internal and

external factors to develop sustainable supply chains (Varsei, Soosay, Fahimnia, &

Sarkis, 2014).

Institutional theory and population ecology are the rival theories of RDT. The

institutional theory indicates that the institutional environment can influence the

development of a structure in an organization more than the market pressures (Bradly,

2015; Fuenfschilling & Truffer, 2014; Rottig, 2016). Moreover, organizational managers

will adopt these structures if they improve the efficiency of the organization. Applying

this theory to the study would mean that the internal structure of the organization would

decide to implement sustainable SCM in the organization if it improves their efficiency.

For population ecology for organizations, Hannan and Freeman (1977) stated that

organizations exist within a population of similar organizations, and the survival of the

organization would depend on how the organization responds to their environment. Two

kinds of environment can influence the survival of the organization; external and internal.

In this study, I apply this theory on how organizations respond to the internal and external

environment concerning sustainability. The strengths of population ecology are that it

shows a holistic approach to understanding the structure of organizations, and it shows an

explanation on how organizations survive (Hannan & Freeman, 1977). However, there

are limitations of the theory as well such as having a deterministic view of human beings

(Daft, 2012). A deterministic view indicates that human beings or organizations respond

in a mechanical way to the experiences they have encountered. As such, individuals or

organizations that hold the population ecology are not proactive and are only reactive to

the situation. One of the weaknesses of the population ecology is its dependence on the

reaction of the organization towards what is happening in its external environment.

However, Daft (2012) explained that companies have the capability to define and

redefine their external environment. Bozeman and Moulton (2011) supported the

sentiments of Daft with the fact that organizations especially large ones have the

capability to modify the conditions of their environment.

Population ecology theory for organizations is a major rival theory of RDT

because they have similarities such that both theories acknowledge the influence of the

internal and external environment to the organization. However, population ecology

theory does not align with the purpose of this study. This study is more aligned with RDT

because at the core of the concept of sustainability is the issue of resources. Population

ecology theory focuses on the reaction of the individuals or organizations about the

situation at hand while RDT focuses on how to ensure that the organization has sufficient

resources now and in the future to ensure survival and progress.

Sustainable SCM

International business environment challenges organizations to concentrate on

SCM to gain a competitive advantage (Nuruzzaman, 2015; Shen, Olfat, Govindan,

Khodaverdi, & Diabat, 2013). General pressures of the environment on organizations

hypothesized by Pfeffer and Salancik (1978) are almost the same as they were during the

1970s (Davis & Cobb, 2010). According to the principles of RDT, resources and their

acquisition is the core of decision-making process of organizations (Davis & Cobb,

2010). The scarcity of resources pressures organizations to seek sustainable supply chain

strategies essential for an organization’s survival, long-term sustainability of resource

supply, and sustainable economic performance (Karimi & Rahim, 2015).

The scope of the components included in supply chain management range from

operations management, resource and distribution management, logistics and

transportation, marketing, purchasing, and information technology (Chan, Nayak, Raj,

Chong, & Manoj, 2014; Roh, Hong, & Min, 2014). All of these key inter-organizational

business processes are integrated for an effective supply chain strategy that influences

and improves the performance of the organization (Carter & Rogers, 2008; De Marchi,

Di Maria, & Micelli, 2013; Roh et al., 2014; Winter & Knemeyer, 2013). Because of the

advancement in technology of global supply chain, organization managers can benefit

from real-time data about demand and supply of products that are helpful for decision-

makers in the supply chain (O’ Rourke, 2014).

SCM is central to achieving sustainability through changing buying practices and

impacts on the natural environment as it deals with the resources needed for the

production (Glover, Champion, Daniels, & Dainty, 2014). RDT supports the notion that

the lack of strategic resources may incentivize focal organizations to establish direct links

with third parties (Nuruzzaman, 2015). Focal organization managers can use non-

governmental organization-built environmental and social databases to monitor their

lower-tier suppliers (Tachizawa & Yew Wong, 2014). The global flow of goods,

information, labor, and capital that extends from raw materials to final products provide

an excellent context to understand sustainable supply chain and to test the concept of

sustainability (Miller, 2013). Both supply chain and sustainability focus on system

dynamics (Beske, Land, & Seuring, 2014).

As opposed to the traditional perspective of supply chain management that

emphasizes on the economic aspect of an organization, sustainable SCM is described as

the explicit incorporation of environmental and social goals that extends the economic

dimension of the triple bottom line (Brandenburg, Govindan, Sarkis, & Seuring, 2014;

Seuring & Müller, 2008). To reflect the principles of business sustainability, organization

managers integrate social and environmental issues with core strategic issues at the

supply chain level (Gao & Bansal, 2013). The main objective of sustainable SCM is to

make the supply chain more sustainable with the end goal of producing an effective

sustainable supply chain (O’ Rourke, 2014). As such, sustainable supply chain refers to

the outcome of a specific supply chain. Sustainable SCM is also a strategic integration of

the social, environmental, and economic objectives of an organization with collaboration

within and with other organizations to develop term economic, social, and environmental

performance of the organizations and its supply chains (Seuring & Müller, 2008). Thus,

the innovative supply chain contains the components of the traditional supply chain and

also integrates sustainability issues withing the traditional areas of expertise by focusing

on the long-term survival of the organization (Carter & Easton, 2011; Taticchi et al.,

2013).

In sustainable supply chains, the environmental and social dimensions are

addressed by the members of the supply chain through corporate social responsibility

(CSR) initiatives while competitiveness is maintained through meeting the demands and

needs of consumers that satisfy the economic aspect of sustainability (Diabat, Kannan, &

Mathiyazhagan, 2014; Seuring & Müller, 2008). Sustainable SCM is often understood as

ensuring that supply chain practices are environmentally friendly (Diabat et al., 2014;

Govindan, Kaliyan, Kannan, & Haq, 2014). Sustainable SCM is also sometimes called

green supply chain, focusing on the environmental component of sustainability (Lee,

Klassen, Furlan, & Vinelli, 2014; Turker & Altuntas, 2014).

Technology has boosted the lean manufacturing of organizations to meet the

demands of the consumers; however, some organization managers failed to understand

more about the environment and social consequences of the production aspect of the

supply chain (O’ Rourke, 2014). A number of organization managers have pursued

sustainable practices. However, these practices should not be limited to environmental

and social responsibilities of the organization but also include the economic benefits of

sustainability for the organization (Galpin, Whittington, & Bell, 2015). At the same time,

certain organization managers applying the triple bottom line approach still tend to focus

strongly on the economic dimension (Beske & Seuring, 2014). Organizations need to

work with one another in promoting sustainable SCM practices as a way to achieve

organizational success rather than merely as a moral obligation (Alexander, Walker, &

Naim, 2014; Wang, Rodrigues, & Evans, 2015). Sustainable SCM practices should

promote to organizational success (Green et al., 2015). A strong focus of organizations on

the integration of social, economic, and environmental dimensions needed to ensure

corporate sustainability and a sustainable future (Gopalakrishnan et al., 2012; Tseng &

Chiu, 2013; Tseng et al., 2015). There is little theoretical development or empirical

analysis of the integrative sustainability logic while it is critical for supply chain

managers to gain an absolute understanding of the complex correlation and interplay of

factors that foster sustainability and company competitiveness (Gopalakrishnan et al.,

2012).

The adoption of sustainable SCM practices has a positive effect on three

categories of outcomes such as economic, social, and operational (Tseng et al., 2015). For

instance, sustainable packaging in organizations has resulted in a positive impact

regarding environmental, economic, and social outcomes (Bealt, Barrera, & Mansouri,

2016). The results have shown evidence that sustainable SCM practices have a positive

effect on the economic and social aspects of an organization (Albertini, 2013). Golicic

and Smith (2013) examined 77 studies published from 2000 to 2011. Golicic and Smith

used meta-analysis to determine whether specific practices of sustainability would

influence the performance of an organization. The results showed that there is a

significant positive relationship between environmental supply chain practices and the

organizational performance. This finding indicates support that sustainable SCM results

in positive firm performance. The study contributed to extending the understanding of the

relationship between environmental supply chain practices and a firm performance (Mitra

& Datta, 2014).

Given that sustainable SCM can have a positive influence on the financial

performance of an organization, sustainable SCM researchers still focus on the

environmental issues while social aspects of sustainable SCM are not examined enough

(Golicic & Smith, 2013; Wolf, 2014). Environmental factors in quantitative studies

mainly include the utilization of natural resources as well as emission of waste by the

organization rather than the social (consumers, suppliers, producers, stakeholders) and

financial (financial performance and economic sustainability) components of sustainable

SCM (Golicic & Smith, 2013; Seuring & Müller, 2008; Seuring, 2013). For instance,

Seuring and Müller (2008) examined 191 papers published from 1994 to 2007. Seuring

and Müller provided a conceptual framework that summarized the findings of sustainable

SCM. Two strategies included in the sustainable SCM framework were the management

of the supply chain to address risks and performance and the management of the supply

chain to address sustainability. Seuring and Müller concluded that the literature on

sustainable SCM still mostly around environmental issues. Social aspects and the

integration of the three dimensions of sustainability are still rare (Seuring & Müller,

2008). Seuring and Müller extended the review of the literature on sustainable SCM up to

308 papers by 2010 and found that only 36 papers were quantitative studies (Seuring,

2013). Seuring (2013) reviewed 36 quantitative studies published from 1990 to 2010 and

found that the social side of sustainability is usually not taken into account.

Studies on sustainable SCM are often pursued in a standalone fashion, which

means that the economic, environmental, and social aspects of the triple bottom line

attended independently without deliberating the existence of interrelationships (Gao &

Bansal, 2013; Lozano, 2015). Also, empirical studies about supply chain management

often focus on single organizations and do not examine the interrelationships of

organizations (Carter & Easton, 2011). The conflict in the supply chain management

perspectives of organizations also leads to the question on whether model-based research

considers the intercompany perspective and whether the perspective of the government

authorities or stakeholders other than the investors reflected in the quantitative studies of

sustainable SCM. The studies of Brandenburg et al., (2014) and Carter and Rogers (2008)

were crucial in the integration of many dimensions within the relationship of

sustainability and supply chains.

Carter and Rogers (2008) conducted a comprehensive literature review and

structured a conceptual framework with the goal of introducing sustainability within the

supply chain management. One of the objectives was to demonstrate the relationship

between environmental, social, and economic performance in the context of the supply

chain. Conceptual theory building was used as a methodology to represent sustainable

SCM. The framework of sustainable SCM was based on RDT and the resource-based

view of a firm. Carter and Rogers (2008) expanded the concept of sustainability to SCM

and suggested major facets that are prerequisites for the implementation of sustainable

SCM practices.

Brandenburg et al., (2014) conducted a content analysis of 134 studies on formal

quantitative models that address sustainability aspects in the forward supply chains.

Brandenburg et al. concluded that expanding the types of tools and factors considered in

the formal modeling efforts offer numerous possibilities and insights. Brandenburg et al.

(2014) also suggested that the sustainable SCM modeling field is on the research upswing

and significantly more modeling based research needs to be completed to fully

understand and integrate sustainable SCM into business thought and practice. Pagell and

Shevchenko (2014) identified that previous researchers have focused on the synergistic

and familiar while overlooking trade-offs and radical innovation. Current knowledge

about sustainable SCM is not sufficient to develop and implement an efficient and

effective sustainable SCM. Pagell and Shevchenko (2014) highlighted five main issues

compounded by measures that do not truly capture a supply chain’s impacts and

suggested to address these issues to help in the development of truly sustainable supply

chains.

Therefore, studies associated with a holistic approach of sustainable SCM that

reflect all three sustainability dimensions are relatively rare (Brandenburg et al., 2014;

Lozano, 2015; Roh et al., 2014; Seuring & Müller, 2008). The holistic approach of

sustainable SCM involves interactions between the environmental, social, and economic

dimensions in the short and long term, and also between internal and external

stakeholders (Lozano, 2015; Seuring & Müller, 2008). Lozano (2015) proposed corporate

sustainability driver model that offers a holistic perspective on how companies can be

more proactive in their effort to becoming more sustainability-oriented. In proposing the

corporate sustainability model, Lozano (2015) considered both internal and external

drivers and the drivers that connect them. Based on the review of the literature on

corporate sustainability and the empirical research, Lozano (2015) drew together a large

number of recognized drivers that affect corporate sustainability.

Overall, researchers in the initial studies regarding sustainable SCM focused on

green products and green operations management; however, these researchers did not

include the social and financial aspects of sustainable SCM. Even though these

researchers paved the way for more studies about sustainable SCM, researchers were not

able to inform on current developments as well as provide recommendations for future

studies. The subject of sustainability has moved from the borders of supply chain

management research to the mainstream. The increase in acceptance of sustainability has

led to a greater understanding of sustainability; however, the present knowledge about

sustainability is not sufficient in creating a truly sustainable supply chain (Pagell &

Shevchenko, 2014; Schrettle, Hinz, Scherrer-Rathje, & Friedli, 2014). Thus, when it

comes to empirical studies, there is the growing relevance that there should be multiple

perspectives on sustainability.

Sustainable SCM and Stakeholder Pressure

Increasing awareness of the need for sustainable future is prompting governments,

customers, and various stakeholders to pressure organizations to incorporate

sustainability issues into their SCM (Tseng & Hung, 2014). Stakeholder pressures or

drivers are factors that motivate leaders of organizations to adopt sustainability in supply

chain management. Within an organization, stakeholder pressure can be categorized as

either internal or external (Brindley & Oxborrow, 2014; Glover et al., 2014; Tseng &

Hung, 2014). The driving force for the adoption of sustainable practice is usually reactive

as opposed to proactive, underscoring the role of internal or external pressure in

sustainable SCM (Mathiyazhagan, Govindan, & Noorul Haq, 2014). Organizations more

visible to institutional pressure and final customers tend to adopt a proactive approach to

sustainability. Less visible organizations tend to be more reactive in implementing

sustainable practices and waiting longer to establish links with other agents in the supply

chain (Tachizawa & Yew Wong, 2014).

The adoption of environmental practices can stem from both internal pressures

such as an organizational strategy and external pressures (Pålsson & Kovács, 2013; Seles,

de Sousa Jabbour, Jabbour, & Dangelico, 2016). Pålsson and Kovács examined the

intention of freight transportation-intensive industries to reduce CO

emission. By

combining the resource-based view and stakeholder theory, Pålsson and Kovács found

that organizational strategy outweighs stakeholder pressure in determining whether an

organization intends to green its transportation. Stakeholder pressure sets the minimal

levels that elevate the performance (Pålsson & Kovács, 2013). Internal motives differ

between organizations. External drivers lead to a reduction of transportation emissions to

a predetermined point that is an actual requirement for organizations (Pålsson & Kovács,

2013).

When organizations adopt sustainable supply chain management, stakeholders are

likely to be more concerned with the environmental and social components of

sustainability while organizations are likely to focus on maintaining the economic

benefits while practicing sustainability (Diabat et al., 2014; Ramanathan et al., 2014).

Lee, Singal, and Kang (2013) examined the relationship between corporate social

responsibility and corporate financial performance. Lee et al. found that organizations in

the hospitality industry often reduce social and environmental investments when

economic conditions are unfavorable whereas they continue investments in operations

related programs.

Sustainable SCM is an important area of focus for researchers because of

stakeholders’ demands for organizations’ commitment to adopt sustainability practices

(Taticchi et al., 2013). Meixell and Luoma (2015) conducted a quantitative systematic

review of the stakeholder-focused sustainable SCM literature, and specifically literature

on the pressure and influence of stakeholders on sustainable SCM. Different types of

stakeholders have a different influence on corporate sustainability performance

depending on whether the sustainability issue is environmental or social. Additionally,

certain stakeholders play a larger role in social vs. environmental sustainability (Meixell

& Luoma, 2015). Corporate sustainability involves various and often conflicting demands

of a wide set of stakeholders, who tend to apply different decision logics than managers

(Hahn et al., 2015).

Internal pressures such as the need to develop risk management drive sustainable

SCM within the organization (Brindley & Oxborrow, 2014; Glover et al., 2014; Tseng &

Hung, 2014). Internal pressure to adopt sustainable SCM often originates from leaders

and managers (Brindley & Oxborrow, 2014; Glover et al., 2014; Tseng & Hung, 2014).

Reducing costs and increasing profits are also the main drivers of the implementation of

sustainable SCM (Bealt et al., 2016). Every organization has the goal of cost reduction to

increase profits (Glover et al., 2014). The incorporation of sustainability in supply chain

management is a way for an organization to cut down expenses by improving efficiency

(Brindley & Oxborrow, 2014). The need to improve quality is also one of the internal

pressures that can influence the adoption of sustainable SCM (Carter & Easton, 2011).

Such sustainable approach as the decrease of waste and pollution improves quality

(Albertini, 2013). Organizations with environmentally friendly practices produce superior

quality products (Carter & Easton, 2011). Increased pressure from investors can also lead

to the development of sustainable policies in organizations (Diabat et al., 2014). The

increased awareness is also related to the understanding of the raw materials of the

organizations in making the products or the services (Long, Tallontire, & Young, 2015).

The growing awareness of the original approach to sustainability, which

recognizes the three dimensions of sustainability (corporate financial performance, social

performance, and environmental performance) as a part of a system, drive organizational

leaders to proactively pursue sustainable SCM (Esfahbodi et al., 2016; Gao & Bansal,

2013; Hahn et al., 2015; Jamali, 2014). Organizational leaders recognize their roles and

responsibilities towards the environment and society not just for the present but for the

future, which foster a proactive development of initiatives to address sustainability

(Lozano, 2013; Walls & Triandis, 2014). Organizations understand their dependence

upon the long-term sustainability of their resource supply (Esfahbodi et al., 2016; Wolf,

2014). Thus, organizations gain long-term benefit from the adoption of sustainable SCM

strategies. By promoting environmental and social sustainability and proactively

engaging in the sustainable supply chain, organizations build a good citizen reputation.

The good reputation improves legitimacy and access to critical resources (Wolf, 2014).

Based on RDT, Wolf (2014) conducted a quantitative analysis of ESG data to

assess the idea that proactive sustainable practices increase organizational legitimacy.

The sample of the study included data of organizations from different industries and both

highly polluting and less polluting industries (Wolf, 2014). Wolf proposed three

competing models of the potential relationship between sustainable SCM, stakeholder

pressure, and corporate sustainability performance. The objective was to examine, which

of the three models best represent information on 1,621 organizations. Multiple

regression analysis was used to estimate the corporate sustainability performance impact

of the two independent constructs (sustainable SCM and stakeholder pressure) (Wolf,

2014). Corporate sustainability performance was measured by two dimensions of

sustainability, environmental and social, but did not include the economic dimension of

sustainability. Wolf found that the first model, which assumed that sustainable SCM and

stakeholder pressure have a direct and separate effect on corporate sustainability

performance, represents the data best. Based on the finding, proactive sustainable SCM

directly benefits an organization beyond reducing stakeholder pressure. Thus, proactive

sustainable SCM positively related to corporate sustainability performance (Wolf, 2014).

External pressures, such as consumers, suppliers, competitors, and governments,

influence organizations to assimilate sustainable SCM (Cantor, Blackhurst, Pan, & Crum,

2014). The external pressures that drive the assimilation of sustainable SCM are aspects

outside the internal processes of the organization but still have a significant influence on

the internal activities of the organization (Nuruzzaman, 2015). More than internal

pressures, external pressures obligate organizations to include sustainable environmental

and social practices in the supply chain management (Nuruzzaman, 2015). The findings

of empirical research supporting the benefits of green and environmentally friendly

practices in organizations further encourage stakeholders pressure (Kumar, Luthra, &

Haleem, 2013).

Legislative and regulatory policies drive organizations to deliver products and

services through environmental or sustainable practices. California Transparency in

Supply Chains Act is one of the examples of how regulations affect the sustainable

practices of organizations. Some countries also approved tax deductions to organizations

that are practicing environmental or sustainable practices (Fahimnia, Sarkis, Choudhary,

& Eshragh, 2015; Osmani & Zhang, 2014; Rezaee, Dehghanian, Fahimnia, & Beamon,

2015). Customers are one of the most influential external drivers that can pressure

organizations to adopt sustainable SCM (Brindley & Oxborrow, 2014; Ting, Tse, Ho,

Chung, & Pang, 2014). While the customers regularly stress small and medium-sized

companies by the demands, the stakeholders and investors manipulate the large

organizations by the demands (Beske et al., 2014; Brindley & Oxborrow, 2014; Ting et

al., 2014). Organizations must always be alert to the needs of their customers to gain

competitive advantage. Competitors of organizations also serve as an external pressure

that can drive the adoption of sustainable SCM (Beske & Seuring, 2014). The integration

of sustainable practices in organizations was formed to improve competition among

rivals in the same industry (Aguilera-Caracuel & Ortiz-Mandojana, 2013; Wolf, 2014).

The society is also an external pressure that can drive organizations to become more

conscious of environmental issues (Coombs & Holladay, 2015). Organizations are under

pressure to adopt sustainability practices to show the public that they have a sense of

social responsibility (Hsueh, 2015).

External pressures and sustainability demands often come from secondary

stakeholders, such as social activists, non-governmental organizations, and local

communities (Coombs & Holladay, 2015; Hahn et al., 2015). Helmig, Spraul, and

Ingenhoff (2016) found that secondary stakeholders influence primary stakeholders but

do not have a direct impact on the implementation of environmental and social practices.

The finding is in alignment with RDT. Stakeholders in relationships with low

interdependence will choose an indirectly influencing strategy (Helmig et al., 2016).

Activities and behaviors outside of an organization’s control are relationships

outside of its boundaries and part of the environment with many other organizations

and/or stakeholders. The relationships outside of an organization’s boundaries recognized

for dispersed authority and power within the environment, scarcity of critical resources,

and interconnectedness of organizations (Malatesta & Smith, 2014). RDT indicates that

organizations as open systems depend on the external environment and helps to

understand strategies that organizations employ to reduce environmental interdependence

and uncertainty (Gaffney et al., 2013; Pfeffer & Salancik, 1978). The more dependent the

organization is on external resources, the more demands the external stakeholders would

have in the control of these resources (Xia, Ma, Lu, & Yiu, 2014).

Managing various demands of suppliers is challenging for organizations (Kam-

Sing Wong, 2014). The objective of any organization is to maximize independence and

certainty especially in resources (Pfeffer & Salancik, 1978). Organizations significantly

depending on the external environment will struggle to lessen this dependence in various

manners (Pfeffer & Salancik, 1978). Often organizations engage in sustainable practices

when they fear or faced with reduced access to resources due to stakeholder pressure

(Wolf, 2014). Sustainable SCM becomes critical to organizations vulnerable to internal

and external stakeholder pressures (Wolf, 2014). Through sustainable SCM,

organizations address environmental, social, and economic aspects of their supply chains

to reduce stakeholder pressure (Wolf, 2014). Stakeholder pressure is often one of the

main reasons why organizations will pursue sustainable SCM (Brindley & Oxborrow,

2014; Glover et al., 2014; Tseng & Hung, 2014). Wolf (2014), upon conducting a

multiple linear regression analysis of the relationship between sustainable SCM,

stakeholder pressure, and corporate sustainability performance, found that stakeholder

pressure directly affects corporate sustainability performance.

Organizational managers may have a reason for proactively pursuing sustainable

practices other than stakeholder pressure since sustainable SCM contributes to corporate

sustainability performance but the effect can be greater when stakeholder pressure occur

(Wolf, 2014). The stakeholders’ expectations, whether they are internal or external, need

to be incorporated into the sustainable supply chain operations if the pressure is present

(Cantor et al., 2014; Wolf, 2014). The integration of stakeholder expectations into the

organizational strategy improves corporate sustainability performance (Cantor et al.,

2014; Wolf, 2014). Wolf conducted a multiple linear regression analysis of three

competing models of the potential relationship between sustainable SCM, stakeholder

pressure, and corporate sustainability performance by employing RDT. Wolf (2014)

found that the information on 1,621 organizations based on the ESG data did not support

the second model, which assumed the moderating effect of stakeholder pressure on the

sustainable SCM-corporate sustainability performance relationship. It is possible that

factors not examined in the study determined the importance of stakeholder pressure in a

sustainable SCM context (Wolf, 204). Adebambo, Abdulkadir, Mat, and Alkafaagi

(2013) also investigated the sustainable environmental manufacturing, the direct

influence of its drivers, and financial performance by employing a survey approach and

structural equation modeling. Adebambo et al. found that stakeholder pressure,

legislation, and perceived benefits directly influence the implementation of sustainable

environmental manufacturing practices and financial performance.

Despite the internal and external pressures to adopt sustainable SCM, there are

challenges and obstacles to the integration of sustainability and supply chain processes

(Al Zaabi, Al Dhaheri, & Diabat, 2013). The challenges of sustainable SCM

implementation are (a) cost increase, (b) change of culture, (c) operationalization of

sustainable development, (d) uncertainties among the employees and the organization,

and (e) the complexity of the issues of the organization (Alexander et al., 2015; Galpin et

al., 2015). While sustainable SCM is also supposed to reduce costs of the organization,

the integration of sustainability to supply chain processes can also be expensive to

accomplish (Zhang, Shah, Wassick, Helling, & Van Egerschot, 2014). The adoption of

sustainable SCM would require a significant capital for small to medium-sized

companies (Zhang et al., 2014).

Lack of knowledge of the organizations is also one of the most common obstacles

to the integration of sustainable SCM practices in an organization (Al Zaabi et al., 2013).

Lack of training of the employees is also an obstacle to sustainable SCM, as it leads to a

lack of environmental awareness for employees (Dashore & Sohani, 2013; Myung et al.,

2012; Sisson & Elshennawy, 2015). The lack of integration of IT system was also

identified by Dashore and Sohani (2013) as an obstacle to the implementation of

sustainable SCM practices in an organization. The integration of IT is essential for

information exchange processes and successful sustainable SCM (Brandenburg et al.,

2014; Dashore & Sohani, 2013). Regulations also tend to be an obstacle for the

implementation of sustainable SCM if the regulation does not facilitate the environment

needed for implementing the sustainable supply chain (Dashore & Sohani, 2013). Thus,

corporate sustainability challenges managers in organizations with complex issues full of

tensions as it requires managers to simultaneously address concerns for the environment,

social welfare, and economic prosperity (Hahn, Preuss, Pinkse, & Figge, 2014; Hahn et

al., 2015).

Many organization managers fail to recognize the potential benefits of sustainable

practices for overall organizational performance unless they yield short-term profits

(Alexander et al., 2014; Bradly, 2015). Organizations are not recognizing sustainable

SCM as beneficial to strategic objectives also due to the challenges engage in sustainable

practices only if there is pressure upon the resource dependence relationship with one or

more stakeholders (Pfeffer & Salancik, 1978; Wolf, 2014). Stakeholder pressure

determines the extent to which an organization engages in sustainable SCM. The extent

of engagement in sustainable SCM will affect corporate sustainability performance

(Wolf, 2014). Thus, stakeholder pressure mediates sustainable SCM, and in turn,

sustainable SCM shapes corporate sustainability performance (Cantor et al., 2014; Wolf,

2014).

For instance, risk management is one of the drivers of sustainable SCM within the

organization (Brindley & Oxborrow, 2014; Glover et al., 2014; Tseng & Hung, 2014).

Organizations may not recognize the benefits of risk management programs, such as

managing the long-term sustainability of resources by fostering innovation, unless there

is pressure from external and internal forces to develop an effective supply chain risk

mitigation strategy (Cantor et al., 2014; Lozano, 2013). Cantor et al. (2014) empirically

tested how stakeholders place pressure on organizations to engage in risk management

activities. Cantor et al. (2014) utilized a survey approach to test the nomological model

by employing structural equation modeling techniques. Stakeholders pressure on

organizations to mitigate risk, and joint planning activities with suppliers serve as a

mediating role in the model (Cantor et al., 2014; Lozano, 2013). The Cantor et al. (2014)

study is one of the first papers to test empirically how stakeholders’ pressure mediate the

relationship between sustainable SCM and corporate sustainability.

Wolf (2014) revealed that the mediating effect of stakeholder pressures on

sustainable SCM is not significant. Wolf conducted a multiple linear regression analysis

of three competing models of the potential relationship between sustainable SCM,

stakeholder pressure, and corporate sustainability performance by employing RDT. Wolf

(2014) found that the information on 1,621 organizations based on the ESG data did not

support the third model, which assumed the mediating effect of stakeholder pressure on

the sustainable SCM-corporate sustainability performance relationship. It is possible that

factors not examined in the study determined the importance of stakeholder pressure in a

sustainable SCM context (Wolf, 2014).

Stakeholder pressure has contributed to the sustainability practices and

performance of organizations (Ramanathan et al., 2014; Wolf, 2014). Ramanathan et al.

(2014) analyzed the impacts of various organizational pressures on the environmental

performance of manufacturing firms and found that all five analyzed pressures exert

significant influence on environmental performance. Ramanathan et al. used a structural

equation modeling techniques to consider the impact of all five pressures simultaneously.

Ramanathan et al. also provided evidence that an internal stakeholder such as marketing

department and economic pressure provide the highest influence on the environmental

and economic performance of an organization. Ramanathan et al. (2014) provided a

holistic analysis considering a variety of stakeholder pressures in a single framework and

extended the application of RDT. The theory is one of the theoretical frameworks to

understand the role of organizational pressures on the sustainability performance

(Ramanathan et al., 2014). Organizations are not self-sufficient but rely on their

environment and its resources for survival and achievement of long-term objectives.

Organizations should strive to manage the dependency on the external environment to

gain sustainable development (Pfeffer & Salancik, 1978; Ramanathan et al., 2014).

The adoption of both proactive sustainable SCM and sustainable SCM due to

stakeholder pressure is associated with positive outcomes such as improved

environmental concerns, competitive advantage, cost and risk reduction, revenue

increase, and positive effects on company image and employee motivation (Bradly, 2015;

Kumar et al., 2013). Thus, sustainable SCM and stakeholder pressure directly influence

the strategies organizations employ to enhance corporate sustainability performance

because doing so resolves elements of a resource dependence problem, ameliorates

stakeholder pressure, and ensures sustainable profitability (Wolf, 2014). The moderating

and mediating effect of stakeholder pressures on the sustainable SCM-corporate

sustainability performance relationship requires additional research. Research in the field

of sustainable SCM receives considerable attention. However, the research field is still

very young but is growing very fast (Taticchi et al., 2013).

Sustainable SCM and Corporate Sustainability Performance

During the 1990s, concerns about the environment and social sustainability

emerged such as global warming, climate change, and corporate social responsibility

(Govindan, Khodaverdi, & Jafarian, 2013). Well-known examples of business practices

related to substantial resource depletion have led stakeholders to apply pressure on

organizations to restrict their purchasing activities to sustainable resources not only

within their premises but also across supply chains (Govindan et al., 2013; Wolf, 2014).

Focal organizations are pressured to manage sustainability standards actively beyond

their organizational boundaries due to the reputational and economic risk (Leppelt,

Foerstl, Reuter, & Hartmann, 2013). Even though a focal organization may have little

control over its suppliers’ unsustainable behavior, stakeholders are still likely to point

responsibility to the focal organizations (Hartmann & Moeller, 2014; Tachizawa & Yew

Wong, 2014). The awareness and acceptance of society regarding the importance of

sustainability have led to a political momentum of implementing sustainable projects and

policies (Bason & Anagnostopoulos, 2015; Kolk & Lenfant, 2013; Macagno, 2013).

However, despite the rising human awareness of environmental and social aspects of

doing business, financial performance continues to be the core objective of organizations

(Bateh, Heaton, Arbogast, & Broadbent, 2013; Torugsa et al., 2013; Varsei et al., 2014;

Zhu et al., 2013). The most important linkage between business and society tends to stem

from economic and corporate interests (Varsei et al., 2014).

The concept of sustainability often evolves over time to reflect the changes in the

society (Bateh et al., 2013; Milne & Gray, 2013). Corporate sustainability has been

conceptualized using different theoretical approaches, mainly stakeholder pressure,

institutional theory, and the resource-based view (Milne & Gray, 2013; Montiel &

Delgado-Ceballos, 2014). The topic of sustainability had expanded in public since 1987

when the Brundtland Commission initiated by the United Nations (UN) published its

report titled Our Common Future (World Commission on Environment and

Development, 1987; McManus, 2014). Corporations gradually integrate corporate

sustainability into organizational activities (Bealt et al., 2016; Lozano, 2015).

Bansal and DesJardine (2014) and Montiel and Delgado-Ceballos (2014)

concluded that there is no single understanding of sustainability in businesses as the

interpretations range from reverse logistics to strategic sustainability. The number of

interpretations of sustainability and the broad definition makes it difficult to create

operational tools to contextualize sustainability in the macro context of businesses (Carter

& Rogers, 2008; Milne & Gray, 2013). Sustainability research is highly diverse and

unsystematic as different types of organizations face different sustainability needs (Bateh

et al., 2013). Regardless of the numerous definitions provided about sustainability, Bateh

et al. (2013) asserted that three elements such as longevity, maintenance of purposes, and

responsibility to external needs are essential in the definition of sustainability.

Montiel and Delgado-Ceballos (2014) reviewed the literature on corporate

sustainability from 1995 through 2013. After summarizing the different definitions,

organizational theories, and adopted measures of corporate sustainability, Montiel and

Delgado-Ceballos provided recommendations on how to advance the corporate

sustainability field. Montiel and Delgado-Ceballos concluded that the corporate

sustainability field is still evolving. Thus, sustainability is a complex process that is

multi-dimensional in nature, which makes studies about sustainability very difficult when

combined with the complex nature of supply chain management (Bradly, 2015;

Whiteman et al., 2013).

Despite fewer studies about sustainable supply chain in the early 1990s, the

researchers of initial studies have defined sustainability concept as well as its association

with supply chains that focuses on the importance and benefits of the relationship

between sustainability and supply chains (Green et al., 2015; Winter & Knemeyer, 2013).

However, the researchers of earlier studies about sustainable SCM focused more on the

environmental dimension of sustainability; lacking a perspective of integration among

different concepts (Alexander et al., 2015; Qi, Zeng, Yin, & Lin, 2013; Signori, Flint, &

Golicic, 2015). A limited number of authors have considered a holistic view of

sustainability where there are interactions between the environmental, social, and

economic dimensions (Lozano, 2015). The economic sustainability dimension emerged

as a result of the three-dimensional concept of Elkington’s (1998) Triple bottom line

(Elliot, 2013; Goyal, Rahman, & Kazmi, 2013; Ralston et al., 2014).

The triple bottom line concept introduced by Elkington (1998) incorporates profit,

people, and the planet and evokes the necessity to attend to all three aspects of

sustainability, which has become a framework for sustainability (Gopalakrishnan et al.,

2012; Singal, 2013). The economic dimension of the triple bottom line is the profit

portion of the triple bottom line and refers to economics-sustaining profit and competitive

advantage. The environmental aspect of the triple bottom line relates to resource

depletion. The social aspect involves an organization’s behavior in relation to employees

and community. The profit portion of the triple bottom line - economics remains a major

concern of socially responsible business (Gopalakrishnan et al., 2012; Singal, 2013;

Reefke, & Sundaram, 2017).

Bateh et al. (2013) stressed the need to shift emphasis away from a purely profit-

driven economic perspective to considering the organization as part of a system that is

currently unsustainable. The scarcity of resources, globalization, and the competitive

market along with stakeholders force supply chains to look beyond pure economic gain,

which is becoming an issue of strategic importance (Goyal et al., 2013; Seuring, 2013).

Financial performance no longer guarantees an organization’s long-term survival (Sezen

& Cankaya, 2013). Socio-environmental and economic performance relationships offer

win-win opportunities (Fahimnia et al., 2015). Organizations incorporating sustainability

will succeed, and the organizations that do not will be challenged (Green et al., 2015).

Eccles et al. (2014) investigated the effect of corporate sustainability on organizational

processes and performance and found that high sustainability organizations significantly

outperform their counterparts over the long-term, both regarding stock market as well as

accounting performance (Eccles et al., 2014). To have a sustainable future for all

organization, the integration of the social, economic, and environmental facets of

business operations should be explored (Dixon-Fowler, Slater, Johnson, Ellstrand &

Romi, 2013; Gopalakrishnan et al., 2012; Wan Ahmad, Rezaei, Tavasszy, & de Brito,

2016).

According to the integrative view on corporate sustainability, organizations need

to pursue all three aspects of sustainability simultaneously and embrace the tensions

between different conflicting sustainability aspects rather than dismissing them. Hahn et

al. (2015) recognized that such a strategy goes beyond the triple bottom line because it

addresses the conflicting relationships between these various aspects. Hahn et al. (2015)

developed a systematic framework that allows to identify and characterize tensions in

corporate sustainability. The integrative view on corporate sustainability is the basis of

the framework.

Integration of the three dimensions of sustainability represents a fundamental

mechanism of business sustainability (Reefke & Sundaram, 2017; Windolph, 2013). Gao

and Bansal (2013) tested the presence of instrumental and integrative logic using data of

738 organizations over 13 years and found evidence of integrative logic applied by

organizations. The sample of the study included data of organizations rated by Kinder,

Lydenberg, and Domini & Co. (KLD), Compustat, and the Center for Research in

Security Prices (CRSP). Forty-six percent of the sampled organizations were

manufacturing companies (Gao & Bansal, 2013). Gao and Bansal employed a

generalized estimating equation (GEE) to test the causal effects. Gao and Bansal

articulated that the integrative logic is at the foundation of sustainability, and the

instrumental logic is the facilitator. Gao and Bansal concluded that the result of the

analysis is a business model that aims to integrate business, society, and nature.

Wang and Sarkis's (2013) investigated whether organization's environmental and

social supply chain activities associated with their financial performance. Wang and

Sarkis employed multivariate regression analysis to empirically test the relationship. The

sample of the study included data of organizations from the top 500 US companies based

on Newsweek’s green ranking report, Bloomberg ESG database, and Compustat financial

database (Wang & Sarkis, 2013). Wang and Sarkis found evidence of a positive

relationship between corporate financial performance and simultaneous implementation

of both environmental and social SCM. The study is the first research to investigate the

direct relationship between organizational environmental and social practices and

financial performance. By being the first to use publically available Bloomberg ESG

database to investigate the financial performance related to individual and joint

environmental and social supply chain management activities, Wang and Sarkis made a

significant contribution to sustainability management literature (Wang & Sarkis, 2013).

Singal (2013) examined the link between sustainability and economic

performance for the hospitality industry using MSCI’s ESG database and Standard and

Poor’s credit ratings. Historical long-term issuer ratings assigned to an organization by

S&P represented the financial performance of organizations. ESG indicators represented

the environmental and social performance of organizations. Singal employed multiple

regression analysis and t-tests to evaluate the proposed relationships. One of the several

findings of the study is evidence supporting an integrative logic rather than an

instrumental logic for the relationship between corporate social, environmental, and

financial performance. Singal also suggested that organizations should continue to invest

in sustainability initiatives for strategic reasons even in times of low financial

performance.

Wolf (2014) employed Sustainalytics ESG database and extended existing

research by conceptualizing corporate sustainability with environmental and social

dimensions of sustainability. By applying RDT to a sustainable SCM context, Wolf

empirically assessed the relationship between sustainable SCM and corporate

sustainability performance, with that of stakeholder pressure and corporate sustainability

performance, and the effect of stakeholder pressure on the sustainable SCM and

corporate sustainability performance. Wolf provided valuable insights for managerial

decision makers by illustrating the positive relation between sustainable SCM and

corporate sustainability performance (Wolf, 2014).

A discussion of sustainability impacts on organizational performance, including

discussion of the competitive and cost-effectiveness potentials of sustainability, is one of

the most recent trends (Bateh et al., 2013; Linnenluecke & Griffiths, 2013). In existing

studies, Singal (2013), Wang and Sarkis (2013), and Wolf (2014) have examined the

combined effect of sustainability parameters on firm performance. Lee et al. (2013) and

Fujii, Iwata, Kaneko, and Managi (2013) addressed the effect of individual dimensions of

sustainability on firm performance.

Lee et al. (2013) examined the relationship between corporate social

responsibility and corporate financial performance by employing Pearson’s correlation

analysis. The sample of the study included data of organizations from KLD STATS,

Compustat, and U.S. Bureau of Economic Analysis. Lee et al. found that organizations in

the hospitality industry often reduce social and environmental investments when

economic conditions are unfavorable whereas they continue investments in operations

related programs. Fujii et al. (2013) examined the relationship between environmental

performance and economic performance in Japanese manufacturing firms. Fujii et al.

employed a multiple regression analysis to examine the relationship. Fujii et al. found

that there is a significant positive relationship between financial and environmental

performance due to savings on intermediate energy costs. Fujii et al. also stated that

reduction of CO

emissions might not improve capital productivity in the short term (Fujii

et al., 2013). Kurapatskie and Darnall (2013) extended prior research on the broader

connections between sustainable practices and financial performance. Kurapatskie and

Darnall found that while lower and higher order sustainability activities are in alignment

with organizations’ financial performance, financial benefits related to higher

sustainability activities are greater. Thus, organizations actively integrating sustainability

are more likely to reap greater financial benefits (Kurapatskie & Darnall, 2013).

The best predictors of an organization’s economic and market-based performance

are social and environmental performance (Klettner, Clarke, & Boersma, 2014). The

effects of both social and environmental performance on organizations’ economic and

market-based performance are particularly significant (Green et al., 2015; Klettner et al.,

2014). Positive links widely established between organizations’ sustainable and economic

performance (Klettner et al., 2014; Shamsuddoha, 2015). Investors are becoming aware

of the importance of ESG factors in the estimation of corporate value as ESG

performance indicators reflect the future cash flows (Klettner et al., 2014; Kosmanova &

Docekalova, 2013). Investors and owners of organizations employ ESG performance

indicators to evaluate the economic performance to determine whether the organization

can increase its value and provide adequate returns on their investments over a longer

period (Kosmanova & Docekalova, 2013). ESG factors are becoming the core of business

and presenting long-term consequences on a corporation’s financial performance

(Klettner et al., 2014). ESG reporting forces companies to manage environmental, social,

and economic aspects of business operations effectively to avoid the disclosure of

negative ESG performance to their stakeholders (Ioannou & Serafeim, 2016). National

governments and stock exchange authorities have promoted sustainability reporting

further by adopting laws and regulations that mandate sustainability reporting (Ioannou &

Serafeim, 2016; Milne & Gray, 2013). The regulators are also reviewing the governance

arrangements of corporations to ensure that companies maintain a healthy long-term

focused organizational culture (Ioannou & Serafeim, 2016). ESG performance leads to

higher economic performance as it provides competitive advantage (Ioannou & Serafeim,

2016).

Even though sustainability is encouraged by governments, investors, and

customers, the economics of sustainable decisions are still uncertain (Singal, 2013).

Financial costs and benefits alone cannot create the full picture of sustainability impacts

on organizations (Bateh et al., 2013; Milne & Gray, 2013). Often organizations lack

effective instruments and adequate knowledge to measure financial outcomes of

sustainability measures (Alexander et al., 2015; Milne & Gray, 2013; Windolph, 2013).

Thus, the dominant instrumental logic still establishes a hierarchy of financial outcomes

over sustainability concerns (Hahn et al., 2015).

Economic principles of rationality and accountability mainly govern societal

thinking and decision making (Bateh et al., 2013). Economic interests are still the main

principle in determining attitudes and policies of corporate sustainability (Gupta &

Kumar, 2013; Rahardjo, Idrus, Hadiwidjojo, & Aisjah, 2013). Economic stakeholders

such as employees, shareholders, suppliers, and customers remain very concerned about

the economic benefits as a primary consideration in providing support to the company’s

survival. Customers encourage sustainable practices, but they also do not approve price

increase if it caused by the burden of philanthropic activity (Rahardjo et al., 2013).

The long-term investments that most sustainability improvements require make

them unattractive to organizations that apply high discount rates in estimating projects’

net present values (Eccles & Serafeim, 2013). The sustainable strategy has to increase

shareholder value while at the same time has to improve the organization’s performance

on ESG dimensions. Sustainability requires trade-offs in strategic decision making so that

both the short and long term are considered (Alexander et al., 2015; Bansal &

DesJardine, 2014; Eccles et al., 2014). Often organizational managers fail to understand

trade-offs that exist between financial and ESG performance. The capital market does not

reward organizations for ESG programs that fail to enhance financial performance

(Eccles & Serafeim, 2013). Therefore, organizations still prioritize financial over ESG

performance.

Overall, corporate sustainability is a concept to achieve long-term economic

benefits through the integration of environmental, social, and economic criteria (Carter &

Rogers, 2008). The economic impact of corporate sustainability efforts is the main

research concern. Research propositions have been developed based on RDT, transaction

cost economics, and population ecology, all based upon a view of the industries (Al Zaabi

et al., 2013). The review of the literature from the viewpoint of RDT led to the following

conclusions: (a) organizations take a proactive approach to the sustainable supply chain

and corporate sustainability in an effort to ensure the long-term resource supply and

sustainable corporate performance, (b) organizations take reactive approach to

sustainable practices when they fear or faced with reduced access to resources due to

stakeholder pressure, (c) proactive sustainable supply chain practices contribute to

corporate sustainability performance, but the effect is greater when stakeholder pressure

occurs, and (d) stakeholder pressure determines the extent to which an organization

engages in sustainable supply chain practices. These conclusions guided this research to

address a business problem concerning the understanding and effective practice of

corporate sustainability performance. The complexity and the little theoretical

development of an original approach to sustainability suggest that findings of this study is

not an end in itself, but the next-to-last step in a scientific process that culminates in

providing information about the corporate sustainability performance (see Cohen et al.,

2013). The results of the study indicated that there is a significant positive relationship

between sustainable practices and financial performance. The findings of the study might

assist organizational leaders in the decision-making process in pursued of the long-term

corporate sustainability.

Transition

In Section 1, I presented an introduction and the brief background of the

sustainability agenda. Sustainability issue initiated by the rising concern regarding

resource depletion and the related decline of social well-being, which demands a strong

focus on the integration of social, environmental, and economic aspects of business

operations in supply chains is discussed. The need to understand the connection between

a firm’s financial performance and its investment in sustainability initiatives and the

complex correlation and interplay of factors that foster sustainability and company

competitiveness are highlighted in this section as well.

In this section, I also presented research questions of the study and the appropriate

methodology for addressing the research questions and for testing the hypotheses. The

main research question was what is the relationship between sustainable SCM,

stakeholder pressure, and corporate sustainability performance while controlling for

industry and organizational size? The chosen theory to seek an explanation of the

behavior of an organization in terms of its context was RDT. The chosen methodology

for this study was quantitative, as the purpose of the study was to analyze the

relationships between the constructs. Specifically, to appropriately address the aim of this

study, which is to predict the relationship between a set of predictor variables (sustainable

SCM and stakeholder pressure) and a dependent variable (corporate sustainability

performance), the chosen research design was correlational.

Additionally, in this section, there was also a review of the related literature to

provide context for the study. In an attempt to extend Davis and Cobb’s (2010) RDT,

which holds that sustainable SCM and stakeholder pressure influence the strategies that

organizations employ to improve their economic sustainability, the focus was on the

review of literature related to the theoretical framework and the composite variables of

the study. The several keywords used to filter the studies that are more relevant to the

research topic are: supply chain management, sustainable supply chain management,

impact of SSCM, stakeholder pressure, economic sustainability, and corporate

sustainability performance.

First, in the literature review section, there was a review of RDT and its

application within supply chains as organizations consistently purchase scarce resources

and depend on contingencies in the external environment (Pfeffer & Salancik, 1978;

Malatesta & Smith, 2014). RDT helps to shift an organizational strategy from short-term

survival to long-term organizational growth (Malatesta & Smith, 2014). RDT is a central

argument and highly relevant to the study of contemporary organizations and specifically

to the study of the supply chain relations (Tachizawa & Yew Wong, 2014). RDT

facilitates understanding of the relationship between sustainable SCM, stakeholder

pressure, and corporate sustainability performance.

Second, in the literature review section, there was a review of sustainable SCM

practices. The scarcity of resources pressures organizations to seek sustainable supply

chain strategies that are essential for their survival, long-term sustainability of their

resource supply, and sustainable economic performance. The increase in acceptance of

sustainability has led to a greater understanding of sustainability; however, the present

knowledge about sustainability is not sufficient in creating a truly sustainable supply

chain (Pagell & Shevchenko, 2014; Schrettle et al., 2014). Sustainable SCM is a complex

process that is multi-dimensional in nature, which makes studies about sustainable SCM

very difficult when combined with the complex nature of supply chain management

(Whiteman et al., 2013). Thus, when it comes to empirical studies, there is the growing

relevance that there should be multiple perspectives on sustainability.

Third, in the literature review section, there was a review on the role of

stakeholder pressure in sustainable SCM, including both internal and external pressure,

and its effect on corporate sustainability performance. Internal pressures encourage

organizations to take a proactive approach to the sustainable supply chain considering the

overconsumption and rising resource scarcity phenomenon to ensure the long-term

sustainability of their resource supply. External pressures are also the main reason why

organizations will pursue sustainable SCM. The driving force for the adoption of

sustainable practice is usually reactive as opposed to proactive, underscoring the role of

internal or external pressure in SSCM (Mathiyazhagan et al., 2014). Stakeholders’

demands for organizations’ commitment to adopt sustainability practices makes

sustainable SCM is an important area of focus for researchers (Taticchi et al., 2013).

Finally, in the literature review section, there was a review of the relationship

between the sustainable SCM and corporate sustainability performance. The need for the

holistic approach of sustainable SCM that incorporates environmental, social, and

economic facets of business operations, especially given that sustainable SCM can have a

positive influence on the financial performance of an organization, was stressed. In the

literature review section, it was also recognized that current knowledge about corporate

sustainability performance is not sufficient as there are only a few studies that focused on

the relationship between the sustainable practices and corporate sustainability

performance (Schrettle et al., 2014).

In Section 2, the selected methodology and its appropriateness for this study

elaborated. Specifically, a detailed discussion of the participants in the study, research

method and design, population and sampling, data collection instruments and techniques,

data analysis, and as well as ethical research and study validity presented. In section 3,

the findings of the study related to each of the research questions and the hypotheses

presented. Application of the findings to professional practice and implications for

change and the recommendations for further research also discussed.

Section 2: The Project

This section includes a review of the methodology and research design I used to

conduct the study. The section also includes a review of the study participants, population

and sampling technique, data collection instruments, and specific statistical techniques I

used to investigate the relationships in the study. Finally, this section includes a review of

my data analysis ethical research practices, and concludes with a discussion of the study’s

validity.