The effects of sustainability practices on the performance of risk management and purchasing

Abstract

Companies need special purchasing and supply management practices to ensure that their supply chains are sustainable and transparent. However, sustainability practices do not only serve the purpose of securing sustainability, but also help companies to avoid economic and reputational damage and risks. This paper studies the influence of sustainable purchasing practices on the risk management performance and purchasing performance by using quantitative survey data collected from 111 Finnish companies. The direct and indirect relationships between the concepts are examined using a partial least squares methodology. The results show that the use of sustainable purchasing practices improves the purchasing performance of businesses. Firms that invest in sustainability management in their purchasing will more likely have better performance in their purchasing and supply management. It was also found that sustainable purchasing practices improve reputational and operational risk management performance, which indicates that sustainability practices are significant in risk management in general, not only in relation to sustainability.