Supplier and Customer on the Board: Their Impact on Environmental Performance under supply chain upstream, downstream, and financial pressures

10/07/2024 - 10/07/2024

Supplier and Customer on the Board: Their Impact on Environmental Performance under supply chain upstream, downstream, and financial pressures

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Abstract: 
Prior research has demonstrated that firms with both a supplier and a customer on their board of directors tend to exhibit positive financial performance. However, financial performance and environmental performance can often be in conflict. This study, grounded in stakeholder theory, investigates this dynamic using panel data from S&P 900 firms spanning the years 2007 to 2013. Our findings indicate that having a supplier on the board (SOTB) is negatively associated with environmental performance, whereas having a customer on the board (COTB) is positively associated with environmental performance. These relationships are further influenced by supply chain pressures, including upstream supply pressure like COGS intensity and downstream market pressure like sales volatility. Specifically, COGS intensity amplifies the negative relationship between SOTB and environmental performance, while sales volatility enhances the positive relationship between COTB and environmental performance.

Additionally, these interactions are further modulated by financial pressure, as measured by leverage, also drawn from stakeholder theory. Leverage strengthens the interaction effect of COTB and sales volatility on environmental performance but does not significantly affect the interaction between SOTB and COGS intensity. Furthermore, post-hoc analysis reveals that diversification adds to supply chain pressure and influences the interaction effect of SOTB and COGS intensity on environmental performance. The results are robust to various endogeneity concerns, underscoring the complex interplay between board composition, supply chain pressures, financial pressures, and environmental outcomes within the framework of stakeholder theory.

About the Speaker:
Dr. Saurabh Ambulkar's research focuses on resilient and responsible supply chains. He received his PhD from Iowa State University and has published his work in prominent journals such as the Production and Operations Management Journal, Journal of Operations Management, International Journal of Production Research, International Journal of Physical Distribution and Logistics Management and Journal of Purchasing and Supply Management. He serves on the editorial review boards of the Journal of Operations Management and Decision Sciences Journal. Dr. Ambulkar's research has been cited over 1,400 times and has earned him an honorable mention for the Ambassador Award by the Journal of Operations Management. Before joining UT Arlington, he held assistant professor positions at Northeastern University and the University of Dayton. Alongside his academic career, Dr. Ambulkar has industry experience, having worked in supply chain roles at Mahindra and Mahindra Ltd. and Frost and Sullivan.

IIMA