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Greening the Supply Chain: When Is Customer Pressure Effective?

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  • Magali Delmas
  • Ivan Montiel
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    Abstract

    "Suppliers face increasing pressure from their customers to improve their environmental performance. When firms downstream in the supply chain seek to achieve such improvements themselves, they frequently request that their suppliers adopt greener practices. This paper investigates the rationale for suppliers to comply with or resist the mandate of their customers to adopt the international environmental management standard ISO 14001 in the North American automotive industry. We argue that the effectiveness of such a mandate will vary according to the characteristics of the relationship between suppliers and customers. We contrast and test hypotheses based on both transaction cost and information theories to suggest that suppliers, whether in a dependent or distant relationship with their customers, have incentives to comply with the requests of their customers but through different mechanisms. Our study analyzed the characteristics of 3,152 automotive suppliers located in the United States, Canada, and Mexico over the 2000-2003 period. Findings indicate that suppliers with highly specialized assets, as well as younger suppliers, suppliers headquartered in Japan, and those reporting to the Toxic Release Inventory, are more likely to respond to their customers' pressures to adopt the certified management standard ISO 14001." Copyright (c) 2009, The Author(s) Journal Compilation (c) 2009 Wiley Periodicals, Inc..

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

    Volume (Year): 18 (2009)
    Issue (Month): 1 (03)
    Pages: 171-201

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    Handle: RePEc:bla:jemstr:v:18:y:2009:i:1:p:171-201

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    Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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    Cited by:
    1. Sarkis, Joseph & Zhu, Qinghua & Lai, Kee-hung, 2011. "An organizational theoretic review of green supply chain management literature," International Journal of Production Economics, Elsevier, Elsevier, vol. 130(1), pages 1-15, March.
    2. Ivan Montiel & Bryan Husted, 2009. "The Adoption of Voluntary Environmental Management Programs in Mexico: First Movers as Institutional Entrepreneurs," Journal of Business Ethics, Springer, Springer, vol. 88(2), pages 349-363, September.
    3. Goedhuys, Micheline & Sleuwaegen, Leo, 2013. "The Impact of International Standards Certification on the Performance of Firms in Less Developed Countries," World Development, Elsevier, vol. 47(C), pages 87-101.
    4. Susan A. Kayser & John W. Maxwell & Michael W. Toffel, 2014. "Supply Chain Screening Without Certification: The Critical Role of Stakeholder Pressure," Harvard Business School Working Papers 15-009, Harvard Business School.
    5. Dayna Simpson & Damien Power & Robert Klassen, 2012. "When One Size Does Not Fit All: A Problem of Fit Rather than Failure for Voluntary Management Standards," Journal of Business Ethics, Springer, Springer, vol. 110(1), pages 85-95, September.
    6. Grimm, Jörg H. & Hofstetter, Joerg S. & Sarkis, Joseph, 2014. "Critical factors for sub-supplier management: A sustainable food supply chains perspective," International Journal of Production Economics, Elsevier, Elsevier, vol. 152(C), pages 159-173.
    7. Chonnikarn Fern Jira & Michael W. Toffel, 2011. "Engaging Supply Chains in Climate Change," Harvard Business School Working Papers 12-026, Harvard Business School, revised Oct 2012.
    8. Anil R. Doshi & Glen W.S. Dowell & Michael W. Toffel, 2011. "How Firms Respond to Mandatory Information Disclosure," Harvard Business School Working Papers 12-001, Harvard Business School, revised Jun 2012.

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