The impact of a firm's corporate social responsibility on firm–supplier relationships: The effect of secondary stakeholder CSR on inventory days

Well‐known benefits of corporate social responsibility (CSR) are goodwill and trust. Typically, research states that if a firm engages in CSR activities that benefit stakeholder X, then stakeholder X will reciprocate with higher levels of trust. We advance this line of research by examining whether...

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Bibliographic Details
Published in:Corporate social-responsibility and environmental management 2022-09, Vol.29 (5), p.1689-1705
Main Authors: Groening, Christopher, Ngoh, Cheryl‐lyn, Luchs, Ryan
Format: Article
Language:English
Subjects:
business environment
CSR
inventory efficiency
Social responsibility
stakeholder engagement
supply chain
Tobacco
trust
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Summary:Well‐known benefits of corporate social responsibility (CSR) are goodwill and trust. Typically, research states that if a firm engages in CSR activities that benefit stakeholder X, then stakeholder X will reciprocate with higher levels of trust. We advance this line of research by examining whether CSR activities directed to stakeholder X increase the levels of trust between the firm and a different stakeholder, Y. Specifically, we examine the consequences of CSR actions that a firm directs toward non‐supplier stakeholders on the firm‐supplier relationship. We argue that a firm's secondary stakeholder CSR (e.g., community and environment) creates trust and goodwill with third parties (i.e., suppliers) that manifests in reduced inventory days. We use a data set comprising 27,551 firm‐year observations and find that secondary CSR is associated with decreased inventory days in more complex (more heterogenous and competitive), munificent (growing), dynamic (unpredictable), and socially irresponsible (e.g., gambling and tobacco) business environments.
ISSN:1535-3958
1535-3966
DOI:10.1002/csr.2319