Understanding the Role of Government and Buyers in Supplier Energy Efficiency Initiatives

In environmental management, companies must respond to myriad needs and pressures from stakeholders such as buyers, regulators, communities and NGOs. While researchers recognize that these stakeholder entities have different saliency and influences over a focal firm, the influences from multiple stakeholders are often aggregated as a single factor, overlooking differences among them. Stakeholders may have competing demands: A buyer may consider only potential environment-cost trade-offs while the government balances the environment, increased cost-competitive manufacturing and job creation. Such demands compete for the same resources within the supplier’s organization, forcing suppliers to satisfice and compromise. This paper qualitatively examines Chinese suppliers’ responses to requests to adopt energy efficiency initiatives in their production plants by two of their most critical stakeholders: buyers and the government. We identify three categories of energy efficiency (EE) initiatives implemented by the suppliers and find that their implementations are contingent on their ownership characteristics and value alignment with these two stakeholders. Further, we find that suppliers interpret buyers’ motives regarding EE in the context of buyer-supplier relationships and environmental positioning of the buyers’ products. These findings are articulated in a set of propositions that are introduced based on our analysis of these case study data