Greening the Supply Chain: When is Customer Pressure Effective?

31 Pages Posted: 27 Apr 2009

See all articles by Magali A. Delmas

Magali A. Delmas

University of California, Los Angeles (UCLA)

Ivan Montiel

affiliation not provided to SSRN

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.

Suggested Citation

Delmas, Magali A. and Montiel, Ivan, Greening the Supply Chain: When is Customer Pressure Effective?. Journal of Economics & Management Strategy, Vol. 18, Issue 1, pp. 171-201, Spring 2009. Available at SSRN: https://ssrn.com/abstract=1394705 or http://dx.doi.org/10.1111/j.1530-9134.2009.00211.x

Magali A. Delmas (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Ivan Montiel

affiliation not provided to SSRN

No Address Available

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