Abstract
A burgeoning stream of sustainability research explores the role of companies’ top management team (TMT) characteristics in corporate sustainability efforts, while another stream investigates the effect of a company’s supply chain position on its likelihood of engaging in sustainability. This study shows the importance of integrating the two research streams by demonstrating that supply chain position moderates the relationship between TMT characteristics and sustainability and thus establishes boundary conditions for this relationship. By matching 758 corporate sustainability initiatives with control observations, our results show that the size of the top executive team and the average age of its members, two well-known predictors of corporate sustainability, are distinctly moderated by supply chain position. While business-to-business (B2B) companies are less likely to report a sustainability initiative compared to business-to-consumer (B2C) organizations, we found that B2B TMT size has a greater positive effect on sustainability initiative likelihood than B2C TMT size. Conversely, average B2C TMT age has greater predictive power in explaining sustainability initiative likelihood than average B2B TMT age. The implications of these findings in advancing corporate sustainability and organizational change are discussed.
Highlights
Scientific advances in our understanding of the relationship between climate change and the global economy over the past decade have created new roles and responsibilities for business, as well as a market environment in which sustainable practices are no longer optional [1,2]
The goal of this study is to bring together two historically separate streams in sustainability literature: one stream investigating the organizational characteristics associated with sustainability activities, and another focused on supply chain position in the context of sustainability
We show that the effect of top management team (TMT) size on the likelihood of a sustainability initiative announcement is more pronounced for B2B companies than it is for B2C organizations, while the opposite is true for average TMT age
Summary
Scientific advances in our understanding of the relationship between climate change and the global economy over the past decade have created new roles and responsibilities for business, as well as a market environment in which sustainable practices are no longer optional [1,2]. The growth of corporate sustainability initiatives has been driven by increasing pressure from stakeholders for whom companies reactively reducing the risk of reputational damage is not enough—instead, demands for proactive action on the part of businesses to establish themselves as “good citizens” are growing [4]. Based on the upper echelons theory, which states that organizational outcomes can at least partially be explained by top management teams’ (TMT) characteristics, research in both business ethics and strategy has found a significant effect of company leadership on corporate sustainability initiatives and performance [5,6]. Chain liability builds on attribution theory to show that in contrast to B2B companies, B2C firms stand to experience both greater performance gains from sustainability efforts and higher risk of reputational damage because of increased stakeholder visibility and pressure [12]. Suppliers are faced with a double bind, experiencing increased demand for sustainability from their B2C partners seeking to guard themselves against having to take the blame for a supplier’s misstep, and having to reconcile with the prospect of little to no performance gains [11]
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