Sustainability and the False Sense of Legitimacy: How Institutional Distance Augments Risk in Global Supply Chains

Journal of Business Logistics

43 Pages Posted: 18 Sep 2015 Last revised: 21 Jul 2016

See all articles by Christian Busse

Christian Busse

Carl von Ossietzky University of Oldenburg

Andrew Kach

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC)

Christoph Bode

University of Mannheim - Business School

Date Written: June 10, 2016

Abstract

Supply chain scholars have begun to recognize the institutional influences on supply chains, yet scarce attention has been directed towards the fact that global supply chains often comprise different institutions. This omission represents a severe shortcoming because the understanding of what constitutes legitimate behavior may vary substantially between contexts. This conceptual study employs the institutional distance concept to the case of supply chain sustainability risks. It focuses initially on paradoxical situations in which both the buyer and the supplier fully comply with stakeholder expectations within their own legitimacy contexts, yet the buyer’s stakeholders still withdraw legitimacy from and harm the buyer. The study analyzes the causal microfoundations of how and why such paradoxical risks manifest, drawing on stakeholder theory and institutional theory. The analysis shows that accounting for the differing legitimacy contexts is necessary for explaining these risks, thereby substantiating our initial claim that institutional distance matters to global supply chains. The study yields important implications for corporate practice in that it highlights an inherent trade-off in many global supply chains.

Keywords: institutional distance, legitimacy context, stakeholder, supply chain risk, sustainability

JEL Classification: M10, M11, M14

Suggested Citation

Busse, Christian and Kach, Andrew and Bode, Christoph, Sustainability and the False Sense of Legitimacy: How Institutional Distance Augments Risk in Global Supply Chains (June 10, 2016). Journal of Business Logistics, Available at SSRN: https://ssrn.com/abstract=2662454 or http://dx.doi.org/10.2139/ssrn.2662454

Christian Busse (Contact Author)

Carl von Ossietzky University of Oldenburg ( email )

Ammerländer Heerstr. 114-118
Oldenburg, D-26129
Germany

Andrew Kach

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )

ETH-Zentrum
Zurich, CH-8092
United States

Christoph Bode

University of Mannheim - Business School ( email )

L5, 5
Mannheim, 68131
Germany
+49 621 181 1659 (Phone)
+49 621 181 1653 (Fax)

HOME PAGE: http://procurement.bwl.uni-mannheim.de

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
105
Abstract Views
790
rank
318,290
PlumX Metrics