Corporate sustainability standards in multi-tier supply chains – an institutional entrepreneurship perspective

Abstract

This study extends research on buyer firm roles in improving supplier sustainability practices by considering institutions – norms and rules – in the organisational field in which suppliers and sub-suppliers operate, exerting pressures on these actors to align their respectivepractices. We introducethe resource-based view to arrive at a framework outlining key capabilities for institutional entrepreneurs that seek institutionalisation of corporate sustainability standards (CSS) as a new institution across a multi-tier supply chain. The paper draws on the results of an exploratory research study using six comparative case studies within four industries. While institutional entrepreneurship explains how organisations drive institutional change, the resource-based view outlines criteria for organisational capabilities enabling the focal firm to achieve the targeted institutional change. Our analysis suggests five key capabilities enabling a buying firm to effectively institutionalise their requirements in multi-tier supply chains: (1) inter-firm dialogue, (2) risk management, (3) external stakeholder collaboration, (4) cross-functional integration, and (5) continuous improvement. The key organisational capabilities identified help to extend the theory of institutional entrepreneurship with concepts that facilitate institutional change in multi-tier supply chains with respect to corporate sustainability. This exploratory work opens up avenues of additional research in general and supply chain theory development.