Jul 2026· Journal of International Business Studies· 0 citations· 51 references
Abstract
Global value chains (GVCs) generate efficiency through production fragmentation but simultaneously create sustainability vulnerabilities that can undermine GVC resilience. While MNE buyer-led private ordering and state regulation represent the primary governance responses to these risks, their effects on supplier compliance remain contested. We develop a domain-sensitive governance framework showing that labor and environmental compliance differ systematically in their cost–benefit structures, and which in turn shape the effectiveness of governance forms in driving compliance across sustainability domains. Using a panel of over 2000 suppliers across emerging economies, we find evidence for the asymmetric effectiveness of governance forms across compliance domains. In the labor domain, both regulation and private ordering improve compliance, as stronger labor regulations increase MNE sourcing and reinforce suppliers’ incentives to upgrade. In contrast, in the environmental domain, while private ordering improves compliance, stringent environmental regulation reduces MNE sourcing, weakening suppliers’ incentives to invest in environmental improvements. We identify a buyer–regulation intermediation mechanism through which regulatory stringency shapes supplier compliance indirectly by altering MNE sourcing strategies. Our findings advance GVC governance research by showing that sustainability compliance, and thus resilience, depends not only on governance instruments but also on domain-specific incentive structures and buyer-mediated governance dynamics.
In the highly volatile, uncertain, complex, and ambiguous (VUCA) era, global supply chains face escalating exposure to external shocks ranging from geopolitical disruptions to public health crises. This study investigates how environmental, social, and governance (ESG)-driven multi-stakeholder collaborative governance influences sustainable supply chain performance under conditions of severe macro-level disruption. Adopting a qualitative single-case study methodology, we conduct an in-depth longitudinal analysis of BYD Company Limited, examining its operational dynamics across the critical period from 2019 to 2023. The findings reveal that collaborative governance does not directly generate measurable performance dividends; rather, supply chain resilience functions as a crucial mediating mechanism that translates governance efforts into tangible outcomes. By organically integrating governments, suppliers, and non-governmental organizations, core enterprises cultivate profound relational capital and achieve extreme informational transparency across the network. These foundational elements systematically enhance the supply network's proactive readiness, concurrent resistance, and rapid recovery capabilities through agile resource bricolage. Ultimately, this enhanced resilience drives holistic sustainable performance across the Triple Bottom Line, encompassing economic, environmental, and social dimensions. Theoretically, this research unlocks the operational black box linking ESG initiatives to long-term performance, effectively bridging Stakeholder Theory with operations management scholarship. Practically, it provides actionable insights for managers seeking to transition from zero-sum bargaining paradigms to symbiotic ecosystems, leveraging ESG metrics not merely as compliance costs but as strategic instruments to construct resilient networks capable of navigating extreme global uncertainties.
Sustainability has shifted from a voluntary reputational activity to a core determinant of regulatory compliance and market access within the United Kingdom fast-moving consumer goods (FMCG) sector. This paper critically evaluates the strategic and operational implications of sustainability-driven supply chain reform, using Unilever UK as an illustrative case. Drawing on secondary industry and regulatory data, the study applies PESTLE, Porter's Value Chain, the Balanced Scorecard, Mendelow's Power–Interest Matrix, and the Stakeholder Salience Model to examine how regulatory, retailer, and supplier dynamics jointly shape sustainability outcomes. The analysis finds that retailers function as de facto regulators, translating statutory requirements into commercial conditions such as delisting, and that supplier capability gaps – with over a quarter of suppliers lacking basic traceability systems – represent the principal constraint on compliance. The paper proposes a three-layer sustainability constraint model (regulatory enforcement, retailer amplification, and supplier capability) and argues that sustainability now functions primarily as a strategic risk-management imperative rather than an inherent source of short-term competitive advantage. Prioritised, KPI-linked recommendations are offered covering supplier capability building, phased digital traceability investment, and deferred sustainability optimisation. The paper contributes a structured account of how regulatory pressure is mediated through commercial power in contemporary FMCG supply chains.
Calistus Chinedu Ogbaga· World Journal of Advanced Re...· 0 citations
For many large manufacturers and consumer brands, most greenhouse gas emissions arise outside their own operations and within supplier networks they do not fully control. However, regulators and investors increasingly expect firms to show credible progress on reducing these emissions. This creates a practical governance challenge for procurement: buying firms are expected to drive decarbonization across multitier supply networks even when supplier data are incomplete, difficult to verify, and uneven across tiers. Drawing on paradox theory and sensemaking theory, this study examines how firms interpret and respond to that challenge. The analysis is based on a multicase study of four European multinationals and 32 interviews with procurement actors conducted in two waves. It identifies five recurring governance difficulties: estimating emissions from weak supplier data, verifying claims that cannot be directly observed, balancing short‐term commercial pressures with long‐term decarbonization goals, creating impact beyond a small set of suppliers, and working with suppliers that are unwilling or unable to change. The findings show that firms facing similar pressures pursue different governance responses. Four distinct response patterns emerge: concentrated oversight of key suppliers, broader supplier capability building, industry collaboration platforms, and efforts to influence wider market conditions. The study contributes by providing an empirically grounded account of how buyer‐side Scope 3 governance is organized under persistent constraint, and by showing that governance responses are shaped not only by external conditions, but also by how procurement actors define the governance problem itself.
Kim Sundtoft Hald· Journal of Supply Chain Mana...· 0 citations
This paper aims to examine why multinational enterprises (MNEs), despite their central role in orchestrating global value chains (GVCs), often fail to generate the expected investment-led upgrading among local suppliers in less developed countries (LDCs). The authors challenge the common assumption that MNE-led orchestration naturally produces positive spillovers.
The study draws conceptually on Acemoglu and colleagues’ work on institutions and investment, alongside Property Rights Theory. These frameworks are used to explain how contractual power asymmetries shape investment incentives within GVCs.
The authors argue that strong power imbalances between orchestrating MNEs and local suppliers weaken suppliers’ incentives to invest in upgrading. Because MNEs can shift perceived business uncertainty onto less powerful suppliers, the latter face heightened risks that discourage long-term capability development. This dynamic helps explain the limited empirical evidence of upgrading in many LDC contexts.
The analysis is conceptual and calls for empirical work that more precisely measures contractual power asymmetries and their effects on supplier investment behaviour. It also suggests revisiting assumptions in IB and GVC research regarding the automaticity of upgrading outcomes.
Policymakers and development agencies should recognise that MNE participation alone does not guarantee supplier upgrading. Strengthening local institutional frameworks and improving suppliers’ bargaining positions may be necessary to foster meaningful capability development.
The paper provides a novel theoretical explanation for the persistent gap between expectations and evidence regarding upgrading in GVCs. By integrating institutional economics with Property Rights Theory, it highlights how contractual power asymmetries systematically undermine suppliers’ incentives to invest.
M. Forsgren, M. Yamin· Critical Perspectives on Int...· 0 citations
Sustainability investments in supply chains are positively associated with firm value on average, yet their effects remain heterogeneous. This paper argues that a critical and undertheorized source of this heterogeneity arises after environmental and social (E/S) outcomes are produced: namely, whether claims about those outcomes can be credibly corroborated through evidence available to the stakeholders whose responses shape firm value. We term this condition outcome verifiability. The problem is especially acute in multi‐tier supply chains, where long causal distances, fragmented data custody, and first‐tier double agency make upstream outcomes difficult to observe and substantiate. To locate where this problem emerges, we develop an integrative Conversion–Implementation–Value Creation (CIV) architecture that assigns distinct explanatory roles to institutional theory, dynamic capabilities, multi‐tier governance, signaling theory, and decoupling research. From this architecture, we derive six propositions. Two are especially distinctive. First, verifiability is valence‐amplifying rather than uniformly value‐enhancing: it strengthens favorable stakeholder responses to strong outcomes but intensifies adverse responses to weak outcomes and discrepancies between claimed and realized performance. Second, its effects are stronger for social than environmental outcome claims to the extent that social claims exhibit lower measurement standardization, greater attribution ambiguity, longer causal horizons, and less mature verification infrastructure. By developing stage‐specific diagnostic checkpoints informed by decoupling research, the framework helps identify whether disappointing firm‐value consequences originate in capability formation, multi‐tier enactment and outcome production, or substantiation and value translation. It thereby explains why disclosure mandates alone cannot substitute for credible verification infrastructure or substantive sustainability performance.
Segu Oh· Business Strategy and the En...· 0 citations
This study investigates how management quality shapes the adoption of sustainability compensation incentives (SCI) in European Union firms. It explores the dual role of governance in promoting sustainability-oriented executive pay in the short term while potentially constraining innovation as governance systems mature.
Drawing on panel data from 952 EU-listed firms between 2010 and 2024, the study applies a dynamic random-effects Probit model with control-function and Mundlak corrections. This approach captures both immediate and persistent effects of management quality on SCI adoption while addressing endogeneity, temporal dependence and unobserved heterogeneity.
Results reveal a strong positive short-term relationship between management quality and SCI adoption. Firms with robust governance systems are more capable of translating sustainability priorities into measurable executive incentives, enhancing accountability and legitimacy. However, this influence weakens and may reverse over time, suggesting potential governance saturation or institutional rigidity over time. Sectoral analysis shows stronger responsiveness in environmentally intensive industries, while cross-country comparisons reveal higher SCI adoption in nations with more mature ESG regulatory frameworks.
The study advances corporate governance and sustainability compensation literature by theorizing a Governance Paradox, whereby the same governance capability that accelerates the initial adoption of sustainability-linked incentives subsequently attenuates their further development. Unlike prior work on organizational rigidity, institutional decoupling and diminishing returns, the Governance Paradox specifically captures how formalized management quality can translate into attenuated marginal expansion of SCI over time, even in high-ESG regulatory environments. Methodologically, it offers one of the few empirical applications of a dynamic Probit framework to executive sustainability incentives, providing new insights into how governance mechanisms evolve and shape long-term sustainability alignment.
Ariz Naqvi, Mujtaba M. Momin, Suzan Dsouza· Evidence-based HRM: a Global...· 0 citations