Doing Well by Doing Good? The Self‐interest of Buying Firms and Sustainable Supply Chain Management

Abstract

This paper investigates how changes in sustainability‐related conditions (SRCs) at a supplier influence buyers’ economic performance. Using a conceptual theory‐building approach and drawing on instrumental stakeholder theory, this research identifies four mediating effects through which suppliers’ SRCs affect buyers’ economic performance. The four mediating factors are purchasing costs, supply chain sustainability risk costs, cooperation benefits, and benefits stemming from spillovers of a supplier's self‐promotion. Purchasing costs exert a negative influence on buyers’ performance, whereas the other three factors contribute positively to performance. The study also suggests that the anticipation of performance effects which are salient to the buyer triggers efforts to improve the supplier's SRCs. This research makes several contributions. First, the study identifies and analyzes the causal pathways through which a supplier's SRCs influence buyers’ performance, thus contributing to the development of sustainable supply chain management theory. Second, the study helps buyers make better decisions about their suppliers. Finally, the study provides a conceptual platform for improved dialogue between stakeholders and buyers.