TY - UNPB
T1 - Corporate Environmental Risk and the Customer-Supplier Relationship
AU - Banerjee, Shantanu
AU - Chang, Xin
AU - Fu, Kangkang
AU - Li, Tao
AU - Wong, George
N1 - Chang acknowledges financial support from Rega Capital Management Limited and Academic Research Fund Tier 1 provided by Ministry of Education (Singapore) under grant numbers SUG FY08, M58010006. Wong acknowledges financial support from RGC General Research Fund under grant number B-Q41Z.
PY - 2014/10/1
Y1 - 2014/10/1
N2 - We provide empirical evidence on the adverse effects of supplier firms’ environmental risk exposures on their relationships with principal customers. We document that supplier firms with high environmental risk are less likely to have principal customers. Moreover, from the principal customers’ perspective, a higher level of environmental risk lowers a supplier firm’s probability of being selected relative to its industry peers by its potential customer. Conditional on an ongoing relationship with principal customers, supplier firms with high environmental risk have lower sales to principal customers and shorter relationship durations. These results are more pronounced when customers’ environmental risk is lower. Collectively, our findings suggest that improving the trading relationship with principal customers is an important channel through which firms can benefit economically from being environmentally responsible.
AB - We provide empirical evidence on the adverse effects of supplier firms’ environmental risk exposures on their relationships with principal customers. We document that supplier firms with high environmental risk are less likely to have principal customers. Moreover, from the principal customers’ perspective, a higher level of environmental risk lowers a supplier firm’s probability of being selected relative to its industry peers by its potential customer. Conditional on an ongoing relationship with principal customers, supplier firms with high environmental risk have lower sales to principal customers and shorter relationship durations. These results are more pronounced when customers’ environmental risk is lower. Collectively, our findings suggest that improving the trading relationship with principal customers is an important channel through which firms can benefit economically from being environmentally responsible.
KW - corporate social responsibility
KW - product market competition
KW - environmental risk
KW - customer-supplier relationship
U2 - 10.2139/ssrn.2533471
DO - 10.2139/ssrn.2533471
M3 - Working paper
T3 - Nanyang Business School Research Paper Series
BT - Corporate Environmental Risk and the Customer-Supplier Relationship
PB - SSRN
ER -