How companies influence suppliers to adopt greener practices

Companies often want their suppliers to be more environmentally responsible. Sophie Song, Assistant Professor of Supply Chain Management for the Schmidthorst College of Business, along with researchers Prem Singh Mukandwal and Lohithaksha Guntuka show that suppliers learn green practices by watching their buyers, not just by being told what to do. 

The study looked at 678 buyer-supplier pairs in manufacturing. The team found that a buyer's strong environmental performance alone does not directly improve supplier behavior. However, when suppliers depend heavily on a buyer, they are more likely to adopt that buyer's green practices. 

The research introduces the concept of supply chain contagion. This means environmental behaviors can spread through business relationships without formal rules or contracts. Suppliers observe and copy buyers they depend on, especially when those buyers show strong environmental leadership. 

The study also found that buyers with ESG-related reputational risks struggle to inspire their suppliers. When a buyer has reputation problems from past environmental violations, the positive influence weakens. This means companies cannot promote sustainability beyond their own operations if their environmental credibility is damaged. 

These findings matter because supply chains account for a large portion of environmental harm. The research suggests that companies can reduce environmental damage across entire networks by being credible role models rather than relying only on enforcement. 

Supplier environmental stewardship: Unraveling buyer-supplier dynamics through Social Contagion The… is available via ScienceDirect.