Master Thesis Supply Chain Management
The influence of buyer power use on achieving supplier sustainability
compliance within different buyer-supplier relationships
Multiple case-study research in the food, automotive and electronics industry.
By
Lauri Boon
University of Groningen
Faculty of Economics and Business
MSc Supply Chain Management
June 2020
E-mail: l.a.boon@student.rug.nl
Student number – 3854795
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Abstract
Sustainability is a defining issue of our time and global supply chains (SC) play a significant role in the ecological degradation. Consequently, they have great potential to make improvements regarding sustainability. Moreover, focal firms orchestrating global SCs generally face substantial challenges in managing their supplier relations to accommodate changes driven by sustainability. Therefore, these firms often need to exert power to ensure compliance to their requirements. Previous research has shown that buyer power use is effective to achieve compliance on the short-term. However, power use may damage the quality of collaborative buyer-supplier relationship (BSR). Therefore, this research intends to increase understanding on how buyer power influences supplier compliance to their requirements and analyses the moderating effect of the relationship quality (RQ). Thus, the BSR is the unit of analyse of this research. A multiple case-study research in the food, automotive and electronics industry provided comprehensive insights in the effect and use of buyer power in the context of sustainable supply chain management (SSCM). The findings of this research demonstrated that the SSCM practice provides an explanation for previously inconsistent finding regarding the effect of buyer power on SSC in different BSRs. Furthermore, this study demonstrated that the effect of non-mediated power on SSC is strengthened by high RQ, while the effect of mediated power on SSC is weakened by high RQ. Moreover, this research shows an interaction effect between mediated and non-mediated power and proposes that high non-mediated power reduces the negative effects of mediated power and enhances the positive effects of mediated power. Lastly, the findings suggest that long-term relationships enable development of non-mediated power, which influences supplier’s commitment to comply.
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Table of contents
1. Introduction ... 6
2. Theoretical background... 9
2.1 Sustainable supply chain management ... 9
2.2 Buyer power in SSCM ... 11
2.3 Buyer-supplier relationships ... 13
2.4 Conceptual framework ... 14
3. Methodology ... 15
3.1 Research design and context ... 15
3.2 Case selection ... 16 3.3 Data collection ... 18 3.3.1 Primary data ... 18 3.3.2 Secondary data ... 20 3.4 Data analysis ... 21 4. Findings ... 22 4.1 Sustainability commitment ... 22 4.1.1 Sustainability awareness ... 22 4.1.2 Macro-economic pressures ... 25 4.2 Supplier measurement ... 27
4.2.1 Supplier certificates and assessment ... 27
4.2.2 Supplier Code of Conduct... 28
4.2.3 Supplier compliance auditing ... 29
4.2.4 KPIs measurement and monitoring ... 30
4.3 Supply chain learning ... 32
4.3.1 Supplier involvement ... 32
4.3.2 Mutual understanding ... 32
4.3.3 Joint development ... 33
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5.1 Buyer power in SSCM ... 36
5.2 Relationship strategies ... 37
5.3 Relationship quality ... 37
5.4 Interaction between mediated and non-mediated power ... 39
5.5 Informational power ... 40
5.6 Theoretical perspectives... 40
6. Conclusion ... 42
6.1 Theoretical contribution and future research ... 42
6.2 Managerial contribution ... 44
6.3 Limitations... 44
References ... 45
Appendix ... 51
Appendix I - Case description ... 51
Appendix IIa – Interview protocol selected cases ... 54
Appendix IIb – Interview protocol additional cases ... 56
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Abbreviations
SC : Supply chain
SCM : Supply chain management
SSCM : Sustainable supply chain management (S)CoC : (Supplier) Code of conduct
BSR : Buyer-supplier relationship SSC : Supplier sustainability compliance RQ : Relationship quality
SQ : Sub-question
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1. Introduction
Climate change is a defining issue of our time because the impacts are global in scope and exceptional in scale. Direct or indirect human activities have altered the state of the climate and consequently compromise the ability of future generations to meet their needs (“Sustainability for all,” 2020). On Earth day 2016, a total of 175 world leaders signed the Paris Agreement and confirmed to combat climate change (“United Nations,” 2020). Aside from governments, global supply chains (SC) play a significant role in the ecological degradation and consequently have great potential to make improvements regarding sustainability (Matthews et al., 2016). This enabled the shift from supply chain management (SCM) to sustainable supply chain management (SSCM), which causes organisations to rethink their supplier-management strategies (Touboulic et al., 2014). Largely because sustainability issues cannot be the responsibility of a single firm in the SC (Chen & Chen, 2019). Consequently, focal organisations face pressure from multiple groups of stakeholders (Pagell & Wu, 2009; Touboulic et al., 2014). Furthermore, focal firms orchestrating global SCs generally face substantial challenges in managing their supplier relations to accommodate changes driven by sustainability (Touboulic et al., 2014). Chen & Chen (2019) highlight that the sustainability performance of the focal firm is largely dependent on the supplier’s motivation to incorporate the focal firm’s sustainability standards and practices. However, the suppliers motivation to engage in sustainable practises is often lacking because of the absence of competitive opportunities, lack of stakeholder pressure or awareness about sustainability issues (Foerstl et al., 2015; Jia et al., 2018). These factors impede the transition towards SC sustainability (Matthews et al., 2016).
7 This paper will explore the influence of buyer power on SSC, within different BSRs. This study adopts the typology of mediated and non-mediated power, which has been widely applied in SCM research (e.g. Benton & Maloni, 2005; Liu et al., 2014; Zhao et al., 2008). Both power sources can have different effects in various types of relationship (Reimann & Ketchen, 2017). Additionally, mediated and non-mediated power have significant impact on other outcomes, such as relationship commitment and satisfaction (Brito & Miguel, 2017; Chae et al., 2017; Nyaga et al., 2013), which influence the BSR quality (Handley & Benton, 2012). Mediated power is proven effective to achieve short-term benefits (Pulles et al., 2014) or a certain level of compliance to SSCM practices (Handley & Benton, 2012; Touboulic et al., 2014). However, the use of mediated power may have negative consequences for the quality of the BSR (Singh & Power, 2009) and supplier’s engagement in sustainability practices (Meqdadi et al., 2018). By contrast, the effect of non-mediated power motivates the supplier to commit to the relationship (Chae et al., 2017), which enhances the quality of the BSR (Handley & Benton, 2012; Reimann & Ketchen, 2017) and increase engagement in sustainability practices (Meqdadi et al., 2018). Furthermore, a dominant buyer could become increasingly dependent on its suppliers in their efforts to increase SC sustainability (Touboulic et al., 2014), as sustainability cannot be the responsibility of a single firm in the SC (Chen & Chen, 2019). This emphasises the complexity of buyer power in the context of SSCM.
There has been quite some research on the consequences of power on the BSR (Pulles et al., 2014; Reimann & Ketchen, 2017; Zhao et al., 2008), as well as sustainability practices and compliance to sustainability practices in the BSR (Chen & Chen, 2019; Meqdadi et al., 2017, 2018). Nevertheless, several authors highlight the need to further examine the role of power (Boons et al., 2012; Chae et al., 2017; Pulles et al., 2014) and its impact on implementing sustainability in the SC (Meqdadi et al., 2017; Touboulic et al., 2014). Therefore, this research will provide a more in-depth understanding on how the effect of non-mediated power and use of mediated power influences SSC. Besides, this research examines how the buyer’s approach is affected by the relationship quality. The following research question is proposed: ‘’How does buyer power influence supplier sustainability compliance within different buyer-supplier relationships?’’. To answer the research question, three sub-questions (SQ) are formulated: (1) Which sustainability practices are used by buyers to achieve SSCM? (2) How does buyer power influence or impact supplier compliance to these sustainability practices? (3) How does the relationship quality influence the impact, effect or use of buyer power on achieving SSC?
8 effect of buyer power on SSC (Benton & Maloni, 2005; Clauß, 2012). Moreover, RQ consists of, among other, information sharing and goal congruence (Benton & Maloni, 2005; Nyaga et al., 2013). Thus, the moderating effect of information sharing and goal congruence are examined, as both aspects are necessities for effective SC management (Benton & Maloni, 2005). The main motivation is that buyers may restrain from exercising mediated power, while they rely on non-mediated power in BSRs characterised by high levels of information sharing and goal congruence.
The aim of this research is to obtain in-depth insights on how the effect or use of buyer power influences SSC, within different BSRs. The inconsistent findings of previous studies and the need to examine the influence of buyer power in different contexts indicate that an exploratory approach is appropriate. Therefore, a multiple case-study is chosen as the empirical method of this research. This method has the potential of developing in-depth understanding on the phenomena of interest (Yin, 2014). Multiple case-study allows for comparisons that clarify whether an emergent finding is particular to a single case or consistently replicated by several cases (Eisenhardt, 1991). Additionally, a case study method is flexible due to the varying data collection methods. Rich data can be obtained through interviews, observation and document analysis (Huq et al., 2016). Data is collected through semi-structured interviews with key managers on e.g. sustainability and supplier management, and through document analysis of the focal company and the suppliers (e.g. sustainability reports, CoC, audit and annual reports).
Recent studies (Hong et al., 2018; Huang et al., 2015) proved that the implementation of SSCM practices differs by industrial sector and firm size. Firms in specific industries usually dedicate more resources to sustainability practices (Golicic & Smith, 2013). Therefore, the empirical setting of this research consists of multiple large size (e.g. in terms of turnover) firms from three different industries. This enables investigation of the constructs of interest in comparable contexts, but in different settings (Eisenhardt & Graebner, 2007). The cases are selected from the food, automotive and electronics industry. These firms experience increased demands for sustainable products from governments, customers, suppliers, end-consumers etc. Furthermore, the selected focal firms are part of global SCs and, therefore, face social and environmental challenges (Pullman et al., 2009). Hence, these firms have great potential to make improvements regarding sustainability (Matthews et al., 2016). Moreover, these firms are highly visible and global brands that (indirectly) experience pressures to become more sustainable. This increases importance to engage suppliers in their SSCM practices (Foerstl et al., 2015), as focal firms will possibly be held accountable for their suppliers environmental liabilities (Krause et al., 2009). Consequently, this has implications for their supplier-management strategies.
9 point of view, RDT is often used as the theoretical perspective as it focusses on control over resources through exertion of mediated power (Chen, 2016). RDT is the dominant view to describe power formation in inter-organisational relations (Ireland & Webb, 2007; Touboulic et al., 2014). RDT indicates that a more powerful organisation may use its power by restraining or allowing access to its resources, in exchange for beneficial terms (Reimann & Ketchen, 2017). From a non-economic point of view, SET is often used as the theoretical perspective as it focusses on social and cultural control through exertion of non-mediated power. SET indicates that power use may be detrimental as it may damage the relationship between organisations. This theory indicates that relationship are based on social norms (i.e. reciprocity and fairness) as well as economic exchanges (Nyaga et al., 2013).
This research contributes to literature as it uses RDT and SET simultaneously to increase understanding on buyer power and its influence on SSC, in different BSRs. Additionally, current studies on SSCM has taken either buyer’s or supplier’s perspective. This study takes a dyadic perspective to provide a more comprehensive understanding about the use and effect of power in BSRs. This is important as scholars emphasised an overall absence of supplier perspectives in SCM research. A managerial contribution of this research is to provide mangers with additional insights on how power influences SSC, whilst considering the RQ.
The remaining sections of this paper are structured as follows. First, the existing literature is examined in the theoretical background section to increase understanding on the research topic. This section ends with an overview of the research framework. Second, the methodology of this research will be elaborated. Hereafter, the findings are presented and discussed and the main conclusions, suggestions for further research and limitations are elaborated.
2. Theoretical background
2.1 Sustainable supply chain management
10 indicates that the chain is sustainable. Furthermore, the focus is on the managerial actions to improve and maintain sustainability (Pagell & Wu, 2009). SSCM can be defined as: “The strategic achievement and integration of an organization’s social, environmental, and economic goals through the systemic coordination of key inter-organizational business processes to improve the long-term economic performance of the individual company and its value network” (Carter & Rogers, 2008, p. 368). This definition emphasises an inter-organisational focus, which is of critical importance as it recognises the roles of and interdependencies among stakeholders within and beyond the SC.
There is wide consensus that fundamental changes are needed, as we face tremendous environmental and social challenges. Pressures from governments, customers, end-consumers and other stakeholder groups drive firms to incorporate sustainability practices into their SC. However, these pressures only lead to SSCM if both individual firms and the SC contribute the necessary resources (Gold et al., 2010). Since the amount of pressure varies for upstream and downstream firms in the SC (Foerstl et al., 2015; Gold & Schleper, 2017), the transition towards SC sustainability is often difficult to accomplish (Matthews et al., 2016). This exposes focal firms, especially brand-owning companies, to a great risk (Seuring & Müller, 2008), as stakeholders will possibly also accuse the focal firm for negative impact that result from their suppliers environmental liabilities (Krause et al., 2009). Hence, focal firms’ sustainability is dependent on their supplier relations to successfully spread sustainability initiatives throughout the SC. Therefore, focal firms need to reconsider their sustainability strategies within the BSR, to achieve effective SSC (Meqdadi et al., 2017).
11 Tulder, 2017). Buyers rely on non-mediated power bases to motivate the supplier’s long-term commitment to sustainability standards (Touboulic et al., 2014; van Lakerveld & van Tulder, 2017). Firms often start with a compliance approach and follow with a collaboration approach (Chen & Chen, 2019; Jia et al., 2018), resulting in SC relations that illustrate a combination of both compliance and collaborative mechanisms (Touboulic & Walker, 2015).
2.2 Buyer power in SSCM
Power is a central, yet complex phenomenon in SC relationships (Reimann & Ketchen, 2017). Buyer power is a resource to demand supplier compliance to sustainability requirements (Touboulic et al., 2014) and can be exerted through mediated (coercive and reward) power and non-mediated (expert, referent and legitimate) power. Mediated power involves a buyer’s deliberate attempt to generate specific actions or desired behaviour from their supplier (Chae et al., 2017; Chen & Chen, 2019). Reward power enhances the supplier’s relationship commitment (Brito & Miguel, 2017; Zhao et al., 2008), by providing suppliers with a sense of competence. This motivates suppliers to engage in a long-term relationship with the buyer (Chae et al., 2017). Moreover, buyers can exert reward power to provide their compliant suppliers with positive incentives (Chen & Chen, 2019). By contrast, buyers use coercive power to punish or pressure suppliers to comply with the buyer’s requirements (Chae et al., 2017). Furthermore, coercive power restricts relationship commitment (Chae et al., 2017) and has a negative impact on collaborative relationships (Meqdadi et al., 2018; Nyaga et al., 2013; Zhao et al., 2008). Chen & Chen (2019) elaborated on non-mediated power, which can stimulate the intrinsic motivation of the supplier to commit to the relationship. As supplier chooses to commit to the relationship, they perceive their actions are beyond the buyers control (Chae et al., 2017). Furthermore, the effect of non-mediated power enhances cooperation and collaborative behaviour, which increases the quality of the relationship (Nyaga et al., 2013). Moreover, each component of non-mediated power may have varying degrees of impact on intrinsic motivation for supplier relationship commitment (Chae et al., 2017).
12 Most BSRs occur in the context of power asymmetry (Nyaga et al., 2013). In addition to information sharing and goal congruence, the quality of the BSRs is determined by power asymmetry (Benton & Maloni, 2005; Cox, 2001; Zaheer & Trkman, 2017). The asymmetrical distribution of power among partners exists because of differences in dependence, firm size, market position, switching cost etc. (Belaya et al., 2009; Nyaga et al., 2013). Cox (2001) highlighted that SSCM can only be properly implemented in the buyer-dominance/supplier-dependence relationship or the interdependence relationship (Table 1). In a buyer-dominance/supplier-dependence relationship the buyer is in a position of structural dominance over its suppliers. Hence, the supplier is highly dependent on the buyer for revenue and has limited alternatives. Consequently, the market is characterised by few buyers and many suppliers, which indicates that the buyer/supplier switching costs are low/high. Furthermore, the buyer, as an economic agent, can leverage its power over the supplier (Cox, 2001). Therefore, the continuation of the relationship mostly depends on the suppliers ability to comply to the exchange terms (Tangpong et al., 2015). This type of relationship allows buyers to apply the compliance approach: buyers determine the rules and impose their sustainability approach on suppliers (van Lakerveld & van Tulder, 2017). Thus, this may have implication for the effectiveness of information sharing and goal congruence. Furthermore, proper implementation of SSCM can be accomplished through an interdependence relationship. Both partners have few suitable alternative exchange partner and are increasingly dependent e.g. to obtain critical resources or increased differentiation (Cox, 2001). This increases the mutual relationship commitment (Tangpong et al., 2015). This type of relationship illustrates similarities with the collaboration approach, as partners strive for a win-win situation through collaboration (Tangpong et al., 2015). Consequently, this may have implication for the effectiveness of information sharing and goal congruence.
Relationship type Dependence Switching cost Information
sharing Goal congruence Buyer dominance, supplier dependence Buyer: low Supplier: high Buyer: low
Supplier: high Willingly
Lack of goal agreement
Interdependence Buyer: high
Supplier: high
Buyer: high
Supplier: high Not willingly Goal agreement Table 1: Relationship types and elements. Adapted from (Benton & Maloni, 2005; Cox, 2001; Tangpong et al.,
2015; Zaheer & Trkman, 2017).
13 suppliers to access and control environmental and social resources (Touboulic et al., 2014). This indicates that the power balance may shift during implementation of SSCM practices and emphasises the need to explore buyer power in SSCM.
2.3 Buyer-supplier relationships
Buyers and suppliers enter in relationships to obtain strategic resources and increased operational performance (Meqdadi et al., 2017). Organisations utilise other organisations’ capabilities and resources to create value (Tanskanen, 2015) and become increasingly dependent on one another for resources and supply. Furthermore, SSCM requires the collaboration of all stakeholders, including suppliers (Benton & Maloni, 2005; Clauß, 2012). Prior research on sustainability in BSRs emphasised collaboration between SC partners to facilitate sustainability initiatives (Touboulic & Walker, 2015). However, collaborative relationships are complex and cannot be developed easily (Touboulic & Walker, 2015). Therefore, this research examines the moderating effect of RQ, which influences SC partner’s commitment to engage in collaborative behaviour (Nyaga et al., 2013). RQ is a mechanism to distinguish BSRs along a continuum from low to high RQ. Moreover, it evaluate various elements such as trust, communication, information sharing, dependence and goal congruence (Benton & Maloni, 2005; Nyaga et al., 2013; Nyaga & Whipple, 2011). High RQ is characterised by high levels of information sharing and goal congruence. These aspects are necessities for effective SSCM (Benton & Maloni, 2005; Cox, 2001) and important in achieving SC collaboration (Cao et al., 2010).
Van Lakerveld & van Tulder (2017) highlight that the exchange of relevant sustainability information is an integral part of SSCM processes. Furthermore, information sharing increases the transparency on sustainability operations (Jia et al., 2018), which is necessary to prevent or detect non-compliance (Egels-Zandén, 2014). Moreover, information sharing increases organisational performance (Baihaqi & Sohal, 2013), as it provides a basis for action and allows companies to better coordinate activities (Wang et al., 2016). Moreover, goal congruence is the degree of goal agreement between SC partners. SC partners either feel their objectives coincide with those of the SC, or experience a lack of goal agreement (Cao et al., 2010). Goal congruence increases the willingness to commit to these goals (Benton & Maloni, 2005; Meqdadi et al., 2017) and the motivation to share resources (Yan & Dooley, 2014). Firms that plan and execute common goals achieve more benefits compared to firms that work independently (Cao et al., 2010). Goal congruence requires a degree of mutual understanding of firm practises (Cao et al., 2010). The mutual understanding on firm practises increases if firms clarify their expectations on the SSCM vision, as well as key business processes underpinning the vision (Cao et al., 2010).
14 committed. Similarly, suppliers that must comply to the buyer’s sustainability goals might feel resistant if they do not share the same sustainability vision. Furthermore, buyers that use their powerful position to enhance sustainability, without goal agreement, might damage the RQ (Touboulic et al., 2014). Hence, the effectiveness of information sharing and goal congruence depends on the willingness (Benton & Maloni, 2005; Zaheer & Trkman, 2017) and increases if the benefits are equally distributed (Baihaqi & Sohal, 2013). Thus, this indicates that buyers may restrain from exercising mediated power, while they rely of non-mediated power, in BSRs characterised by high levels of information sharing and goal congruence. Therefore, it is necessary to examine the influence of information sharing and goal congruence on the effectiveness of the buyers SSCM approach.
2.4 Conceptual framework
Altogether, it becomes clear that research on buyer power and the impact on SSC are of crucial importance in the field of SSCM. Prior studies have provided inconsistent results, which indicates the necessity to further investigate these topics and their influences. Reimann & Ketchen (2017) emphasise that scholars should examine how to effectively use power within different situations, rather than investigating the direct effect of isolated types of power. Therefore, this research will examine how the effect or use of buyer power influences SSC, in different types of BSRs. Moreover, the RQ is used to distinguish different types of relationships. Specifically, this research examines what sustainability practices are used by buyers to achieve SSCM and if their power use or effect influences the impact on SSC to these sustainability practices. Additionally, this paper examines if the RQ, in term of information sharing and goal congruence, influences the use or effect of buyer power (Figure 1).
Figure 1: Research framework.
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Source of power Theoretical
perspective Research focus Means of exerting power
Economic based RDT Control over resources
Exercise power through economic means e.g. mediated
power
Non-economic based SET Social and cultural control
Exercise of power through economic means e.g.
non-mediated power Table 2: Sources of power and theoretical perspectives. Adapted from Chen (2016).
RDT is the dominant view to describe power formation in inter-organisational relations (Ireland & Webb, 2007; Touboulic et al., 2014). A powerful organisation may use its power by restraining or allowing access to its resources, in exchange for beneficial terms (Reimann & Ketchen, 2017). The control of resources is a determinant for inter-organisational power (Yeung et al., 2009). RDT considers organisations as interdependent entities, as one entity cannot control all resources that are necessary to survive, develop and be competitive in the changing business environment (Yeung et al., 2009). Furthermore, sustainability issues cannot be the responsibility of a single entity in the SC (Chen & Chen, 2019) and focal firms that simulate suppliers to comply to sustainability practises become increasingly dependent on their suppliers engagement in sustainability practises (Touboulic et al., 2014). Therefore, RDT can help explain the buyers use of mediated power.
SET indicates that relationship are based on social norms (i.e. reciprocity and fairness) as well as economic exchanges (Nyaga et al., 2013). From this perspective, trust and commitment are at the base of a successful collaborative relationship (Chen et al., 2016; Morgan & Hunt, 1994; Narayanan et al., 2015). In a collaborative BSR the more powerful organisation is careful in exerting power, as this can damage the level of trust and commitment in the relationship. Hence, the argument that power use may damage the relationship between firms is often based on SET (Reimann & Ketchen, 2017). SET suggests organisations try to avoid punishment and seek rewards within their relationships. Therefore, SET can help explain the effect of buyer non-mediated power.
3. Methodology
3.1 Research design and context
16 provides more in-depth insights and enables examination of phenomena in their real-life setting (Yin, 2014). Additionally, multiple case-study provides a better understanding on the phenomena of interest than single case-study, as it allows for comparisons that clarify whether an emergent finding is particular to a single case or can be consistently replicated by several cases (Eisenhardt, 1991). This increases the external validity of findings and avoids researcher bias (Eisenhardt & Graebner, 2007). Furthermore, in general a case study method is flexible due to the varying data collection methods. Rich data can be obtained through interviews, observation and document analysis (Huq et al., 2016). Moreover, buyer firms can use different power sources to influence SSC and buyer power may have unexpected impacts on collaborative BSRs (Nyaga et al., 2013; Reimann & Ketchen, 2017). Therefore, each BSR dyad is the unit of analysis of this research. Hence, the influence of buyer power use or effect on SSC was examined for each BSR, from the buyer and supplier perspective. This context creates opportunities to analyse the effectiveness of buyer power on SSC.
The research context consists of large firms from three industries, as the implementation of SSCM practices are influenced by industry and firm size (Hong et al., 2018; Huang et al., 2015). The research context consists of the food, automotive and electronics industry. The food industry faces a social obligation to create safe and quality products (Tereszczuk & Mroczek, 2014). Moreover, as stakeholders are increasingly aware of the environmental impact of food SCs, the food industry is pressured to provide information on the origins, procurement, safety levels and production methods (Wognum et al., 2011). The automotive industry is responsible to fulfil society’s need for mobility (Koplin et al., 2007). Thus, they have tremendous impact on environmental sustainability. Therefore, they must ensure that the automobile is environmentally sustainable (Mayyas et al., 2012). They are committed to reduce environmental impact of vehicles around the world, through area’s such as sourcing, product design and manufacturing (Koplin et al., 2007; Mayyas et al., 2012). The electronics industry is characterised by products with a short lifecycle, which increases the global volume of electronics waste (Hu & Hsu, 2010; Wittstruck & Teuteberg, 2012). This challenges organisations to increase the resource efficiency, which impacts the environmental and financial performance. Consequently, this results in less reduced materials, energy consumption and production waste (Wittstruck & Teuteberg, 2012). These industries are subject to increased pressures from government, customers, end-consumers and other stakeholders (e.g. non-profit organisations) (Huang et al., 2015), which may have implications for their supplier-management strategies. Consequently, these industries proved to be a rich, dynamic setting for this research and offered potential for important insights into the use and effect of buyer power on SSC.
3.2 Case selection
17 on their accessibility, which represents the willingness of the organisations to cooperate (Maruster & Gijsenberg, 2013). Additionally, the cases are selected from three different industries to examine similarities and differences. Furthermore, a strong indicator for supplier selection is the buyers share in the supplier’s turnover. A high buyer share in the suppliers turnover indicates a larger power imbalance (i.e. buyer power, supplier dependence) than a low buyer share in suppliers turnover (Cox, 2001; Touboulic et al., 2014). This may have implications for the effect or use of buyer power to achieve SSC. Additionally, in the selection of suppliers two criteria are taken into account, which are derived from Table 1: (1) suppliers that infrequently communicate with the buyer and experience a lack of goal agreement and (2) supplier that frequently communicate with the buyer and experience goal agreement. Besides these criteria, the buyer’s recommendations e.g. based on expertise or supplier data, are considered. However, due to privacy regulations and COVID-19, only two suppliers were willing to cooperate. An overview of the selected cases is presented in Table 3 (buyer perspective, cases 1 - 5) and Table 4 (dyad perspective, cases 6 and 7). Furthermore, the case descriptions are included in Appendix I.
Buyer perspective
Case Firm Industry Turnover (in millions) # of suppliers
1 BF1 Food ± €574 ± 2000
2 BF2 Food ± €2000 ± 4500
3 BF3 Food ± £3000 ± 2800
4 BF4 Automotive ± £10 ± 440
5 BF5 Automotive ± €5000 ± 2500
Table 3: Overview of selected cases – buyer perspective.
Dyad perspective
Case Firm Industry Turnover (in millions)
# of
suppliers Case Type of supplier
Turnover (in millions)
6 BF6 Electronics ± $280.000 ± 20.000 S6.1 Components $92 7 BF7 Electronics ± €47 ± 800 S7.1 Mechanical parts €1.5
Table 4: Overview of selected cases – dyad perspective.
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Case Firm Industry Turnover € (in millions) # of suppliers Case Type of supplier Turnover € (in millions)
8 BF8 Food ± 11.000 ± 11.600 S8.1 Dairy farmer 1.1 S8.2 Dairy farmer 1.4 9 BF9 Automotive ± 10.400 ± 1300 S9.1 Interior design 5.16
S9.2 Plastics provider 55.2 Table 5: Overview of additional cases.
To allow for thorough analysis of buyer power in a SSCM context, case selection should ensure that replication logic is followed (Karlsson, 2016). Since the unit of analysis consists of different BSRs, contrasting results are expected (e.g. theoretical replication logic). However, as relationships can be characterised by high/low RQ, similar results are expected as well (e.g. literal replication logic). Furthermore, most buyer firms often start with a compliance approach and follow with a collaboration approach (Chen & Chen, 2019; Jia et al., 2018), which influences the RQ and, therefore, enhances the expectation of literal replication. By using replication logic in the case selection, the external validity of the data is increased (Yin, 2009). Furthermore, nine cases have been selected, which allows for cross-case analysis (Eisenhardt, 1989). Moreover, this increases external validity of the data (Yin, 2009). The use of multiple data sources (i.e. the dyad perspective) increases construct validity of data, as different sources account for triangulation of evidence and protect against researcher bias (Yin, 2009).
3.3 Data collection
3.3.1 Primary data
Semi-structured interviews were conducted with key informants (Table 6, 7 and 8). Semi-structured interviews tend to stimulate discussions, as they provide flexibility to ask for details while ensuring that all research topics are covered (Yin, 2014). This is necessary to obtain in-depth insights on how the effect or use of buyer power influences SSC.To mitigate data collection bias, the selection of informants was based on their knowledge on the research topics and their ability to view these phenomenon from diverse perspectives (Eisenhardt & Graebner, 2007).
Selected cases – Buyer perspective
Case Firm Current function # of years
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Supply Chain Project Lead 9 60 4
5 BF5 Quality and Environment Manager 9 90 7 Specialist Environment Manager 1.5 90 6
Table 6: Overview of interviewees from buyer perspective.
Selected cases – Dyad perspective
Case Firm Current function # of years
experience
Duration in minutes
Transcript length
6 BF6 Global Commodity Manager 0.5 90 10
S6.1 International Sales Manager 1.5 30 5
7
BF7 Supply Chain Manager 2 55 8
S7.1 Production manager 15 75 6
Table 7: Overview of interviewees from buyer-supplier perspective.
Additional cases – Dyad perspective
Case Firm Current Function # of years
experience Duration in minutes Transcript length 8 BF8
Manager Animal Health and Welfare 5 60 10
S8.1 Dairy Farmer * 45 9
S8.2 Dairy Farmer * 30 6
9
BF9 Senior Quality Advisor 15 70 16
Strategy and Sustainability Manager 3 70 10
S9.1 Account Manager 10 45 9
S9.2 Sales Manager 6 45 9
Table 8: Overview of additional interviewees from buyer-supplier perspective. * No concrete # years of experience.
20 in a Google Drive database. This left a trail of transcripts which increases reliability and traceability of the data. Afterwards, the transcripts of the interviews were sent back to the interviewees for confirmation (Yin, 2014).
At the start of each interview, general questions were asked on buyer power in SSCM, SSC and the BSR under investigation. As the interview went on, more specific questions were asked to gain a deeper understanding on these concepts. To enhance the explorative character of this research, questions were formulated in such a way that they aim for a description, explanation, example, elaboration or clarification on that specific topic. This helped to increase understanding on specific topics and to increase the reliability of the data (Long & Johnson, 2000). Moreover, an interview protocol was used to guide the interviews (Appendix IIa en IIb). The questions for the interviewees of the buyer and its suppliers had to be adjusted, as the perspective on buyer power influence on SSC and the level of expertise might differ. At the end of each interview the interviewee was asked if, in their opinion, anything was overlooked during the interview. This prevents bias of data collection and provides the opportunity for discoveries that lead to alteration of the protocol (Yin, 2009).
3.3.2 Secondary data
In addition to the information on the case companies’ websites, the most recent sustainability reports, CoCs and annual reports were analysed to collect additional data (Table 9). The use of additional data increases construct validity, as different sources for data collection account for triangulation of evidence and protect against researcher bias (Yin, 2009). The analysis of secondary data allowed the interviewee to ask more specific questions as there was increased familiarity with the topic on a company-specific level. Moreover, this helped to obtain more valuable and detailed information, which could provide more in-depth insights.
Case Firm Type of document Total # of
pages
1 BF1 Integrated Annual Report 126
2 BF2 Sustainability Report Supplier Code of Conduct
36 8
3 BF3 Annual Review 40
4 BF4 Annual Report
Supplier Code of Conduct
180 2 5 BF5 Sustainability Report
Supplier Code of Conduct
8 1 6 BF6 Sustainability Report
Supply Chain Standards
21 7 BF7 Sustainability Report (in Dutch)
Certificates and Declarations
4 1
8 BF8
Annual report
Sustainability Report (in Dutch)
CSR policy and implementation of ISO 26000
211 34 53 9 BF9 Annual and sustainability report
Supplier Code of Conduct
142 6 Table 9: Overview of archival documents.
3.4 Data analysis
During data analysis the software Atlas.ti and Excel were used as analysis tools and databases. Atlas.ti enables to keep record of the analysing process, by using memos. This clarifies how certain interpretations are derived and increases data visibility (Corbin & Strauss, 2014). Atlas.ti was mostly used during within-case analysis. The data files were exported to Excel, which was used to switch between data files during cross-case analysis. During data analysis a comparison technique is applied in which collected data are compared to incoming data (within and across cases) and existing literature, to determine if certain interpretations should be reconsidered (Eisenhardt & Graebner, 2007). This constant comparison makes analysis a dynamic process (Corbin & Strauss, 2014). Therefore, the coding process is based on the iterative approach by Gioia et al. (2013). A code symbolises data in one word or a short phrase, the code assigns an essence-capturing or summative attribute to that part of the data (Saldana, 2015). The overall analysis process is based on the inductive approach, which indicates a transition from raw data (i.e. context specific) to theory (i.e. general concepts) (Corbin & Strauss, 2014). A total of 35 documents were coded, including the interview transcripts and archival documents (Table 9). The coding tree is included in Appendix III.
After data collection, the within-case analysis was initiated (Eisenhardt, 1989). Prior to the 1st order analysis, the transcripts and audio recordings were carefully reviewed. During the 1st order analysis, labels were generated for quotes or information that were considered relevant for this research. The interviewees language is maintained as much as possible. The archival documents were coded after coding of the interview transcripts and elements that were relevant were directly assigned to the 1st order codes. As there was little attempt to limit categories, this resulted in a list of over 300 1st order
codes. For developing the final 1st order codes of the analysis, the case specific 1st order codes were compared across-cases, to combine codes with the same aspects or essence (Eisenhardt, 1989; Gioia et al., 2013). Irrelevant codes were excluded. This resulted in a list of 38 final 1st order codes. In the 2nd
22 were provided with labels or phrasal descriptions (again retaining the interviewees language). Finally, the 2nd order categories were analysed to find emerging themes, which can be combined into aggregated dimensions. During this last phase, the major categories are compared with each other to progress towards the themes or concepts of this research. Additionally, relevant literature that was not part of the initial research is considered to see if findings are grounded in literature or whether new concepts are discovered (Gioia et al., 2013).
4. Findings
In the following section, the findings from the cross-case data analysis are presented. As this research examines how the use or effect of buyer power influences SSC, the findings are structured according to the buyer’s sustainability practices that emerged from the data (SQ1). Furthermore, each practice includes case materials on how different types of buyer power have influenced the implementation and effects of this SSCM practice (SQ2). Moreover, each practice includes case materials that show how the RQ has impacted the use or effect of these power bases (SQ3). Hence, the link between the collected data and this research’s theoretical framework is more evident. Furthermore, as both theoretical and literal replication logic is followed, the similarities and differences among cases can be presented. Additionally, quotes are used to exemplify the relations between themes and to indicate similarities and differences between cases.
4.1 Sustainability commitment
The data suggests that the buyer’s commitment to enhance SSCM is influenced by their sustainability awareness and macro-economic pressures. Consequently, buyer firms that are increasingly aware of unsustainable practices or that experience high pressures, formulate requirements and demand these from their suppliers. External pressures enhance awareness of unsustainable SC practices, which influences the buyer’s SSCM approach. Furthermore, buyer firms that experience high macro-economic pressures, are often more motivated to become sustainable and use multiple SSCM practices (e.g. certification and assessment, CoC, audits and KPIs). However, it became evident that buyers must undertake action to achieve SSC, as suppliers generally did not experience the same macro-economic pressures (e.g. due to limited visibility). Both sustainability awareness and macro-economic pressures determine their SSCM approach and consequently influence buyer power use or effect. In their efforts to increase awareness and commitment, buyers mainly rely on non-mediated power.
4.1.1 Sustainability awareness
23 some industries are subject to strict regulations ‘’In our industry, we are subject to ISO regulations that are very strict, as they follow the UN Goals.’’ [BF5]. Furthermore, all firms are familiar with the TBL or 3Ps principle, in which people, planet and profit need to be balanced. However, some interviewees highlighted the importance of financial stability, as this is crucial for organisations to exist and necessary for organisations to fully incorporate sustainability initiatives in their operations (BF1, BF3, BF5, BF6 and BF7). Financial stability is a prerequisite for companies to focus on sustainability ‘’There is still a lot that needs to be sorted out. Sustainability is not our focus right now, maybe in the near future.’’ [BF3], which indicates that profit is imperative. If profit is endangered this imposes an immediate threat to the firm, while sustainability is less tangible and the risks are more general ‘’What does is matter to us, so to speak, that the earth temperature rises 3 degrees?’’ [BF5].
Some of the case companies belong to or associate with one or more (non-profit) organisations, which are dedicated to increase environmental sustainability. These organisations are critical towards sustainability practices, pressure firms to increase sustainability of their SC operations and provide support for sustainability initiatives. As there is increased attention for sustainability, these organisations gain worldwide recognition. Therefore, companies consider these organisations in formulating their sustainability strategies. For instance, these organisations can provide products with accreditation, certification or a quality mark. Some examples of (non-profit) associates are Ecovadis (BF1), MSC and ASC (BF2), Fairtrade and UTZ (BF3), EASO (BF4), CDP (BF5), ODVA (BF7) and Planet Proof (BF8). These examples indicate that buyer firms enhance their legitimacy or credibility in terms of their sustainability capabilities (e.g. legitimate power), which influences the supplier’s sense of obligation to adhere to the buyer’s requests. Furthermore, they strive for recognition of their skills and knowledge on sustainability, which indicates the possession of expert power. For instance, BF9 is a large multinational company and dedicates many resources to sustainability ‘’In our sector, we see that BF9 made large investments in sustainability policies and involves us in their programs, which helps us to continue to grow and learn about sustainability.’’ [S9.1]. This indicates BF9s expert power: suppliers can learn from the buyer’s expertise. Furthermore, their turnover enables them to dedicate more resources to sustainability, which enhances SC sustainability (e.g. trough investments and involvement practices). Moreover, the data suggests that cooperation with these organisations keeps them up to date about sustainability practices, issues and trends, which increases opportunities to develop their knowledge on sustainability (e.g. expert power).
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4.1.2 Macro-economic pressures
Most firms addressed that they experience macro-economic pressures through legal regulation and customer demand. These pressures motivate them to commit to sustainability practices, as they are committed to maintain their competitive position ‘’If we’re not doing it (incorporate sustainability), we will start lagging behind and may be less interesting for these clients or new business.’’ [BF4] and fear reputation loss. Furthermore, sustainability might provide companies with a competitive advantage, as it enhances corporate image, provides opportunities for differentiation and cost reduction. When buyer firms experience pressures, they formulate these into requirements and demand these from their suppliers. Suppliers often have multiple customers (from different industries) and must adhere to multiple buyer requirements, as they (and the entire industry) require a certain level of sustainability ‘’We notice that our customers have quite a few requirements aimed at sustainability, and every customer has different types of requirement.’’ [S9.1]. Therefore, suppliers might achieve a competitive advantage if they initiate their own sustainability programs or initiatives, as (new) customers increasingly demand sustainability. This indicates that compliance might increase the supplier’s competitiveness. Hence, sustainability can be of commercial value as this enhances stakeholders’ trust in the firm’s operations, while a lack of sustainability might result in reputation loss. Furthermore, suppliers are committed to complying to the buyer’s sustainability requirements as this provides them with an opportunity to engage in the buyer’s business. In addition, it improves their corporate image and their competitive position. Hence, sustainability compliance provides certain benefits, which increases their relationship commitment.
26 Moreover, buyers only engage in relationships with suppliers that adhere to their requests, which indicates the use of reward power. Additionally, this indicates the implicit use of coercive power: through withholding rewards. This might have implications for the effectiveness of information sharing and goal agreement, as suppliers are not motivated to commit to information sharing or working towards the buyer’s objectives. The data suggests that suppliers perceive a reward as an endorsement of their competence or performance. Furthermore, rewards indicate the partner aims to pursue a long-term relationship, which increases the supplier’s commitment to adhere to the buyer’s needs, share information and work towards the buyer’s objectives. This indicates that high RQ strengthens the effect of non-mediated power on SSC. Moreover, buyers use reward power (through providing and withholding rewards) to influence SSC. Supplier’s commitment to adhere to the buyer’s needs is strengthened through the simultaneous use of reward power and effect of non-mediated power. This indicates that rewards increase the supplier’s intrinsic motivation (i.e. commitment) and the positive effect of reward power is enhanced if the supplier’s intrinsic motivation is high.
Furthermore, the buyer’s visibility (i.e. market and SC position) is a large determinant for stakeholder pressure and influences the buyer SSCM approach. For example, buyers that experience high visibility, experience high external pressures. Consequently, suppliers understand that buyers must act upon these pressures ‘’We cannot expect BF8 to maintain competitive and sustainable, if we don't go along ourselves.’’ [S8.1]. This indicates the effect of legitimate power: suppliers accept the buyer’s influences. However, these buyer firms are vulnerable, as they will possibly be held accountable for their supplier’s environmental liabilities. Therefore, they must ensure compliance and exert pressure on their suppliers. Hence, they rely on mediated power. Moreover, the data suggests that information sharing is a prerequisite in monitoring supplier compliance. Supplier’s must present all sorts of documentation, for buyers to assess compliance. For instance, BF2, BF3, BF6, BF8 are active in the B2C market and experience high visibility. These firms are in direct contact with the end-consumer and are increasingly exposed to stakeholder pressures, which requires them to take responsibility. These firms believe that, in principal, suppliers are less concerned with end-consumer demand, as they are not in direct contact with the end-consumer ‘’Our customers, which are downstream in the supply chain, pay more attention to the demand of end-consumers. They will translate end-consumer demand to us. As a supplier, we’ll follow our customers demand.’’ [S6.1]. They are compelled to use their power to punish or reward (non) compliance ‘’There are certain consequences for suppliers who do not meet the required standards, think of smaller or less orders.’’ [S8.1]. The use of mediated power results in a lack of goal agreement, as buyers impose their rules on suppliers. Thus, in addition to the positive effect of legitimate power (because of high brand awareness) on SSC, buyers are mostly reliant on mediated power to influence SSC, as suppliers are generally less concerned with stakeholder demand.
27 firm and emphasises a sense of similarity between them and the buyer firm. This indicates the effect of referent power (e.g. through brand identification). Second, suppliers feel obligated to comply to a buyer’s request, they feel buyers have a superior position due to their market position and firm size. This provides the buyer with legitimate power. Additionally, suppliers can demonstrate this partnership to other potential customers ‘’Part of the reason is that we are a quite famous global company. To work with us, they’re able to show other potential customers that they can fulfil a global leading company’s requirements.’’ [BF6], which might influence the supplier’s perception of the buyer’s legitimate power, as they assume that compliance to the buyer’s requirements provides them with a competitive advantage. Lastly, large firms often have extensive sustainability programs, as society and other stakeholders demand the firm’s resource dedication to increase SC sustainability. Consequently, this results in increased learning potential for suppliers. This indicates the effect of expert power (e.g. ability to learn from buyer’s skills).
4.2 Supplier measurement
The data suggested that supplier measurement practices are applied by buyers to improve SSCM. Buyers use multiple practices to measure or monitor supplier sustainability compliance, such as certificates and assessment, supplier CoCs, audits and KPIs. Regardless of the RQ, buyers mainly rely on mediated power to ensure compliance to their minimal sustainability standards. More specifically, buyers use reward power or implicit forms of coercive power: through withholding rewards. Additionally, buyer’s non-mediated power improves sustainability performance.
4.2.1 Supplier certificates and assessment
Buyer firms use certificates and assessment as tools to select suppliers and/or measure supplier sustainability performance. Sustainability certification requirements are increasingly important for sustainable conscience companies, to maintain high quality and sustainability standards during their SC operations. Buyers require adherence to international certification, such as ISO14001 for environmental management. Information sharing is highly important during an assessment, as different types of documentation (e.g. audit history, plant information, self-assessment, ecological programs) are used to assess supplier sustainability. Moreover, buyer firms addressed the importance of transparency on sustainability practices, documentation, processes and capabilities.
28 or postponing the payment until they comply, or even switching suppliers. For instance, the data highlighted that buyer firms might accept non-compliance of a smaller supplier, as their business is only slightly affected. However, a priority one supplier without e.g. ISO certification must be replaced, as this imposes a larger risk on their operations. Thus, the buyers impact on the supplier’s commitment to comply (e.g. non-mediated power) and the risk on their operations, determine the use of coercive power (e.g. by switching suppliers), even if RQ is high (e.g. priority one supplier). Consequently, if suppliers adhere to the buyer’s requirements, they are rewarded with e.g. an order. This might increase their relationship commitment, as the reward is perceived as a sign that the partner aims for a long-term relationship. Furthermore, as both partners are willing to ensure continuity of their relationship, this enhances goal agreement. Moreover, the explicit use of coercive power seldom occurs, as this potentially harms the RQ. Buyers rather use an implicit form of coercion, through withholding rewards (e.g. not assigning an order), which may be perceived by suppliers as an act of punishment. Furthermore, the data indicates the effect of legitimate power, as suppliers are committed to engage in the buyers business and believe that the buyer is in a superior position ‘’In the end you are producing for your customer and not for yourself. So, the product must meet the customers requirement, the customer is king.’’ [S9.1]. As a result, suppliers are willing to comply to the buyer’s environmental regulations, which indicates that the effect of legitimate power results in willingness to work towards the buyer’s objectives (e.g. goal agreement).
4.2.2 Supplier Code of Conduct
A SCoC often consists of the buyer’s expectation of supplier’s practices in business operations. These codes often include practices on working conditions, health and safety, ethics and environmental regulations. Some suppliers addressed that the buyer’s requirements are perceived similar as the institutional or international standards ‘’This is just something that must happen (sustainability) … the customer is always right.’’ [S9.1], as they are committed to working with the buyer and are expected to adhere to these standards as well. This indicates the buyer’s legitimate power, as the supplier perceives the buyer’s requests as a natural part of the BSR.
29 their requirements. Thus, this results in less effectiveness of information sharing and, consequently, a lower RQ. Furthermore, buyers demand compliance to their SCoC and, therefore, explicitly propagate their coercive power to demand SSC, by including a passage in their SCoC on e.g. relationship termination in case of non-compliance. For instance: ‘’Failure to comply with any of the named standards, schemes or certifications will be deemed a breach of contract and we reserve the right to terminate.’’ [BF2]. Compliance to the SCoC can be monitored through, for instance, audits and KPIs.
4.2.3 Supplier compliance auditing
All buyer firms use audits as a tool to monitor compliance and improve performance. However, some audits focus on sustainability, quality and safety (BF1, BF2, BF3, BF8) and most audits focus on quality and safety regulations (BF4, BF5, BF6, BF7 and BF9). Nevertheless, environmental issues are often noticed during audits. Audits measure the performance at a certain time, can identify gaps and evaluate whether processes and systems work effectively. Audits can be conducted at the supplier selection stage and during the relationship, in a self-assessment form to measure performance (e.g. checklists) or as a site-visit. It often occurs that a self-assessment is followed by a site-visit (for third-party auditing as well) ‘’This is a self-assessment and during the audit it will be reviewed, and they will check whether what you have said is correct and you should be able to demonstrate this.’’ [S7.1]. For BF1, BF2, BF3 and BF8 quality, safety, sustainability are interrelated targets as their business concerns food products (Manzini et al., 2014). Therefore, these aspects are actively measured and monitored through audits. Furthermore, these firms are subject to strict law and regulations (i.e. political support) regarding food safety and quality, which requires them to monitor these issues. For instance, the European food safety system HACCP (Hazard Analysis and Critical Control Points).
Some firms structurally incorporate audit regimes as a tool for measurement, control and improvement (BF2, BF4, BF7 BF8). Other firms only conduct audits if necessary (BF1, BF9), for instance, if the self-assessment of a supplier results in doubts about the sustainability of the supplier. The reason for this is that structurally conducting audits requires time and financial resources and is infeasible with a large/global supply base. Additionally, firms use third-party auditors (e.g. ISO), as these organisations are ‘’experts in the field’’ [BF3, BF8] and are ‘’able to provide an independent judgement’’ [BF2], which increases their reputation. These independent partners conduct analyses, administrative and physical audits and conduct more unbiased audits, which is perceived more reliable by some firms. By contrast, BF4 and BF6 explicitly addressed that they have many in-house capabilities (e.g. expert power), high-quality supplier relationships and extensive KPI measurements in place (e.g. expert power, information sharing). Therefore, third-party auditors are only involved if the organisation lacks specific knowledge to respond effectively to supplier’s non-compliance.
non-30 compliance. As structural non-compliance (e.g. failing to improve after action plan) is seen as a breach of contract, business can be withdrawn. This indicates the buyer’s ability to use coercive power, in terms of rejection of the product or a lower price. The buyers use of coercive power is used less explicitly in collaborative BSRs. This can be explained by the potential harm on the RQ, for instance, to the degree of trust and commitment in the BSR. In these relationships, aspects as honesty and transparency are valued ‘’We must ensure that BF9 never has a reason not to trust us, that’s why we’re always open and honest.’’ [S9.2]. The consequences of non-compliance are less severe if the supplier notifies the buyers on an issue or a problem beforehand, instead of them accidentally encountering the issue later-on in the (auditing) process. Therefore, these firms rather use an implicit form of coercion, through withholding rewards. Furthermore, buyer firms possess non-mediated power. Most of the buyers have a large supply base which enhances their legitimate power, as suppliers feel they need to increase their efforts to maintain their competitiveness among the buyer’s supply base. Furthermore, audits through site-visits are perceived as a qualitative measurement tool, as this can contribute to improvement of the operational performance through sharing of knowledge and expertise (e.g. expert power) and the RQ (e.g. through interaction). Audit results are evaluated and improvement opportunities, such as higher quality and innovation or lower costs, and/or issues of non-conformance are translated into a follow-up action plan. Suppliers must improve within a few weeks, otherwise the buyer can punish the supplier by withdrawing business (e.g. coercive power). Moreover, this indicates that audits are a tool to share information and a starting point to increase mutual understanding. However, the buyers SSCM approach determines to what extent audit results are used for performance improvement, which influences the effectiveness of information sharing (e.g. benefits equally distributed).
Furthermore, it became evident that structural audits or assessment are not necessary in BSRs with high levels of trust (BF4, BF5, BF7, BF9) ‘’The level of trust is higher than with other suppliers. Therefore, we conduct less audits.’’ [BF9], or in relationships that actively use other measures to monitor compliance ‘’I have not experienced an audit by BF9. I think the main reasons is that employees from BF9 are continuously working within our company, and they pass on information to BF9. So, because we cooperate continuously, there may be less need for an audit. You could say we undergo continuous site-visits.’’ [S9.1] or KPIs ‘’In addition to the questionnaire, we received specific KPIs from BF9 and we have to share our performance with them on a weekly basis.’’ [S9.2]. These firms conduct audits relatively infrequent, as they trust on information sharing and goal congruence to ensure compliance. These findings suggest that buyer firms rely on a combination of both compliance (e.g. structural audit or assessment) and collaborative (e.g. trust) mechanisms (Touboulic & Walker, 2015).
4.2.4 KPIs measurement and monitoring
31 to stimulate them to improve or maintain high performance, which requires extensive information sharing. These measurements support the decision-making process and form the basis for follow-up actions plans, which are initiated the same way as for poor or non-compliant audit results. Thus, both firms benefit from information sharing (e.g. through improvement), which increases the effectiveness of information sharing. Sustainability measurements (e.g. emissions, materials, energy consumption etc.) are monitored continuously and evaluated e.g. once a month. Not all firms use KPIs to measure sustainability performance, as not all firms see the added value of sustainability measurement trough KPIs. Furthermore, the lack of sustainability measurement through KPIs can be explained by an inadequate knowledge or tools for sustainability measurement. However, as other buyer firms (B4, BF5, BF7, BF9) have extensive quality, cost and logistic KPIs, this seems unlikely.
For example, BF8 requires dairy farmers to share information, they use this information to enable dashboards that measure the dairy suppliers’ performance on their sustainability programs. The dashboards are valuable for suppliers, as they provide a benchmark to compare performance to other suppliers. Therefore, the supplier’s benefit from information sharing, which increases the effectiveness. Moreover, as BF8 enables the dashboards, this enhances mutual understanding on SC objectives which may contribute to goal congruence. Furthermore, a good score gets rewarded with a bonus or a higher price for the dairy products. In a case of poor-performance or non-compliance rewards are withheld, which indicates the implicit use of coercive power. Depending on the dairy supplier’s improvement, they will be rewarded or BF8 will reduce the price (or even reject the product) for their dairy products. Thus, this indicates the use of reward power (e.g. bonusses), coercive power (e.g. rejection of product) as well as the implicit use of coercive power i.e. through withholding rewards ‘’Last year we had some bad luck, which is reflected in our score. Due to the lower score, they pay less for our milk.’’ [S8.1]. BF9 shares their sustainability KPIs with their suppliers, which are used by suppliers to improve sustainability performance ‘’In terms of production, we have certain sustainable KPIs which we have received from BF9.’’ [S9.1]. This indicates the possession of expert power, as BF9 formulates the KPIs based on their expertise, which contributes to their supplier’s performance improvement. Moreover, this requires extensive information sharing, which is enabled in their integrated information system. The realisation of this system required joint investment and a certain level of trust. Furthermore, the long-term relationship between BF9 and their suppliers increases mutual understanding (e.g. trough shared belief, norms and values) on their vision towards sustainability, which enhances the supplier’s commitment to incorporate the buyer’s KPIs.
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4.3 Supply chain learning
Buyers firms use SC learning practices to improve SSCM. SC learning is enhanced by supplier involvement, mutual understanding, joint development and continuous improvement. To establish SC learning, a certain amount of trust is required. Most of these SSCM practices were identified in the cases that aim for high quality and innovation through long-term collaborative relationships (BF4, BF5, BF6, BF7, BF9). Buyers mainly rely on non-mediated power in their efforts to increase SC learning.
4.3.1 Supplier involvement
The data suggests that firms enable suppliers to join training programmes, masterclasses, workshops, conferences or presentations to share ideas and knowledge and learn new skills, which indicates the effect of both expert and referent power. In addition, some firms (BF4, BF5, BF6, BF7 and BF9) structurally involve their key-suppliers in their operation, as they require the SC to react quickly to the changing environment. Thus, supplier involvement practices are used to increase insights (e.g. understanding) in SC processes, which enables development of goals that coincide with goals of the SC (e.g. goal congruence). Moreover, supplier involvement practices are used to derive joint profits, through increased quality and innovation or lower costs, which contribute to their long-term competitiveness. Furthermore, involvement practices imply the combination of both the buyer’s and supplier’s R&D resources and the exploitation of joint capabilities (e.g. information and knowledge sharing). Briefly, supplier involvement practices enable information sharing and goal congruence, as there is frequent interaction between SC partners which increases mutual understanding on SC processes. Furthermore, supplier involvement practices enable the supplier’s learning potential, as they can learn new skills. This emphasises the effect of expert power. Moreover, it enables relational development, which emphasises the effect of referent power. Thus, these findings indicate that the effect of expert and referent power through supplier involvement practices influences SSC. Furthermore, high RQ strengthens the effect of non-mediated power on SSC.
