Governance mechanisms in managing sustainability practices in retail supply networks

Abstract

The purpose of this paper is to compare the application of sustainability practices in two Australian food supply networks to identify how suppliers and focal firms (retailers) interact in terms of sustainability practices. A web-based questionnaire is developed to investigate the sustainability practices in Australian suppliers.Data from 66 received questionnaires are analysed via parametric and nonparametric tests to explain the differences between mean scores of the various sustainability practices implemented by retailers. The results identify two distinct governance mechanisms, which retailers apply to manage their suppliers' sustainability practices. The hands-off governance mechanism generally uses the sustainability practices in which retailers do not need to be involved directly when managing sustainability practices, while in the hands-on governance mechanism they are interested in participating directly. The results also show that the supplier's age and headquarter locations can affect the types of the two governance mechanisms in the supply network (SN). This paper is one of the few studies that empirically investigates governance mechanisms in the context of sustainability practices across the SN. The contribution of this research can assist further research to observe the application of sustainability practices in the SN.For focal firms with a complex SN, this paper provides insights into balancing their effort to manage sustainability practices in various suppliers.