The Influence of Supply Network Structure on Firm Sustainability Performance

Abstract

This study investigates the structural properties of supply network and examines the relationship between a firm’s degree centrality and local density and its sustainability performance. Furthermore, we examine the potential moderating effects of sustainability capability and a firm’s closeness centrality on sustainability performance. The hypotheses were tested using a secondary supply network dataset consisting of 18943 companies and 103,632 contractual links between them from the automotive industry. We use social network analysis approach for calculating each structural property. Upon that, we also retrieved the sustainability performance data using Eikon database and 304 companies were returned for the further regression analysis. Our results unravel that local density of a firm’s supply network has a significant relationship with its sustainability performance. The results also indicate that sustainability capability weakens the relationship between a firm’s upstream supplier degree centrality on sustainability performance. Moreover, the association between a firm’s local density and sustainability performance may be strengthened by the firm’s closeness centrality. In this light, this study contributes to supply chain research and sustainability management by accounting for the embedded nature of visible and often-invisible connectivity patterns in supply networks and showing how these structural properties influence the embedded firms to achieve their sustainability performance.