Does implementing social supplier development practices pay off?

Abstract

Purpose– The purpose of this paper is twofold. First is to investigate the impact of social supplier development practices on the suppliers’ social performance. Second is to analyze if the implementation of supplier development practices by Western buying firms pays off in terms of operational and economic results.Design/methodology/approach– Hypotheses are tested in a sample of 120 Spanish manufacturing firms using Path Analysis.Findings– The results suggest that while supplier development practices help to improve the suppliers’ social performance and the buying firm’s operational performance, they do not pay off in terms of economic performance.Research limitations/implications– The paper shows that supplier development practices help to improve the suppliers’ social performance while improving the operational performance of the buying firm. The study has two main limitations. First, because cross-sectional data are used, possible recursive relationships could not be accounted for. Second, the study is limited to the Spanish scope and, as such, results need to be interpreted in that context.Practical implications– The results of this study provide insights to managers with respect to the implementation of supplier development practices to make their suppliers more socially responsible. Furthermore, managers are shown the implications of implementing such practices in terms of operational and economic outcomes.Originality/value– This paper contributes to the existing literature on the effectiveness of sustainable supplier development practices by including the suppliers’ performance, which has been generally neglected. Objective measures for economic performance are also included.