Study Links Socially Responsible Supplier Selection to Better Financial Performance
A growing number of retailers and manufacturers have adopted policies aimed at making their supply chains transparent and free of environmental and human-rights abuses – moves that surely improve corporate image. A recent study suggests that “socially responsible supplier selection” also benefits financial performance.
Researchers from the University of Tennessee, building on earlier work by others, looked at 479 manufacturers, retailers and service providers in China, the United Arab Emirates and the United States.
While there were different outcomes among the three regions, the researchers’ exploratory empirical analysis found evidence that, “overall, firms that consider socially responsible aspects during the supplier selection process enjoy financial performance advantages versus rivals.”
The findings help supply chain managers by linking socially responsible supplier selection to commonly expected outcomes within each of the countries, they said.
The researchers, who looked at sales, growth and market share, predict that sales and market share will be higher as firms increasingly consider social responsibility in choosing suppliers.
