Firm Termination of Irresponsible Suppliers: The Role of Severity of Irresponsibility

Le résumé fourni par la source

Our paper explores whether and under which conditions a firm terminates its relationship with an irresponsible supplier in its global supply chain. Integrating the systems perspective in the context of sustainability with the literature on organizational aspirations, we posit that firms use nuanced decision-making to assess the cost-benefit ramifications of maintaining relationships with irresponsible suppliers while considering the expectations of their stakeholders. We hypothesize a non-monotonic relationship between supplier irresponsibility and firm termination of the relationship, with firm tolerance for intermediate severity of irresponsibility. We further propose that firm financial and sustainability underperformance relative to industry peers act as moderators, prompting firms to distance themselves from irresponsible suppliers, at both intermediate and high severity.

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