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Towards a theory of multi-tier sustainable

supply chains: a systematic literature review

Elcio M. Tachizawa
Department of Business Administrations, Universidad Carlos III de Madrid, Getafe, Spain, and
Chee Yew Wong
Leeds University Business School, University of Leeds, Leeds, UK

Purpose The purpose of this paper is to develop a comprehensive framework that synthesizes approaches and contingency variables to manage
the sustainability of multi-tier supply chains and sub-suppliers.
Design/methodology/approach Using a systematic literature review, the authors analyse 39 studies and relevant theories to develop a
comprehensive framework that integrates research efforts so far.
Findings The authors build a conceptual framework that incorporates four approaches to manage the sustainability of multi-tier supply chains.
They also identify several contingency variables (e.g. power, dependency, distance, industry, knowledge resources) and their effect on the proposed
Research limitations/implications Based on the framework, six research propositions that advance the theories on multi-tier supply chain
management, allow lead firms to develop comprehensive sustainable supply chain strategies and set the ground for future research in the area were
Originality/value This study provides a novel framework for studying sustainability in multi-tier supply chains that goes beyond the single-tier
perspective and incorporates the extended supply chain.
Keywords Environment, Suppliers, Sustainable supply chains, Social factors, Literature
Paper type Conceptual paper

Introduction et al., 2012). Actually, the most serious environmental and

social issues in the supply chain are often generated by
Recently, big firms have started to realize that managing the
suppliers located in the second tier or further upstream, also
sustainability of first-tier suppliers may not be enough. Even
referred to as lower-tier suppliers (Ernst and Kim, 2002), or
though a focal firm may have little control over its suppliers
sub-suppliers (Grimm et al., 2011). For example, NGOs such
unsustainable behaviour, consumers are still likely to attribute
as Greenpeace have accused famous high-street clothing
responsibility to the focal or lead firm (Hartmann and
retailers of allowing their suppliers and suppliers suppliers to
Moeller, 2014). Consequently, many big firms are finding new
discharge hazardous chemicals into major rivers in China
ways of managing the multi-tier supply chains to reduce such
(Greenpeace, 2011). Firms such as Nike and Wal-Mart are
chain liabilities (Hartmann and Moeller, 2014). For example,
developing new partnership strategies specifically designed to
Puma is including up to the fourth tier of suppliers in its
lower-tier suppliers (Plambeck and Denend, 2011). Finally, it
sustainability reports, and Nike is monitoring hundreds of
is estimated that up to 90 per cent of greenhouse gases
second-tier suppliers (from leather to zipper producers) to its
emissions could be generated by lower-tier suppliers
contract footwear and apparel factories (Lee et al., 2012b).
(Plambeck, 2012). This puts in doubt the real impact of low
Although there has been considerable research on
emission targets and other sustainability initiatives taken
sustainable supply chain management (SSCM), there is
recently by many firms.
predominantly a focus on first-tier suppliers (Lee, 2008;
Nevertheless, lower-tier suppliers possess some
Walker and Jones, 2012). However, globalization and the
characteristics that make it complicated for lead firms to
fragmentation of supply chains, together with increasing
manage their sustainability. First, lower-tier suppliers are the
stakeholder pressure to increase transparency and
suppliers about whom buyers have less information (Choi and
accountability, have raised concerns about the impact of
Hong, 2002). Second, lead firms do not have enough
second- and third-tier suppliers on sustainability (Miemczyk
influence over lower-tier suppliers. For instance, even
dominant buyers (e.g. Wal-Mart, Nike) represent only a small
The current issue and full text archive of this journal is available at percentage of the business of a lower-tier supplier (Plambeck,
www.emeraldinsight.com/1359-8546.htm 2012). Third, lower-tier suppliers tend to be less susceptible
to environmental pressure from society, because they are often
small and medium enterprises (SMEs), not well-known to the

Supply Chain Management: An International Journal

19/5/6 (2014) 643663 Received 13 February 2014
Emerald Group Publishing Limited [ISSN 1359-8546] Revised 15 July 2014
[DOI 10.1108/SCM-02-2014-0070] Accepted 19 July 2014

Multi-tier sustainable supply chains Supply Chain Management: An International Journal
Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

general public (Lee et al., 2012b), and located in countries RQ2. Related to these practices, what should their respective
where environmental and social regulations are less governance mechanisms look like?
demanding (Esty and Winston, 2006). Finally, lower-tier
suppliers tend to have a more unstable relationship with the RQ3. Which are the contingency variables that explain the
rest of the supply chain, because they can be changed easily governance mechanisms used by lead firms to manage
(Ponce and Prida, 2004). Surprisingly, despite the importance the sustainability of lower-tier suppliers?
of the subject, literature on this issue still lacks conceptual The next step was to define which search engine and search
frameworks. This is the main motivation for this paper. strings to use. After consultation with several database experts,
To address the above issues, this paper reviews 39 studies two search engines were chosen, because of their broad and
and relevant theories and develops a theoretical framework of multidisciplinary scope: ABI Inform ProQuest and EBSCO
multi-tier SSCM. The paper has two major objectives: first, to Host.
identify the governance mechanisms used for managing the The search string had to be sufficiently broad to include all
sustainability of lower-tier suppliers. While monitoring and papers that answered the research questions and, at the same
collaboration are two widely known mechanisms for managing time, narrow enough to allow for a careful examination of their
first-tier suppliers (Rao, 2002; Zhu and Sarkis, 2004; Vachon applicability to the study. Therefore, we used a search string
and Klassen, 2006), this paper attempts to identify and that encompassed simultaneously three categories of
conceptualize more complex governance mechanisms. keywords:
Second, this paper aims to identify the contingency variables 1 keywords related to Green/Sustainability/Environmental/
behind the adoption and effectiveness of such governance Social/Corporate Responsibility;
mechanisms, i.e. the context under which some of these 2 keywords related to Supply Chain Management/
practices are more effective than others (Sousa and Voss, Purchasing/Procurement; and
2008). 3 keywords related to Lower-tiers/networks.
The theoretical contributions of this paper are threefold:
first, it responds to the call for future studies which focus Therefore, the search string used was as follows: ab(green OR
beyond simple one-tier buyerseller relationships (Abbasi and environment OR eco OR sustainab OR social) AND
Nilsson, 2012; Sarkis, 2012; Mena et al., 2013). Second, while ab(suppl OR purchasing OR procurement) AND
the studies of triads buyersuppliersupplier (Wilhelm, 2011; ab(sub-supplier OR second-tier supplier OR subcontractor
Choi and Wu, 2009) and supplier buyer customer OR tier-n supplier OR suppliers supplier OR extended supply
relationships (Mena et al., 2013) focus largely on relational chain OR tier OR network)
factors, this paper extends the existing literature, as it focuses This procedure searched the keywords within the title and
on governance mechanisms, practices and contingency factors abstract, and the time frame for the articles was between
which affect such relationships. Third, the paper advances the January 1976 and June 2014. Given the considerable amount
of material on this category, we also included
multi-tier supply chain management (SCM) theory (Meixell
non-peer-reviewed articles published in high-reputation
and Gargeya, 2005; Mena et al., 2013) by adding the context
management reviews. According to Sarkis (2012), emergent
of sustainability. Accordingly, inspired by the seminal paper
research in this area may also appear in books and conference
by Lambert et al. (1998), this paper identifies theories for
papers. Therefore, we included some references on these
explaining the management of different tiers in a supply chain
categories that provided a clear contribution to the study. The
with respect to environmental issues.
search generated 2,120 items. The items were submitted to a
The paper is structured as follows: first, we show the results
preliminary screening, where we eliminated papers that were
of the systematic literature review. Then, we relate these
duplicated and dropped items that did not have a managerial
findings to the main organizational theories applied to SSCM,
focus. We retrieved 681 items after this stage. Then, we
setting a conceptual framework. After this, we present some
performed an abstract analysis, where we only kept the items
research propositions based on this framework. Finally, we
that had, simultaneously, a multi-tier perspective and a
discuss research and managerial implications, present some
sustainability focus. We kept 114 items after this step. Finally,
limitations of the study and propose further research lines.
we performed a full paper analysis, examining if the papers
contributed to answer at least one of the proposed research
Method questions. More precisely, we verified if empirical results
The literature related to lower-tier suppliers is sparse and identified practices, governance mechanisms or contingency
encompasses several concepts originated from different areas variables associated to the management of the sustainability of
(e.g. SCM, inter-organizational networks, corporate social lower-tier suppliers. As a result, 39 items were considered for
responsibility, etc.). Therefore, there is a need for a more analysis. A schematic view of the screening methodology is
structured and broader analysis of the related literature. Thus, depicted in Figure 1.
we decided to apply a systematic literature review Each item was analysed and coded to facilitate its synthesis.
methodology (Tranfield et al., 2003; Denyer and Tranfield, First, a coding scheme was developed through two cycles of
2009). Based on our research motivations, we propose the pilot coding and evaluation. More specifically, draft coding
following research questions to our study: categories were applied to sample data by two independent
researchers. Then, there was a discussion of issues that
RQ1. Which practices do lead firms use to manage the occurred, and the coding scheme was adjusted if necessary.
sustainability of lower-tier suppliers? This procedure assured inter-coder reliability, e.g. the amount

Multi-tier sustainable supply chains Supply Chain Management: An International Journal
Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

Figure 1 Screening methodology embeddedness (Choi and Kim, 2008) and balance theory
(Choi and Wu, 2009). Alternatively, social network theory
2,120 681 114 39
Initial items Preliminary items Abstract items Full items argues that the performance of a firm depends on the structure
search screening analysis paper
of the extended supply network in which it is embedded
- Apply search string - Management focus - Multi-er perspecve - Does it t our
research quesons?
(Johnston and Linton, 2000; Crespin-Mazet and Dontenwill,
- ABI-INFORM/PROQUEST - Eliminate duplicates - Sustainability 2012; MacCarthy and Jayarathne, 2012). Similarly, systems
- EBSCO theory argues that the component part of a system can be best
understood in the context of relationships with other systems
of correspondence among two or more coders (Weber, 1990). rather than in isolation (Checkland and Holwell, 1997).
Validity (i.e. the extent to which it represents what the Finally, complexity theory claims that, as system complexity
researcher intends to measure) was assured by theory-based (i.e. the number of elements and the degree to which these
coding schemes (Potter and Levine-Donnerstein, 1999). After elements are differentiated) increases, it becomes more
this, the items were classified according to the content difficult to determine its performance outcomes (Crozier and
categories by two researchers, and results were analysed Thoenig, 1976) and firms find it more difficult to plan and
quantitatively. Potential discrepancies were resolved by predict their organizational actions (Sarkis et al., 2011).
discussion. The items were categorized according to the Network studies integrate systems theory and complexity
following variables: year, journal, sustainability focus within the concept of complex adaptive supply networks (Choi
(environmental, social or both), methodology (empirical vs et al., 2001; Choi and Hong, 2002; Surana et al., 2005; Pathak
theoretical, qualitative vs quantitative), governing practices et al., 2007; Kim et al., 2011), which are characterized by an
and contingency variables. The results of the analysis are evolving structure and functions, and the dynamic complexity
presented in the following pages. of their entities (Li et al., 2010).
In parallel, the relational view helps explain how
Descriptive results inter-organizational relationships within the supply chain can
A list of the 39 selected items is depicted in Table I. Moreover, be a source of competitive advantage, by facilitating access to
in Table III, we relate a list of relevant organizational theories critical network resources (Dyer and Singh, 1998).
and their relationships with the approaches proposed to Additionally, resource dependency theory claims that firms
manage the sustainability of lower-tier suppliers. cannot be self-sufficient with regard to strategically critical
The 39 papers were published between 2000 and 2014, resources (e.g. standards, procedures, technologies, material
with the majority (59 per cent) after 2011. This indicates that sources, distribution channels) and thus need to collaborate
this issue has acquired a very recent relevance. With respect to with suppliers (Chang et al., 2012; Zhu and Sarkis, 2004;
the research method, we observe a predominance of empirical Cheng, 2011).
(69 per cent) over theoretical papers (31 per cent), and Transaction costs economics (Williamson, 1981) helps
qualitative (62 per cent) over quantitative (38 per cent) explain governance structures within networks (Zaheer et al.,
papers. This suggests that this research line is in an 2000; Cheng and Sheu, 2012), and has been used to
intermediary stage of development. The distribution of the investigate the effectiveness of codes of conduct (Ciliberti
articles across journals is very equilibrated, with no journal et al., 2009), inter-organizational performance improvement
being responsible for more than three papers, indicating that (Simpson et al., 2007) or trust within the supply chain (Barney
the subject has attracted the interest of several fields of and Hansen, 1994). Additionally, several authors have applied
knowledge. Finally, with respect to the scope, the majority of information asymmetry, satisficing and dynamic signalling to
the papers (59 per cent) focus on environmental issues, with a
the sustainability in supply chains (Jiang and Bansal, 2003;
small percentage (11 per cent) focusing on social issues
Gonzlez et al., 2008; Sarkis et al., 2011; Wittstruck et al.,
(Figure 2). This is in line with previous studies (Ashby et al.,
2012; Miemczyk et al., 2012; Gimenez and Tachizawa, 2012).
Alternatively, a few studies (Carter and Rogers, 2008) have
relied on agency theory (Eisenhardt, 1989) to explain
Theoretical background incentive mechanisms that support SSCM implementation.
In this section we review some theoretical frameworks that Finally, Sarkis et al. (2011) suggest that path dependence can
have been used to investigate multi-tier SCM. SCM literature explain the implementation of SSCM as a self-reinforcing
has analysed sustainability practices mainly through dyadic mechanism dependent on initial conditions. All these
relationships with first-tier suppliers (Vachon and Klassen, theoretical developments highlight the importance of adopting
2006) or triadic relationships with buyer and two first-tier a multi-tier perspective in SSCM studies, and some of the
suppliers (Wilhelm, 2011). Alternatively, Mena et al. (2013) conceptual complexities which are involved. In particular,
have analysed a triadic structure composed of buyer, first-tier there is a lack of specific research frameworks to analyse this
suppliers and second-tier suppliers. In parallel, researchers issue. This is the focus of the next section.
have relied on network perspectives, e.g. inter-firm networks
(Gassenheimer et al., 2007; Galaskiewicz, 2011) and supply
Multi-tier SSCM research framework
networks (Harland et al., 2001; Lamming et al., 2000).
However, organizational theories are necessary to In Figure 3, we propose a research framework to our study.
understand the mechanisms involved in complex interactions We now explain the main components of the research
within multi-tier supply chains (Sarkis et al., 2011), e.g. social framework.

Table I Multi-tier SSCM research sample
Social or Type of
Study Main theory and contribution environment-focused study Multi-tier practices Contingency factors
Koh et al. (2012) Systems theory. Cross-tier effect of the Environment Empirical Provide requirements to first-tier suppliers Lead firm power,
implementation of environmental related to environmental standards industry dynamism
Awaysheh and Klassen Social network theory. Effect of supply Social Empirical Provide requirements to first-tier and Dependency,
(2010) chain structure, namely, transparency, lower-tier suppliers on social standards; transparency, distance
dependency and distance, on the social audits
adoption of socially responsible
Alvarez et al. (2010) Inter-organizational networks. Both Empirical Collaborate with NGOs; formal and Trust; uncertainty
Longitudinal study; governance informal coordination mechanisms
mechanisms initially relied mostly on (supplier meetings); provide assistance to
informal mechanisms, then formal suppliers
governance mechanisms were
Multi-tier sustainable supply chains
Elcio M. Tachizawa and Chee Yew Wong

Ciliberti et al. (2009) Information theory and transaction Social Empirical Social standards; suppliers reports Firm size/power
costs. Codes facilitate coordination
between immediate partners in a
supply chain, especially when the
most powerful one enforces the code
Mena et al. (2013) Resource-based view, complexity Both Empirical Directed sourcing; environmental/social Firm power; dependency;

theory and social networks. Three standards; environmental/social audits material criticality:
structures of triads buyersupplier Management resources
supplier were identified: open, closed
and transitional
Zhu et al. (2012) Diffusion of innovation and ecological Environment Empirical Collaboration with first-tier and second- N/A
modernization. Identified three types tier suppliers; environmental standards;
of firms, namely, early adopters, environmental audits
followers and laggards, based on the
adoption of green supply chain
management practices
Zhu et al. (2008) Contingency resource-based view; Environment Empirical Collaboration with first-tier and second- Industry
institutional theory; stakeholder tier suppliers; environmental standards;
theory. Industry differences in environmental audits
embracing GSCM practices
Plambeck and Denend Analysis of the collaborative practices Environment Empirical Buyer-generated databases; provide Firm power; knowledge
(2011) with suppliers and NGOs used to assistance to first-tier suppliers on how to resources; visibility
manage lower-tier suppliers monitor lower-tier suppliers;
environmentally environmental standards developed by
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NGOs; environmental audits; long-term

quantity commitments; directed sourcing;
Supply Chain Management: An International Journal

suppliers working groups

Table I
Social or Type of
Study Main theory and contribution environment-focused study Multi-tier practices Contingency factors
Kim and Rhee (2012) Collaboration with lower-tier suppliers Environment Empirical Collaboration with first-tier and lower-tier N/A
is a critical factor in green supply suppliers
chains performance
Simpson et al. (2012) Institutional theory. The role of firms Both Theoretical Environmental/social standards Visibility; industry
internal capabilities to the success of pollution level
voluntary management standards
Plambeck (2012) Discusses lower-tier suppliers Environment Theoretical Provide assistance to suppliers Trust; firm power
incentives to invest in green practices
Lee et al. (2012b) Shows how firms can rely on NGO Environment Empirical Collaboration with NGOs; NGO-generated Firm power; visibility;
databases to monitor lower-tier databases; provide assistance to first-tier accountability;
suppliers suppliers on how to monitor lower-tier knowledge resources
Mueller et al. (2009) Standards alone are insufficient to Both Theoretical Environmental/social standards N/A
Multi-tier sustainable supply chains
Elcio M. Tachizawa and Chee Yew Wong

guarantee sustainability upstream the

supply chain
Gonzalez et al. (2008) Resource-based view; signalling Environment Empirical Environmental standards Firm size
theory. Signalling theory can be
applied to reduce information
asymmetry in environmental issues;
EMS as a pre-requisite for supplier

environmental pressure
Parmigiani et al. (2011) Efficient vs responsive supply chains; Both Theoretical Audits; monitor suppliers; collaborate Firm power; control;
technical vs relational capabilities. with suppliers; social/environmental accountability
Accountability and control are critical standards
variables that determine supply chain
sustainability strategy
Crespin-Mazet and Industrial networks. Three types of Environment Empirical Provide requirements to suppliers; audits; Knowledge resources;
Dontenwill (2012) legitimacyproduct legitimacy, environmental standards; collaboration product stability
corporate legitimacy and cause with NGOs
legitimacyand different roles of
business and non-business actors in
the firms extended sustainable supply
Foerstl et al. (2010) Dynamic capabilities view. Firms must Environment Empirical Environmental standards; collaboration Perceived stakeholder
integrate external responsiveness with with suppliers; collaboration with NGOs pressure
supply risk management to create a
truly dynamic capability
Cheng (2011) Relational risk; resource-based view. Environment Empirical Collaboration with suppliers Power asymmetry
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Relational risk is found to be

negatively associated with willingness
Supply Chain Management: An International Journal

to share knowledge
Table I
Social or Type of
Study Main theory and contribution environment-focused study Multi-tier practices Contingency factors
Cheng and Sheu (2012) Transaction costs economics; relational Environment Empirical Collaboration with suppliers Relational proclivity;
risk. Opportunistic behaviour and relational benefits,
dysfunctional conflict decrease the connectedness
willingness to establish relationships
to enhance the strategy quality for the
green supply chain
Caniels et al. (2013) Green purchasing. Supplier readiness Environment Empirical Environmental standards; collaboration Supplier readiness;
and customer requirements are with first-tier suppliers; monitoring of customer requirements
significant drivers in supplier suppliers
Boyd et al. (2007) Procedural justice perspective. A CSR Both Theoretical Supplier monitoring; environmental Firm power; dependency
implementation characterized by standards
Multi-tier sustainable supply chains
Elcio M. Tachizawa and Chee Yew Wong

procedural justice rather than by

greater monitoring is more likely to
increase supplier compliance
Bourlakis et al. (2014) Large manufacturers rather than the Environment Empirical Collaboration with first-tier and lower-tier Firm size
big retailers were found to be the suppliers
sustainability performance

Wittstruck et al. (2012) Signalling, information provision and Environment Empirical Environmental standards; sharing N/A
the adoption of standards are crucial information with suppliers; monitoring
preconditions for the overall success of lower-tier suppliers
MacCarthy and Jayarathne The benefits of a strongly collaborative Both Empirical Collaboration with first-tier suppliers Visibility; firm power
(2012) network in enhancing a sustainability
Mares (2010) Analyses where do the buyers Social Theoretical Monitoring of first-tier and lower-tier Visibility; distance; firm
responsibilities end as supplier suppliers; social standards size
distance increases in lower tiers of the
value chain, and what concepts are
used to limit these responsibilities
Shukla et al. (2009) There is huge gap in lower-tier Both Empirical Environmental/social standards; Firm size
upstream supply chains of auto OEMs, collaboration with first-tier and lower-tier
about sustainability issues such as suppliers
material selection, supplier selection,
vendor development, evaluation of
vendors and use of clean fuel
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transporters in inbound and outbound

Supply Chain Management: An International Journal

Table I
Social or Type of
Study Main theory and contribution environment-focused study Multi-tier practices Contingency factors
Castka and Balzarova Institutional theory; diffusion of Social Theoretical Social standards Visibility; firm size
(2008) innovation. The focus on a socially-
responsible (SR) process requires much
closer alignment in the supply chain in
comparison to SR product orientation,
especially in high-visibility sectors
(pharmaceutical, chemical, clothing,
Johnston and Linton Social networks. Presents evidence Environment Empirical Collaboration with first-tier suppliers; Complexity of
(2000) that some types of social networks collaboration with NGOs implementation;
influence implementation success more knowledge resources;
Multi-tier sustainable supply chains

than others firm size

Elcio M. Tachizawa and Chee Yew Wong

Zhu and Sarkis (2004) Second-tier supplier environmentally Environment Empirical Collaboration with first-tier suppliers; Firm size; quality
friendly practice evaluation is a monitoring of second-tier suppliers; management and just-in-
statistically significant item of external environmental standards; audits; provide time implementation
GSCM environmental design specifications to
Esty and Winston (2006) Highly visible firms tend to establish Environment Empirical Collaboration with first-tier and lower-tier Firms size; visibility
actively direct links with lower-tiers suppliers; collaboration with NGOs;

and partnership with NGOs, whereas audits; environmental standards;
SMEs might explore a bandwagon monitoring of lower-tier suppliers;
strategy bandwagon strategy of supplier
selection; share buyer-generated or NGO-
generated databases
Gualandris et al (2013) Stakeholder theory; accounting. A Both Theoretical First-tier and lower-tier supplier Stakeholder saliency
framework of sustainability assessment sustainability assessment and verification
and verification (SAV), encompassing
depth (number of tiers) and breadth
(number of products)
Plambeck et al. (2012) Large firms are collaborating with Environment Theoretical Provide assistance to first-tier suppliers Knowledge resources;
NGO to facilitate monitoring and on how to monitor lower-tier suppliers; firm power; distance
helping both first-tier and lower-tier provider incentives to disclose problems;
suppliers self-identify problems collaborate with NGOs; collaborate with
Lee et al. (2012a) How industry groups and NGOs are Environment Theoretical Collaboration with NGOs and Firm power; knowledge
facilitating learning among suppliers competitors; provide information to first- resources; distance
and screening lower-tier suppliers by tier suppliers on how to select and
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focal firm and first-tier suppliers monitor lower-tier suppliers

Supply Chain Management: An International Journal

Table I
Social or Type of
Study Main theory and contribution environment-focused study Multi-tier practices Contingency factors
Sarkis (2012) Resource-based view; transaction Environment Theoretical Collaboration with suppliers; sharing of Distance; firm size;
costs; resource dependency; environmental data with stakeholders knowledge resources
stakeholder theory. Proposes a
framework that analyses green supply
chains using seven boundaries:
organizational, proximal,
informational, political, temporal,
cultural, legal, economic and
Multi-tier sustainable supply chains
Elcio M. Tachizawa and Chee Yew Wong

Delmas and Montiel Transaction costs; information theory. Environment Empirical Environmental standards Distance; dependency;
(2009) Suppliers both with tighter years of relationship;
relationships with their customers and firm power; state level
with more distant relationships are of pollution; state
likely to adopt the ISO 14001 environmental
standard, though for different reasons regulation; quality

Pagell and Wu (2009) A concern for continuity of lower-tier Both Empirical Collaboration with NGOs, competitors Firm size; industry
suppliers is an important measure of and local governments
supply chain sustainability.
Partnerships with NGO, competitors
and local governments are an
important source of sustainable
Schneider and Wallenburg Stakeholder theory. Industry contexts Both Theoretical Collaboration with suppliers, NGOs, Industry; stakeholder
(2012) influence on sustainable sourcing competitors, customers and local salience
profiles governments
Hartmann and Moeller Attribution theory. Antecedents and Environmental Empirical N/A Firm size, strategic
(2014) consequences of chain liability effect importance of product,
in multitier supply chains degree of incident
Grimm et al (2014) Theory of critical success factors. Both Empirical N/A Trust, power,
Identified critical success factor for relationship duration,
sub-suppliers compliance with transparency, perceived
corporate sustainability value, geographical and
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cultural distance
Supply Chain Management: An International Journal
Multi-tier sustainable supply chains Supply Chain Management: An International Journal
Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

Figure 2 Scope of the articles issues, and need external stimulus from end-user product
manufacturers (Lee, 2008).
To a further extent, Wu et al. (2010) claim that a firm can
influence not only the direct link with first-tier suppliers, but
also the indirect link between two suppliers. For example,
Choi and Hong (2002) verified that Honda selects, directly,
many of its lower-tier suppliers. This approach can also be
explained using resource dependence: firms cannot be
self-sufficient with respect to certain strategic resources and,
therefore, should collaborate with other firms controlling such
resources (Chang et al., 2012). This is particularly important
concerning resources (e.g. standards, procedures,
technologies, etc.) that affect sustainability (Sarkis et al.,
Governance mechanisms 2011). Additionally, it has been argued that high-density
Drawing on the research sample, we identified the practices social networks reduce transaction costs by making
used by lead firms to manage multi-tier relationships with opportunism more costly (because of reputational effects) and
suppliers. Not all of these practices are specifically developed more easily discovered (Zaheer et al., 2000). From an
for addressing sustainability, as some are used to manage information perspective, greater interaction with lower-tier
other issues (e.g. cost). However, sustainability is one of the suppliers reduces information asymmetry (Simpson, 2010).
main motivations for multi-tier practices (Mena et al., 2013). The main disadvantage of this approach is the increased
These practices can be grouped in four basic approaches: managerial effort demanded by the lead firm (Mena et al.,
Direct, Indirect, Work with third parties and Dont 2013), e.g. when lead firms have to identify and monitor
bother. They are defined and discussed as follows. Table II lower-tier suppliers (Choi and Hong, 2002). Nevertheless,
further provides a list of these approaches identified by firms that forge a great number of alliances are able to extract
existing studies. A list of organizational theories applied to the more value from these links, as they gain more experience
four approaches is depicted in Table III. (Plambeck, 2012).

Direct Indirect
In this approach, lead firms have a direct access to lower-tier In this approach, contact with lower-tier suppliers is
suppliers. They can by-pass first-tier suppliers and establish a performed indirectly through another supplier. For example,
direct contact with lower-tier suppliers, to monitor, govern lead firms use their power over first-tier suppliers to make
and collaborate with them to improve their environmental or them monitor or collaborate with lower-tier suppliers. It is
social performance. This approach is similar to the closed difficult for a single company to manage compliance within
structure of buyersuppliersupplier triads suggested by Mena the entire supply chain, thus cross-tier collaboration is
et al. (2013). In this direct approach, however, links may essential (Mueller et al., 2009; Koh et al., 2012), e.g. lead
also be informal and may occur on an ad hoc basis (e.g. the firms may pressure first-tier suppliers to require environmental
lead firm provides information that might improve lower-tier or social certification from lower-tier suppliers. This approach
supplier sustainability). Accordingly, the literature on strategic is based on the open structure of triads suggested by Mena
networks (Jarillo, 1988; Sydow and Windeler, 1998; Zaheer et al. (2013), but in this case related to any lower-tier supplier
et al., 2000) proposes that a hub firm can exert a leading role (i.e. not only the second tier).
in a network, due to its closeness to the end consumer, size or Standards are a major indirect mechanism of coordination
ability to build connections. It allows lead firms to fill in of lower-tier suppliers (Pilbeam et al., 2012; Grimm et al.,
structural holes (i.e. the lack of connections between agents in 2011), reducing information asymmetry (Prado, 2013) and
a supply network) and therefore obtain power in the network transaction costs (Ciliberti et al., 2009). Empirical studies
(Burt, 2009). Additionally, Pilbeam et al. (2012) argue that confirm that SMEs can be effective in spreading the
the coordination of dispersed supply networks is less costly sustainability requirements received from large companies to
and more effective when there is centralization and it is their own suppliers (Ayuso et al., 2013). Accordingly,
conducted by a lead firm. Small suppliers lack the information-sharing mechanisms are highly important in this
information, resource or expertise to manage environmental approach; e.g. when first-tier suppliers adopt the same
standard as the lead firm, they are able to gather
sustainability-related information for lower-tier suppliers
Figure 3 Research framework
(Ciliberti et al., 2009). Moreover, the relational view (Dyer
Contingency variables and Singh, 1998) may explain the extent to which the nature
of critical resources at lower tiers affects the relationship
Governance mechanisms (social / environmental) between lead firms and first-tier suppliers. For example, firms
such as Nike train key first-tier suppliers on the use of
environmental databases to monitor and collaborate with
3rd-tier 2nd-tier 1st-tier Lead firm lower-tier suppliers (Plambeck and Denend, 2011).
supplier supplier supplier

Work with third parties (NGOs, government, competitors, etc.)

Lower-tier suppliers In this approach, lead firms collaborate or delegate

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Table II Lower-tier supplier management practices

Approach Practices References
Direct Provide requirements to lower-tier suppliers (e.g. codes of conduct, Zhu and Sarkis, 2004; Boyd et al., 2007;
list of hazardous substances, etc.) Mueller et al., 2009; Zhu et al., 2012;
Wittstruck et al., 2012; Simpson et al., 2012;
Caniels et al., 2013
Directed sourcing; select directly lower-tier suppliers or use a list Mena et al., 2013; Lee et al., 2012a
of preferred lower-tier suppliers
Monitor suppliers (e.g. visits, audits, surveys) Rao, 2002; Zhu and Sarkis, 2004; Boyd et al.,
2007; Shukla et al., 2009; Vachon and
Klassen, 2006; Zhu et al., 2008; Awaysheh
and Klassen, 2010; Foerstl et al., 2010
Share buyer-generated databases (product composition, Plambeck and Denend, 2011; Lee et al., 2012a
environmental footprint, etc.)
Provide assistance to suppliers (e.g. training, supplier conferences, Rao, 2002; Zhu and Sarkis, 2004; Zhu et al.,
joint applied research) 2008; Cheng and Sheu, 2012; MacCarthy
et al., 2012; Kim and Rhee, 2012; Plambeck,
2012; Zhu et al., 2012; Bourlakis et al., 2014
Indirect Provide requirements to first-tier suppliers (e.g. codes of conduct, Koh et al., 2012; Simpson et al., 2012; Delmas
list of hazardous substances, etc.) and Montiel, 2009
Require that lower-tier suppliers be certified (e.g. ISO 14000, SA Esty and Winston, 2006; Castka and
8000) Balzarova, 2008; Gonzalez et al., 2008;
Ciliberti et al., 2009; Mueller et al., 2009;
Simpson et al., 2012; Wittstruck et al., 2012;
Mena et al., 2013
Provide assistance to first-tier suppliers on how to monitor and/or Plambeck, 2012; Plambeck and Denend, 2011;
collaborate with lower-tier suppliers Plambeck et al., 2012; Lee et al., 2012a
Work with third parties Use information from third parties (e.g. NGOs) to monitor lower- Plambeck and Denend, 2011; Plambeck et al.,
tier suppliers (e.g. environmental databases) 2012; Lee et al., 2012b
Collaborate with NGOs (e.g. joint development of environmental Pagell and Wu, 2009; Alvarez et al., 2010; Lee
standards) et al., 2012b; Peters et al (2011)
Collaborate with competitors (e.g. to develop common audit Esty and Winston, 2006; Plambeck et al.,
standards; industry groups; industry self-regulations; voluntary 2012; Prado, 2013; Peters et al., 2011
Delegate responsibilities to third parties (e.g. standards
institutions, third-party auditors)
Dont bother No information about lower-tier suppliers Esty and Winston, 2006; Schneider and
Wallenburg, 2012; Mena et al., 2013
Focus on first-tier suppliers/internal focus Esty and Winston, 2006; Gonzalez et al., 2008

responsibilities to other organizations (e.g. NGOs, lower-tier suppliers (Ciliberti et al., 2009), e.g. Walmarts
competitors, firms from the same industry, standards environmental standards developed together with the Global
institutions, etc.) to elaborate sustainability standards, Aquaculture Alliance for its farm-raised fish products
implement industry self-regulations (Prado, 2013) or (Plambeck and Denend, 2011).
voluntary standards (Grimm et al., 2011; Peters et al., 2011), In addition, firms can also use NGO-built environmental
monitor suppliers using third-party sustainability databases, and social databases to monitor their lower-tier suppliers
etc. Even though companies can delegate some responsibilities (Miemczyk et al., 2012). This can be understood using
to the third parties such as certification bodies, it is important resource dependency theory, which supports the notion that
for lead firms to provide input to such third parties and even the lack of strategic resources may incentivize lead firms to
oversight their effectiveness. Another possibility is to establish direct links with third parties (Chang et al., 2012).
implement coalitions with competitors and other industries to From a social network perspective, nodes with more ties will
improve negotiation power with respect to lower-tier have more access to information (Borgatti and Li, 2009).
suppliers, and create or participate in voluntary sustainability However, the relational view argues that cooperating with
initiatives which involve lower-tier suppliers (Grimm et al., non-business actors such as NGOs requires different
2011; Peters et al., 2011). For example, Walmarts alliance relational patterns (Crespin-Mazet and Dontenwill, 2012).
with Unilever aiming at accruing more power with respect to From an agency theory perspective, this new triad relationship
Cargill, a critical lower-tier supplier of sustainable palm oil (i.e. lower-tier supplierthird party buyer), without
(Plambeck, 2012). Third-party monitoring of standards commercial contractual obligations, will incur in a different set
complements incomplete contracts, especially with respect to of incentives and information-sharing mechanisms.

Table III Theoretical foundations for multi-tier sustainable supply chain management
Multi-tier sustainable supply chain management practices
Theories Dont bother Direct (second tier, etc.) Indirect (via first tier) Work with third parties
Agency theoryagency problems Understand how agency problems Understand agency problems Understand agency problems with a A new triad relationship (lower-tierthird parties
such as asymmetric information, can drive firms not to bother with a focus on the direct focus on tasks related to the buyer) without real contractual obligation, meaning
moral hazard and conflict of about the management of lower- relationship with low-tier management of low-tier suppliers the third party is seen as the agent that does not
interest add agency costs to the tier suppliers suppliers while considering receive payment directly from the buyers
lead firm, leading to the use of the relationships with the
various monitoring practices, first-tier suppliers
reward mechanisms, contract
design and information sharing
mechanisms (Eisenhardt, 1989)
Transaction cost theoryexplains Understand how transaction cost Understand transaction costs Understand transaction costs unique While there is no commercial contract relationship
the costs (search and can drive firms not to bother unique to this relationship to this relationship and drivers with the third party, still there will be search and
Multi-tier sustainable supply chains
Elcio M. Tachizawa and Chee Yew Wong

information, bargaining, about the management of lower- and drivers behind the direct behind the direct management of information and bargaining costs involved
policing and enforcement) tier suppliers management of the lower- the lower-tier suppliers via the first-
involved in making economic tier suppliers tier suppliers
exchange (Williamson, 1981)
Information process theory and Understand in which conditions Understand information needs and information-sharing mechanisms Working with third parties can reduce the risk of
signalling theoryhelp to information exchange with or with first-tier and lower-tier suppliers (also information from/to low- satisficing signalling
understand how information about lower-tier suppliers will not tiers suppliers via the first-tier suppliers)

asymmetry can affect the be effective to the lead firm
effectiveness of sustainable
supply chain practices and the
use of specific information-
sharing mechanisms (Simpson
et al., 2007)
Social network theoryThe Understand in which context the The centralization and Understand to what extent the Understand which specific characteristics will be
performance of a buying extended supply network formalization level within a density of the social network will more effective with respect to the ties with each
company depends on the sustainability will not affect the social network may improve impact its sustainability third party (NGOs, government, competitors)
structure of the extended lead firm performance the performance of the lead performance
supply network in which it is firm
embedded (Choi and Kim, 2008)
Balance theory - balance is Relevant to the study of triad Can be used to understand the balance among the different relationships e.g. first-tierbuyersecond-tier; third-party
reached when everyone (suppliersupplierbuyer) when buyersecond-tier; third-partybuyerfirst-tierCan be used to explain the different multi-tier sustainable supply chain
maintains a positive buyer does not bother to manage management practicesBalance can be viewed as a contingency factor
relationship with one another; the lower-tiers
balanced in relationships leads
to positive outcomes,
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(Cartwright and Harary, 1956)

Supply Chain Management: An International Journal
Table III
Multi-tier sustainable supply chain management practices
Theories Dont bother Direct (second tier, etc.) Indirect (via first tier) Work with third parties
Relational viewexplain how N/A To identify which critical To what extent will the nature of Understand the specific characteristics of the inter-
inter-organizational resources justify a direct the critical lower-tier resources organizational relationships with each third party
relationships within the supply approach to lower-tier affect the relationship with the and how these characteristics are related to the
chain can be a source of suppliers first-tier suppliers critical sustainability resources
competitive advantage by
facilitating access to critical
(network) resources (Dyer and
Singh, 1998)
Resource-based Identify which internal resources Understand the mechanisms Understand the mechanisms of Understand the critical resources available in third
viewCompetitive advantage may compensate the lack of of identifying and identifying and transferring parties and how they affect sustainability
may be sustained by contact with lower tiers transferring sustainability- sustainability-critical resources from
Multi-tier sustainable supply chains

incorporating resources that are critical resources directly lower tiers via first-tier suppliers
Elcio M. Tachizawa and Chee Yew Wong

valuable, rare, imperfectly from lower tiers

imitable and non-substitutable
(Barney, 1991)
Stakeholder and institutional Analyse how the lack of Identify which stakeholders Understand the mechanisms that Analyse the complex role that third parties may
theory - Companies produce stakeholder pressures may shape and mechanisms of pressure lead firms use to transfer exert by simultaneously generating and supporting
externalities that affect many a reactive approach by lead firms will incentivize firms to sustainability pressures across the management of different stakeholder pressures
parties (stakeholders), who in with respect to supply chain adopt a direct approach to several tiers of the supply chain

response will exert pressure sustainability lower tiers
mechanisms over the firms (Zhu
et al., 2008)
Systems thinkingThe N/A Explain how the direct link N/A Understand how the link with third parties affects
component part of a system can with lower-tier suppliers can the sustainability in other parties of the system
be best understood in the improve the sustainability of
context of relationships with other parties of the system
other systems rather than in
isolation (Checkland and
Holwell, 1997)
Complexity theoryAs system Explain why the reduction in Investigate to what extent Investigate to what extent the lack Understand the links between collaboration with
complexity (i.e. the number of operational complexity may the direct link with lower of direct link with lower tiers third parties, system complexity and sustainability
elements and the degree to incentivize firms to adopt this tiers affect system affects system complexity and how performance
which these elements are approach complexity and how this will this will impact overall
differentiated) increases, it impact overall sustainability sustainability performance
becomes more difficult to performance
determine its performance
outcomes (Crozier and Thoenig,
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Supply Chain Management: An International Journal
Table III
Multi-tier sustainable supply chain management practices
Theories Dont bother Direct (second tier, etc.) Indirect (via first tier) Work with third parties
Resource dependence - Firms Explain under which conditions Understand how and to Explain under which conditions lead Understand how and to what extent sustainability
cannot be self-sufficient with lead firms may reduce their what extent sustainability firms may reduce their sustainability resource dependence incentivizes lead firms to
Multi-tier sustainable supply chains

regard to strategically critical sustainability resource resource dependence resource dependence and to what establish direct links with third parties
Elcio M. Tachizawa and Chee Yew Wong

resources (e.g. standards, dependence and to what extent incentivizes lead firms to extent this justifies their reduced
procedures, technologies, this justifies their reduced links establish direct links with links with suppliers
material sources, distribution with suppliers lower-tier suppliers
channels) and thus need to
collaborate with suppliers (Zhu
and Sarkis, 2004)
Path dependenceFirms are Explain how initial non- N/A N/A N/A

incentivized to reinforce initial sustainable choices become
choices; and thus limit future reinforced and supply network
choice options (David, 1985) structures may persist in spite of
non-optimal sustainability
Social embeddedness theory Explain why lead firms may Explain why lead firms may Explain why lead firms may choose Explain why lead firms may establish direct links
Firms are embedded in choose to neglect ties with lower- establish direct links with to neglect ties with lower-tier with third parties (in particular, NGOs, government
networks of social relationships, tier suppliers based on the lower-tier suppliers, suppliers based on the possible and competitors), motivated by the cooperation
characterized by the strength its possible drawbacks caused by motivated by the drawbacks caused by structural benefits of an increased embeddedness
social ties; this can be either a structural embeddedness cooperation benefits of an embeddedness
cooperation enabler or a increased embeddedness
liability (Granovetter, 1985)
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Supply Chain Management: An International Journal
Multi-tier sustainable supply chains Supply Chain Management: An International Journal
Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

Nevertheless, issues such as transaction costs will still be P1. Lead firms intend to achieve sustainability in a
present: while there is no commercial contract relationship multi-tier supply chain using one or more of the four
with the third party, still there will be search, information and approaches: Direct, Indirect, Work with
bargaining costs involved. Finally, the multiple and complex third-party or Dont bother.
relationships that have to be managed among different actors
in this approach can be better analysed using balance theory In Table III, we relate the main organizational theoretical
(Choi and Wu, 2009). frameworks to the identified approaches.

Dont bother Contingency variables

In this approach, firms focus on first-tier suppliers and have Contingency theory has attracted considerable interest
neither information about lower-tier suppliers nor intention to recently in operations management and SCM literature
influence them. This approach is found in firms with limited (Wiengarten et al., 2012). Sousa and Voss (2008) argue that,
power in the supply chain (Esty and Winston, 2006). Drawing rather than analysing management practices, researchers
on the notion of emergence of supply networks, firms may find should analyse the context under which they are effective, by
it hard to deliberately plan the exact structure of the network examining, exhaustively, the literature and theoretical
after the first-tier supplier selection (Choi et al., 2001). frameworks, and providing a wide-ranging list of factors. We
Moreover, the final assembler often has rather imprecise or describe below some of the contingency variables found in the
inexistent information regarding lower-tier suppliers (Choi SSCM literature and their effect on the approach chosen by
and Hong, 2002). This approach may be more applied to less the lead firm.
complex supply chains (e.g. less tiers), or firms with less
visibility to the final customer (Caridi et al., 2010). Firms that
Power is the ability to influence the activities of other members
face less intense institutional pressure tend to be followers
of the network (Pilbeam et al., 2012). Parmigiani et al. (2011)
and adopt a more conservative approach, i.e. implement
make a distinction between two types of influence: economic
successful practices after they are tested by pioneer companies
(negotiation power) and non-economic (industry influence).
(Simpson et al., 2007) or use the same first-tier suppliers as
Alternatively, Mena et al. (2013) distinguish between two
leading firms (Esty and Winston, 2006). They are usually
sources of power: possession of resources (e.g. ability to offer
smaller and have fewer technical and financial resources
contracts) and supply chain position (e.g. proximity to the
(Delmas and Montiel, 2009).
market). Its role in SSCM governance mechanisms is a
This approach can be understood under the theoretical lens
promising venue of research (Alvarez et al., 2010), as
of the resource-based view, i.e. certain firms may rely on
asymmetric power relations are intrinsic to global supply
internal and external (first-tier supplier) resources that
networks (Pilbeam et al., 2012). Power distribution influences
compensate the lack of contact with lower-tier suppliers.
the depth of collaboration between buyers and suppliers in
Similarly, path dependence and the reinforcement of internal
networks (Kahkonen, 2014). For example, coordination
structures that compensate the lack of external links may
through standards requires that a powerful supply chain
reduce the incentives to build additional ties with lower-tier
partner enforces it (Ciliberti et al., 2009), and supplier power
suppliers. Developing costly information exchange
limits sustainable SCM (Hoejmose et al., 2013). Whereas
mechanisms is often ineffective and uneconomical (Simpson
trust is related to collaboration, power is used to achieve
et al., 2007); therefore, if agency problems (e.g. asymmetric
compliance (Handfield and Nichols, 1999).
information and conflicts of interest) are reduced, it may be
unnecessary to rely on sophisticated mechanisms of Stakeholder pressure
monitoring or information sharing. Furthermore, excessive When firms are more visible to the media, institutional
structural embeddedness may be a liability to lead firms pressure is often more intense (Castka and Balzarova, 2008;
(Granovetter, 1985). Finally, as system complexity increases, Simpson et al., 2012). In this case, firms tend to adopt a more
it becomes more difficult to control its performance (Sarkis proactive approach and establish direct links with any agent
et al., 2011) and, therefore, a simplification in the structural that can contribute to the sustainability of the supply chain
and operational complexity may be beneficial to the lead firm (Esty and Winston, 2006). Companies with higher public
(Kim et al., 2011). visibility will place more emphasis on the particular
It is important to mention that the above four approaches sustainability dimensions focused by NGOs (Schneider and
may be complementary to each other, i.e. a firm may Wallenburg, 2012). For instance, the Dirty Laundry report
simultaneously rely on more than one approach for a specific by Greenpeace about the pollution issues of lower-tier textile
supplier or material. For example, a firm may collaborate with suppliers had exerted a lot of pressure on high-street fashion
lower-tier suppliers by training them on cleaner production clothing retailers (Greenpeace, 2011). Likewise, transparency
methods and, at the same time, work with an NGO to design (i.e. product visibility and end-user knowledge of the supply
an industry-specific environmental standard. In particular, the chain) has a positive effect on the adoption of social
purchasing of certified material often implies the collaboration sustainability by suppliers (Awaysheh and Klassen, 2010).
with a third party and at the same time the delegation of part Similarly, stakeholder saliency determines the level and depth
of the responsibilities on lower-tier suppliers to the certifying of supplier monitoring (Esty and Winston, 2006; Schneider
organization and the first-tier supplier. The higher the and Wallenburg, 2012; Gualandris et al., 2013). Alternatively,
complexity, the more diversified should be the set of firms that are less visible to the final consumers tend to be
governance mechanisms (Grandori and Soda, 2006). Based more reactive, waiting longer to establish links with other
on this, we formulate the following initial proposition: agents in the supply chain (Simpson et al., 2012). Finally,

Multi-tier sustainable supply chains Supply Chain Management: An International Journal
Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

Parmigiani et al. (2011) posit that accountability (i.e. the dependency positively influences socially responsible SCM
extent to which firms are required or expected to justify their (Hoejmose et al., 2013). This dependency can be augmented,
supply chain decisions to stakeholders) positively affects the depending on the level of concentration in the industry at the
impact of social/environmental capabilities on sustainability lower tiers of supply chains (Plambeck, 2012), forcing lead
performance. Thus, the higher the accountability, the higher firms to adopt alternative governance mechanisms, e.g.
the motivation of the lead firm to invest in collaboration with competitors (Lee et al., 2012a).
social/environmental capabilities. Finally, low government
pressure may incentivize networks to self-regulate by using
Distance (e.g. physical, social or cultural) among supply chain
standards (Pilbeam et al., 2012).
partners increases information asymmetry and coordination
Industry efforts (Simpson et al., 2007; Mares, 2010). Similarly,
The industry effect on the effectiveness of managerial Awaysheh and Klassen (2010) verify, in a multi-industry
practices has been traditionally studied in SCM (Fisher, survey among Canadian firms, that supplier distance may
1997). In SSCM, recent studies suggest that industry affect the adoption of socially responsible supplier practices.
influence is particularly powerful (Castka and Balzarova, They argue that, if supplier distance is small, the variety of
2008). Wiengarten et al. (2012) demonstrate that firms in socially responsible supplier practices is reduced. On the other
static industries invest a higher amount, more productively, in hand, when distance increases, the lead firm relies on more
environmental practices than firms in dynamic ones. This is diversified governance mechanisms. Additionally, Hoejmose
especially important when we consider lower-tier suppliers, et al. (2013) argue that geographic distance increases the effect
because, by definition, they produce more basic raw materials, of dependency and buyer power on the level of adoption of
e.g. a more static industry context. Therefore, standards may socially responsible SCM.
be less effective when there is significant technological change
Knowledge resources
within the supply network (Pilbeam et al., 2012). Accordingly,
Esty and Winston (2006) posit that the lack of knowledge
Chavez et al. (2012) have studied the effect of industry
resources is an important incentive for lead firms to
clock-speed on the relationship between SCM and
collaborate with third parties on the design and
performance. Additionally, Schneider and Wallenburg (2012)
implementation of sustainable practices in the supply chain.
characterize the industries into several archetypes, based on
Similarly, Plambeck and Denend (2011) argue that even big
the emphasis of environment, social or economic
multinational firms may lack the technical expertise to manage
sustainability. For example, the chemical industry adopts an
the sustainability of their suppliers and, thus, they need to
environmentalist profile, whereas the textile sector follows a
associate with NGOs to implement sustainability in their
social activist approach. Finally, another potential industry
supply chains. Alternatively, firms with less technical
classification refers to the pollution level. Simpson et al.
resources may adopt a conservative strategy, implementing
(2012) claim that when firms operate in high-pollution
sustainable practices after leading firms, lowering their risks
industries (e.g. chemical), institutional pressure for
(Simpson et al., 2007; Delmas and Montiel, 2009).
performance improvement is often more intense, so they tend
Based on the above understanding of contingency factors,
to develop superior environmental capabilities and adopt a
we formulate the following initial proposition:
more proactive approach. Alternatively, firms that operate in
low-pollution sectors face less intense institutional pressure P2. Power, stakeholder pressure, material criticality,
and tend to wait longer to adopt new sustainability practices. industry dynamism/pollution level, dependency,
Material criticality distance and knowledge resources determine the
Criticality of materials is commonly associated with the approach chosen by the lead firm to manage the
impact on the final product quality or sustainability, e.g. sustainability of lower-tier suppliers.
high-quality wheat is a key ingredient in bread making (Mena
Based on the literature review, we propose the following
et al., 2013). Highly critical materials may force lead firms to
conceptual framework (Figure 4). The framework illustrates four
establish direct links with lower-tier suppliers (i.e. a direct
approach), whereas materials with low criticality may
motivate lead firms to adopt a more indirect or dont Figure 4 Conceptual framework
bother approach to lower-tier suppliers. A lead firm will
connect directly with its lower-tier suppliers that control key Contingency Third
Work with
product characteristics (Choi and Hong, 2002; Lee et al., variables
third party
2012a). In the organizational context, material criticality
increases the relational proclivity of the lead firm, i.e. the Power
Stakeholder pressure Direct Lower-tier
benefits obtained through inter-organizational relationships Material criticality
firm suppliers
(Cheng and Sheu, 2012). Industry
Dependency Indirect
Dependency Distance Dont
Knowledge resources bother
Awaysheh and Klassen (2010) claim that dependency on 1st tier
suppliers (i.e. the degree to which a firm relies on other
members of the supply chain for critical resources, Relationship e.g.
components, or capabilities) directly affects the adoption of direction of contact
or influence
socially responsible practices. More specifically, joint

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Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

categories of multi-tier SSCM approaches a lead firm can apply, pressure, material criticality, industry pollution level,
and the contingency variables that will affect this choice. dependency, supply chain distance and knowledge
Based on the literature review, we further refine the two resources, and negatively affected by industry
initial propositions with respect to the effect of contingency dynamism.
variables on the SSCM approach (Table IV). This table
should be read as in the following example: firms following the However, a lead firms limited amount of knowledge resources
direct approach tend to have more power, face higher might impose some hurdles to the collaboration with suppliers
stakeholder pressure, are more likely to operate in a (Esty and Winston, 2006: Plambeck and Denend, 2011). In
high-pollution sector and receive highly critical materials from this case, the lead firm may have to rely on a third party
these suppliers. On the other extreme, firms that follow the possessing sustainability-related knowledge (e.g. an NGO).
dont bother approach will usually have lower power, face Moreover, when the lead firm has limited power, it may have
lower stakeholder pressure, low dependency, operate in a to collaborate with competitors to influence their common
low-pollution sector and will not receive highly critical lower-tier suppliers (Plambeck, 2012). Furthermore, when
materials from these suppliers. industry dynamism is high, it becomes costly to directly
We now explain how our initial propositions can be refined: monitor and work with a less-stable low-tier supply base to
when the lead firm has little power, it is not able to influence achieve sustainability. Thus, lead firm power and knowledge
lower-tier suppliers practices (Caniels et al., 2013; Bourlakis resources negatively affect the probability of collaborating with
et al., 2014). On the other hand, if there is a strong stakeholder a third party.
pressure, lead firms are forced to adopt a more proactive Therefore, we formulate the research hypothesis:
approach, establishing direct collaboration or monitoring
lower-tier suppliers. This pressure will be stronger if the lead P4. The probability of the lead firm adopting the Work
firm operates in a high-pollution industry (Simpson et al., with third party is positively affected by stakeholder
2012), or if the material is critical to supply chain pressure, material criticality, industry pollution level,
sustainability (Mena et al., 2013). Furthermore, if the lead dependency and supply chain distance, and negatively
firm is highly dependent on the supplier, it will have extra affected by its knowledge resources, power and industry
incentives to closely monitor its sustainability (Awaysheh and dynamism.
Klassen, 2010). Moreover, if the lead firm has plenty of
However, when the material criticality and dependency are
knowledge resources, this collaboration with lower-tier
low, the lead firm may prefer to avoid complexity by not
suppliers will be further encouraged (Plambeck and Denend,
establishing a direct link with lower-tier suppliers (Cheng and
2011; Simpson et al., 2007). Additionally, if the lower-tier
Sheu, 2012; Plambeck, 2012; Mena et al., 2013). Moreover, if
supplier is highly distant from the lead firm, then the lead firm
will have incentives to closely monitor its activities to reduce the distance is low, so is information asymmetry (Awaysheh
information asymmetry (Simpson et al., 2007; Awaysheh and and Klassen, 2010) and, therefore, the lead firm may rely on
Klassen, 2010). Finally, if the lead firm operates in a dynamic less complex governance mechanisms, e.g. sustainability
industry, it will invest less in SSCM (Wiengarten et al., 2012), certifications and first-tier supplier pressure (Koh et al., 2012).
and therefore it will avoid building direct ties with lower-tier Additionally, when industry dynamism is high and pollution
suppliers. level is low, environmental investments will be less effective
Thus, we formulate the following research proposition: (Simpson et al., 2007; Wiengarten et al., 2012); therefore, the
lead firm will have less incentive to build direct links upstream
P3. The probability of the lead firm adopting the Direct in the supply chain. Finally, when lead firm power is high,
approach is positively affected by its power, stakeholder pressure on first-tier suppliers can be highly effective (Koh

Table IV Approaches vs contingency variables

Contingency variable References Direct Indirect Third party Dont bother
Power Ciliberti et al., 2009; Parmigiani et al., 2011; Simpson High High Low Low
et al., 2012; Schneider and Wallenburg, 2012; Mena
et al., 2013; Grimm et al., 2014
Stakeholder pressure Esty and Winston, 2006; Castka and Balzarova, 2008; High High High Low
Awaysheh and Klassen, 2010; Simpson et al., 2012;
Schneider and Wallenburg, 2012
Industry pollution level Esty and Winston, 2006; Simpson et al., 2012; High Low High Low
Plambeck, 2012
Industry dynamism Wiengarten et al., 2012; Koh et al., 2012 Low High Low High
Dependency Awaysheh and Klassen, 2010; Plambeck, 2012; Lee High Low High Low
et al., 2012a
Distance Awaysheh and Klassen, 2010; Grimm et al., 2014 High Low High High
Material criticality Mena et al., 2013; Hartmann and Moeller (2014) High Low High Low
Knowledge resources Esty and Winston, 2006; Plambeck and Denend, 2011 High Low Low Low

Multi-tier sustainable supply chains Supply Chain Management: An International Journal
Elcio M. Tachizawa and Chee Yew Wong Volume 19 Number 5/6 2014 643663

et al., 2012). All these factors motivate lead firms to use an This paper synthesizes research in the area and proposes a
Indirect approach through their power over first-tier multi-tier conceptual framework for supply chain managers to
suppliers. manage sustainability. Furthermore, this integrative
So, we posit the following: framework embeds some contingency variables and
propositions that can suggest when an approach is more
P5. The probability of the lead firm adopting the Indirect effective than another. These findings have critical managerial
approach is positively affected by its power, stakeholder implications, e.g. supplier selection, purchasing processes,
pressure and industry dynamism, and negatively production location, etc. In particular, the study provides
affected by material criticality, industry pollution level, guidance on how to take into consideration buyer, supplier,
supply chain distance, dependency and knowledge industry and product characteristics simultaneously, when
resources. taking such decisions from a sustainability perspective.
Although many studies focus on a specific context
Nevertheless, when the lead firms power is not high enough to
characteristic, real-world decisions have to incorporate a much
influence first-tier suppliers, a Dont bother approach may
more diversified set of variables. This study lays down the
be more preferable (Bourlakis et al., 2014), e.g. selecting the
theoretical foundations to bridge this gap.
same suppliers of highly sustainable companies (Esty and
Concerning the limitations of this study, we acknowledge
Winston, 2006). Furthermore, the reduced level of
the drawbacks of the systematic literature review methodology
stakeholder pressures may induce a passive approach by lead
(Denyer and Tranfield, 2009), especially those concerning the
firms, with respect to supply chain sustainability (Castka and
literature sampling criteria and analysis. Moreover, further
Balzarova, 2008). Finally, if lower-tier suppliers are located in
empirical research is required to test the research propositions,
distant countries, lead firms may have a higher incentive to
and to validate the conceptual framework and generalize the
invest in monitoring or collaboration activities (Hoejmose
conclusions. Further research should explore cross-industry
et al., 2013).
empirical data, testing the research propositions and the
Thus, we posit the following proposition:
applicability of the conceptual framework. Additionally, it is
P6. The probability of the lead firm adopting the Dont necessary to develop methodologies for prioritizing the great
bother approach is positively affected by industry number of lower-tier suppliers (thousands, in many cases)
dynamism, and negatively affected by its power, according to specific criteria. Finally, studies should test
stakeholder pressure, material criticality, industry extent to which approaches and contingencies differ for social
pollution level, knowledge resources, supply chain and environmental sustainability. Therefore, we believe this
distance and dependency. study contributes to expand knowledge on this critical issue
and sets the ground for future SSCM research initiatives.
In the next section we discuss research and managerial
implications of this conceptual framework.
Conclusion Abbasi, M. and Nilsson, F. (2012), Themes and challenges
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it examines existing literature and theories of multi-tier SCM Supply Chain Management: An International Journal, Vol. 17
using a systematic approach. Second, it provides a novel No. 5, pp. 517-530.
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Zhu, Q. and Sarkis, J. (2004), Relationships between About the authors
operational practices and performance among early
adopters of green supply chain management practices in Elcio M. Tachizawa is an Assistant Professor at the
Chinese manufacturing enterprises, Journal of Operations Department of Business Administration at University Carlos
Management, Vol. 22 No. 3, pp. 265-289. III of Madrid. He earned a PhD degree in management from
Zhu, Q., Sarkis, J., Cordeiro, J.J., Lai, K.H. (2008), Pompeu Fabra University (Barcelona, Spain). He is currently
Firm-level correlates of emergent green supply chain investigating how firms green their supply chains and adopt
management practices in the Chinese context, Omega, environment-friendly management practices. His work
Vol. 36 No. 4, pp. 577-591. appears in journals such as the International Journal of
Zhu, Q., Sarkis, J. and Lai, K.H. (2012), Green supply chain Production Research, the International Journal of Production
management innovation diffusion and its relationship to Economics, the International Journal of Operations and
organizational improvement: an ecological modernization Production Management and Supply Chain Management: An
perspective, Journal of Engineering and Technology International Journal. Elcio M. Tachizawa is the corresponding
Management, Vol. 29 No. 1, pp. 168-185. author and can be contacted at: elcio.mendonca@uc3m.es
Chee Yew Wong is a Professor of supply chain management
and Director of the Centre for Operations and Supply Chain
Further reading
Research (COSCR) at Leeds University Business School,
Gereffi, G. and Lee, J. (2012), Why the world suddenly cares University of Leeds, UK. He earned a PhD in supply chain
about global supply chains, Journal of Supply Chain management from Aalborg University, Denmark. His research
Management, Vol. 48 No. 1, pp. 24-32. interests include supply chain integration, supply chain
Khknen, A.K. (2014), The influence of power position on collaboration, sustainable supply chain and supply chain
the depth of collaboration, Supply Chain Management: An innovation. His work appears in journals such as Journal of
International Journal, Vol. 19 No. 1, pp. 17-30. Operations Management, International Journal of Production
Lo, S.M. (2014), Effects of supply chain position on the Economics and Supply Chain Management: An International
motivation and practices of firms going green, International Journal.

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