The performance implication of corporate social responsibility in matched Chinese small and medium-sized buyers and suppliers

Abstract

Corporate social responsibility (CSR) is a popular and important strategy for businesses to improve ethical behaviours in order to achieve economic sustainable development. Indeed, many social or environmental incidents that occur in one supply chain member could bring huge risks or disruptions for the entire supply chain. Yet the existent CSR studies rarely take buyers and suppliers into consideration in the examination. On the other hand, the existent literature of CSR is primarily concerned with larger organizations and pays very limited attention to small and medium-sized enterprises (SMEs). Thus, this study, viewed from transaction cost economics theory (TCE) and stakeholder theory, examines how buyers' CSR adoption influences suppliers' CSR adoption (i.e. with or without buyers’ proactive efforts) and whether CSR adoption in matched buyers and suppliers can achieve a win-win outcome for both firms in terms of enhancement in financial performance. The posited hypotheses are tested by 154 matched small and medium-sized buyers and suppliers from the Chinese manufacturing sectors. The majority of the hypotheses are supported by our analysis results. This study fills the gap that there is a lack of exploration in the actual value of CSR for firms in a buyer-supplier relationship. Our findings enrich the literature of CSR and operations management by offering empirical insights from a buyer-supplier and SME perspective, and provide managerial guidelines for enterprises, governments and NGOs to promote CSR and related practices to buyers and suppliers in supply chains.