Managing paradoxical trade-offs: Sustainability and diversification strategies of supply managers

This paper investigates how practicing supply managers make sustainable supplier selection trade-offs, with a focus on the paradoxical tensions between environmental and social sustainability, cost, and supply diversification. Using a discrete choice experiment involving 217 experienced professionals, we explore how managers prioritize and balance cost, geographic diversification, environmental sustainability, and social sustainability. The trade-off alternatives in our experiment are based on empirically observed supplier evaluations from a global FMCG firm. Our findings show that managers resist selecting new suppliers with inferior sustainability profiles and have a willingness to pay a modest premium for improved environmental and social performance. These tendencies are more pronounced among lower-level managers. Managers also place higher value on environmental performance than social performance and tend to view these two sustainability dimensions as substitutes. From a risk management perspective, supply diversification is particularly valued, even when it involves a trade-off with environmental performance. However, managers are hesitant to add suppliers within the same country unless environmental benefits are evident. Overall, this study provides new insights into how managers value and reconcile competing priorities in supplier selection, offering implications for advancing sustainability and resilience in supply chains.