Capabilities for Corporate Sustainability Standards Institutionalization along the Supply Chain

Abstract

We develop a framework outlining key capabilities for an institutional entrepreneur that seeks successful implementation (institutionalization) of a new institution across its supply chain. We focus on the institution of corporate sustainability standards. To achieve this objective, we complete an exploratory research study based on six comparative case studies within the retail, paper, medical textile, and information technology industry. The research integrates institutional entrepreneurship and the resource-based view theories to help explain the phenomenon exhibited by the case studies. While the first theory explains how organizations can drive institutional change, the latter outlines criteria for organizational capabilities enabling the focal firm, i.e. the institutional entrepreneur, to achieve the targeted institutional change. Our analysis suggests five key capabilities enabling the focal firm to effectively implement the CSS in its supply chain that is reflected by both suppliers' and also sub-suppliers' compliance with the previously defined CSS: (1) inter-firm dialogue, (2) risk management, (3) external stakeholder collaboration, (4) cross-functional integration, and (5) continuous improvement. The organizational key capabilities identified help to extend the theory of institutional entrepreneurship with concepts that facilitate the institutional change in supply chains with respect to corporate sustainability. This exploratory work opens up significant avenues of additional research in general and supply chain theory development.