Cascading Sustainability in Multi‐tier Supply Chains: When Do Chinese Suppliers Adopt Sustainable Procurement?

Abstract

As global brands assume more accountability for their extended supply chains, some request that their first‐tier suppliers in turn adopt sustainable procurement practices, thereby “cascading” sustainability requirements to second‐tier suppliers. However, such cascading has not yet become institutionalized. We partnered with a leading sustainability electronics company—here called “Tronics”—to investigate which Chinese suppliers are more likely to adopt sustainable procurement and when Tronics' power—measured by its percentage of its Chinese suppliers' business—is more/less relevant. We gathered secondary (audit and company records) and primary (survey) data on Tronics' relationship with 134 Chinese suppliers, and complemented these sources with three archival datasets from CDP's Supply Chain Program, the National Enterprise Credit Information Publicity System of China, and the World Economic Reports. The results show that Chinese suppliers that either have an integrated management system composed of economic, environmental, and social pillars or engage with key stakeholder networks are more likely to adopt sustainable procurement practices, and that these effects are boosted when Tronics' power is low to moderate. Interestingly, Chinese suppliers with sustainability violations are not necessarily less likely to adopt sustainable procurement practices. When Tronics represents a large percentage of a supplier's business, it can persuade a noncompliant supplier to adopt sustainable procurement practices, though it has limited power over suppliers that exhibit critical violations.