Legitimacy and transparency in dyadic supply chains: Does competition intensity matter?

Abstract

Working only with suppliers that meet certain social and environmental standards has become a new norm in the selection of business partners for many firms, which encourages suppliers to become more transparent to gain a competitive advantage. This study investigates whether buyer legitimacy is associated with supply chain transparency from an environmental, social, and governance (ESG) perspective. Using a dataset of 605 dyadic relationships from Chinese listed firms for the period 2011–2019, we empirically examine our conceptual framework using hierarchical linear regression models. We demonstrate that buyer legitimacy is positively associated with supplier ESG transparency in dyadic supply chains. We further find that the supplier's competition intensity negatively moderates the positive relationship between buyer legitimacy and supplier ESG transparency. Overall, our findings contribute to a better understanding of organizational legitimacy and the buyer–supplier relationship and offer practical guidelines for enhancing supply chain transparency.