Building reputation through sustainable supplier selection: the case of an emerging economy

Mohammad Asif Salam,Murad Ali

doi:10.1108/ejmbe-12-2019-0217

Abstract

PurposeThe purpose of this research is to examine the drivers of sustainable supplier selection (SSS) and investigate the extent to which it is associated with a buyer's financial performance within an emerging economy context.Design/methodology/approachThe data were collected from 235 supply chain and procurement professionals in Thailand. The structural relationship was tested using partial least squares based structural equation modeling (PLS-SEM) and PROCESS tool.FindingsBased on the empirical findings, firms that pursue sustainability initiatives during supplier selection process enjoy better financial performance than their competitors. The analysis suggests six hypothetical paths explain SSS. Suppliers' human rights and safety focus are the most powerful determinants of SSS. Significantly, positive support was found for the SSS and buyers' financial performance relationship. Finally, there is a significant moderating effect of resource investment on sustainability efforts.Research limitations/implicationsData for the study were collected from a single industry, so the findings are indicative but not representative of all supply chains. Due to this limitation, the findings cannot be generalized across other countries and industries. This study is a starting point in understanding the role of SSS in creating a sustainable supply chain. Future research may develop a comprehensive understanding of the nature and magnitude of the impact of SSS on sustainable supply chains.Originality/valueThis paper contributes toward an understanding of the determinants of SSS and its consequences for sustainable supply chains.

Highlights

Many of the global supply chains rely on emerging economy suppliers for their sourcing decisions due to various reasons, such as close proximity to markets, close proximity to manufacturers, quality, delivery, flexibility and skilled and low-cost labors
The reputations of many organizations have been at stake by the questionable practices of their suppliers owing to sustainability issues (Foerstl et al, 2015)
The current study addresses the Sustainable supplier selection (SSS) issue by examining how socially responsible purchasing practices which are measured by the purchasing social responsibility (PSR) dimensions, such as customers, the government, employees and the society at large as primary constituencies of the firm, determine the extent to which firms consider sustainability aspects in the selection of emerging economy suppliers

Summary

Introduction

Many of the global supply chains rely on emerging economy suppliers for their sourcing decisions due to various reasons, such as close proximity to markets, close proximity to manufacturers, quality, delivery, flexibility and skilled and low-cost labors. The reputations of many organizations have been at stake by the questionable practices of their suppliers owing to sustainability issues (Foerstl et al, 2015). There is ample anecdotal evidence suggesting that firms can suffer severe losses due to social, ecological or ethical problems hidden in their supply chains. The full terms of this licence may be seen at http:// creativecommons.org/licences/by/4.0/legalcode

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