Impact of Buyer-Supplier network complexity on firms’ Greenhouse gas (GHG) emissions: An empirical investigation

Abstract

Building on transaction cost economics theory and social network theory, we investigate the impact of dimensions of buyer-supplier network (BSN) complexity (horizontal, vertical, and spatial) on firms' environmental performance, specifically, greenhouse gas (GHG) emissions. Using secondary data from diverse sources on the supply networks of 319 firms, extending to the Tier-2 level, we present and test a robust empirical model that also accounts for potential endogeneity effects. To understand this key relationship between BSN complexity and environmental performance at a deeper level, we further test the moderating influence of BSN members' reach on this key relationship. We also test the moderating effects of a focal firm's control over its BSN on this key relationship. We find that both the vertical complexity dimension and the horizontal complexity dimension of BSNs had a U-shaped relationship with the participating firms' GHG emissions. In contrast, the spatial complexity dimension of BSNs had a positive impact on the participating firms' GHG emissions. With respect to the moderating effects, we found that firms' control over their BSN negatively influenced these relationships, whereas the reach of the BSN members positively influenced these relationships. Taken together, this set of mixed-pattern findings casts new light on the broad literature of multitier BSNs, environmental sustainability, and the effective management of supply chains. The managerial implications of our findings are also discussed.