Sustainable supply chain and company performance

Abstract

Purpose– This paper aims to investigate the link between a sustainable supply chain and companies’ financial performance (FP) and provide empirical evidence about the relationship between these two constructs. This link is an important, but still unclear, subject.Design/methodology/approach– Multivariate measures of sustainable supply chain performance and companies’ FP are used for Granger causality tests on a large, diverse sample of 3,900 companies in a time frame of eight years (2004-2011).Findings– Results indicate general bidirectional causality between sustainable supply chain performance and companies’ margins and revenue. However, the link between firms’ profitability and sustainable supply chain performance is unidirectional. In addition, the recent financial crisis altered this link between the studied constructs. Finally, a wide diversity in relationship patterns between sustainable supply chain performance and companies’ FP emerges when the full sample is divided into different geographical regions and economic sectors as specified by the Global Industry Classification Standard system.Practical implications– This research makes recommendations for improving several processes, such as stakeholder evaluation of the sustainable supply chain performance of companies worldwide and manager testing of environmental policy outcomes.Originality/value– Building on the mostly qualitative literature on sustainable supply chain performance and companies’ FP, this research provides quantitative evidence of the gaps between these constructs. This research contributes to the discussions of supply chain management, environmental practices and the drivers of companies’ environmental and financial success.