What is the relationship between social responsibility and corporate performance?

The interaction and integration of corporate social responsibility [CSR] and supply chain management [SCM] has led to sustainable supply chain management [SSCM]. The factors of anticipated increase in climate change, demand for transparency, increased environmental pollution, energy prices, and consumer awareness will definitely serve to amplify the importance of SSCM.

There are several definitions of sustainability. The most well-known definition was offered by the Brundtland Commission [1987]: “development that meets the needs of the present without compromising the ability of future generations to meet their needs.” This broad macro-economic definition was criticized for not being specific enough to properly guide companies and their supply chains. Therefore, in response, the triple bottom line concept was developed, which included societal, environmental, and economic performance.

Considering that, on average, manufacturers purchase approximately 60% of their product components from suppliers, it is impossible for firms to be sustainable without greening their supply chains. Seuring and Müller [2008] stated “supplier developments were required before focal companies were even able to offer ‘sustainable’ products to their customers. This demands much deeper information flows along the supply chain, where suppliers have to gain detailed insights …” If companies, especially Original Equipment Manufacturers [OEM], are genuinely interested in sustainability, it is imperative that they not dump their hazardous and/or environmentally polluting operations onto Small and Medium Enterprises [SME], whether in their own or other countries. Using small and midsize suppliers that do not employ appropriate environmental capabilities should not be accepted as an excuse for large companies to continue to operate as they have in the past. It is not unusual for SME to not have the necessary resources and capabilities to become environmentally safe companies.

Socially and environmentally responsible companies are increasing in number. For example, Sony uses suppliers that exceed environmental regulatory requirements and who also work with an environmentally sound supply base [Handfield et al., 2005]. Manufacturing companies are increasingly incorporating environmental criteria into their supplier selection processes. However, this is far from sufficient. It is important to encourage their suppliers to become sustainable and environmentally friendly when lacking environmental capabilities. Supplier development is the very essence of SCM and SSCM. Supplier development is the effort of the buying firm to increase their suppliers' capabilities [Ehrgott et al., 2013], which can be challenging because it requires a major commitment of time, money, personnel, and other resources by both parties. Several barriers demonstrate the challenges of supplier development [Monczka et al., 2009]. It can be risky, costly, unproductive, and at times, the required investment can be unrecoverable. There is a need for survey-based and other methods of research applied to supplier development [Simpson and Power, 2005], and in particular, supplier development in environmental activities and processes.

There are three major groups of processes measuring the environmental performance of suppliers: supplier selection based on environmental criteria; the supplier's control and monitoring of environmental activities; and environmental supplier development [ESD]. Unfortunately, much of the literature on the environmental issues concerns supplier selection and control, ignoring supplier development [Govindan et al., 2013].

Firms may choose to help their suppliers with several performance dimensions such as cost, quality [Lin and Chai, 2012], and environment. Where the literature on supplier development is limited, the literature on ESD is very scarce comparatively; this study is intended to contribute towards closing this gap. In essence, the research outlines several elements of sustainability by way of searching for the answers to two questions: [i] is ESD affected by CSR? and [ii] does ESD affect the firms' performances? By providing answers to these questions, this study attempts to extend the literature through clarifying the effect of CSR on ESD, and ESD on firms' performance [i.e., financial performance and competitive advantage]. On a practical level, will the results of this study helps firms to understand which factors catalyze to develop the relationship with their suppliers in order to improve environmental performance? In particular, because the effect of CSR on the financial performance of firms is unstable, by searching this relationship through the agency of ESD, this study intends to clear the way for firms such that if they use supplier evaluation, incentives, and direct involvement, CSR has the potential to indirectly promote the performance of firms.

Sustainable supply chain management

There are several perspectives on sustainability, but the triple bottom line approach is receiving particular attention [Seuring and Müller, 2008]. According to Elkington [1998], sustainability can be achieved by considering environmental, social, and economic performance. SSCM tries to answer the question of “what is it that we need to do, not just to survive, but to thrive and not just one year, three years, or five years from now, but in ten years, 20 years and beyond” [Carter and Easton,

Conceptual model proposal

Firms have responsibilities beyond producing goods for a profit. These include contributing towards solving important social problems [Sawyer and Evans, 2010] and protecting the natural environment. The liability of a firm towards the natural environment is not only to avoid environmental damage, but also to protect and recover it [Türker, 2009]. One of the ways CSR materializes itself is through helping suppliers to develop environmental capabilities. Due to the lack of experts, qualified

Data collection

Survey methodology is used in this study. Manufacturing firms employing more than 250 employees [above the SME size] were considered for this study. Initially 718 responses were collected. Of the 718 responses, 404 were eliminated due to inappropriate respondents [e.g., secretaries], industries [i.e., service], size, or several responses from the same person or firm, leaving 314 acceptable responses. In these remaining responses, missing values were minimal and were replaced by averages. The

Discussion

Although environmental responsibility is usually included as a dimension of CSR, since there are other dimensions [e.g., employees], it is not a given that CSR will automatically be associated with ESD activities. While it is reasonable to expect that CSR leads to ESD, it is a matter of scientific study to test this relationship and its strength. There are mixed results in the extant literature regarding whether CSR has financial and/or other benefits for firms. This research indicated that CSR

Conclusion

Managers concerned with the well-being of their firms should clearly realize the importance and consequences of CSR since managers will increasingly play a major role in writing and instituting CSR policies and code of conduct. CSR is a multifaceted concept, and implementing this philosophy requires the complete attention and efforts of managers. CSR is made up of the following: [i] CSR to employees, [ii] CSR to customers, [iii] CSR to environment, [iv] CSR to media, and [v] partnerships with

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