Wilhelm, Miriam M., Blome, C., Bhakoo, V., & Paulraj, A. (2016) "Sustainability in multi- tier supply chains: Understanding the double agency role of the first-tier supplier. Flashcards
What is the first-tier supplier? (the role to the core company)
The role is a direct link to the final company (last part) of the chain, the company that is selling the product or service. That company has the responsibility to be sustainable. And the only contact in the supply chain they have is with the first-tier supplier. Therefore, the role of the first-tier supplier becomes important for the company. That they fulfil the requirements that the company must live up to.
For example, H&M with alot of sustainability requirements from society and organizations. However, their suppliers are not fulfilling these requirements, which is difficult to control.
How can the core company affect the first-tier supplier to live up to the sustainability requirements?
What is the tripple bottom line theory?
Triple bottom line (Sustainability theory) - Saying that core company is responsible for more than just economic issues.
Previously the companies focused only on the economic side (that profit should only be considered), However, the triple bottom line includes more issues such as social (Working conditions, houres, salaries etc. ) and environmental issues. (Safe products, emissions, etc.) - How do the suppliers take these into account?? (
What is the agency theory?
Agency theory
The problem arises when the principal delegates work to the agent.
The agents actions are driven by self-interest and opportunism.
Difficult and expensive for the principal to verify what the agent is doing.
Consequences => Moral Hazzard, Information asymmetry, Adverse selection, incentive alignments. (This paper focus on Information asymmetry, the relation between the two actors, the core company can use incentive alignment (e.g. shares in core company) to motivate them to live up to requirements)
What is the institutional theory? (in regard to first-tier)
Institutional theory
How does the first-tier supplier follow the norms, regulations and culture of the core company. How they are followed and implemented. Sustainability (are rules and regulations) the social and environmental issues are important to be profitable.
