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Introduction
Recently, big firms have started to realize that managing the sustainability of first-tier suppliers may not be enough. Even though a focal firm may have little control over its suppliers’ unsustainable behaviour, consumers are still likely to attribute responsibility to the focal or lead firm (Hartmann and Moeller, 2014). Consequently, many big firms are finding new ways of managing the multi-tier supply chains to reduce such chain liabilities (Hartmann and Moeller, 2014). For example, Puma is including up to the fourth tier of suppliers in its sustainability reports, and Nike is monitoring hundreds of second-tier suppliers (from leather to zipper producers) to its contract footwear and apparel factories (Lee et al., 2012b).
Although there has been considerable research on sustainable supply chain management (SSCM), there is predominantly a focus on first-tier suppliers (Lee, 2008; Walker and Jones, 2012). However, globalization and the fragmentation of supply chains, together with increasing stakeholder pressure to increase transparency and accountability, have raised concerns about the impact of second- and third-tier suppliers on sustainability (Miemczyk et al., 2012). Actually, the most serious environmental and social issues in the supply chain are often generated by suppliers located in the second tier or further upstream, also referred to as “lower-tier” suppliers (Ernst and Kim, 2002), or sub-suppliers (Grimm et al., 2011). For example, NGOs such as Greenpeace have accused famous high-street clothing retailers of allowing their suppliers and suppliers’ suppliers to discharge hazardous chemicals into major rivers in China (Greenpeace, 2011). Firms such as Nike and Wal-Mart are developing new partnership strategies specifically designed to lower-tier suppliers (Plambeck and Denend, 2011). Finally, it is estimated that up to 90 per cent of greenhouse gases emissions could be generated by lower-tier suppliers (Plambeck, 2012). This puts in doubt the real impact of “low emission” targets and other sustainability initiatives taken recently by many firms.
Nevertheless, lower-tier suppliers possess some characteristics that make it complicated for lead firms to manage their sustainability. First, lower-tier suppliers are the suppliers about whom buyers have less information (Choi and Hong, 2002). Second, lead firms do not have enough influence over lower-tier suppliers. For instance, even dominant buyers (e.g. Wal-Mart, Nike) represent only a small percentage of the business of a lower-tier supplier (Plambeck,...