Ethical Culture – Motivating Green Championing as Opposed to Green Washing in Supplier Management?!

Abstract

While sustainable and responsible management is an important topic in supplier management, there is little knowledge concerning how ethical culture, perceived by purchasing employees, influences ethical and unethical behaviour in supplier management. Today, buying firms rely on so-called green champions or suppliers that promote sustainability in the upstream supply chain, thereby guaranteeing that the focal buying firm sources sustainable products. At the same time, firms are also confronted with incentives to overreport their upstream sustainability performance, which is commonly referred to as greenwashing (GW). However, GW, as unethical behaviour, and green supplier championing (GSC), as ethical behaviour, can coexist in organisations. Their respective presence is said to be strongly influenced by a firm’s ethical culture. Thus, we investigate the effects of senior management leadership (informal ethical culture) and incentives (formal ethical culture) on GSC and GW. Rather than considering mutually exclusive endogeneous variables, we simultaneously investigate the effects of informal and formal culture on GW and GSC. Moreover, we assess their interaction effects. Our analysis consists of a path analytic model based on data from 118 European firms. We found support for four of our seven hypotheses. These findings provide managerial implications as to how GSC can be promoted without simultaneously causing GW. This research illustrates how ethical culture theory can be applied and adopted to responsible supplier management.