Do Contractors and Suppliers Agree on the Supplier's Green Capability?

Moon Kim, Chungwon Woo, Jae Rho, Yanghon Chung (Corresponding author: Chung-Won Woo)
Sustainability, 8(1), 82, 2016 · DOI: 10.3390/su8010082

TL;DR — Case study of a major Korean construction firm and 106 suppliers. Suppliers rate their own environmental capability higher than the contractor rates them. Both sides score suppliers lowest on the relationship with second-tier suppliers and highest on the relationship with the contractor. Agreement between the two evaluations varies with industry type, firm size and partnership duration.

Key findings

1. A systematic perception gap. Suppliers' self-evaluation scores of environmental capability are higher than the contractor's evaluation scores of the same suppliers.
2. The weak link is further down the chain. From both evaluators, suppliers score lowest on the item rating the relationship with second-tier suppliers and highest on the relationship with the contractor.
3. Alignment is not random. Consistency between supplier and contractor evaluations relates to supplier characteristics — industry type, firm size, and duration of partnership with the contractor.

Method in one line

Exploratory case study of a supply chain comprising one major Korean construction firm and 106 suppliers, comparing contractor and supplier evaluations of the same environmental management capabilities.

국문 요약

녹색공급망관리(GSCM)는 지속가능한 성장을 위한 기업 경쟁력을 강화하며, 특히 환경오염이 큰 프로젝트 기반 산업인 건설업에서 중요하다. GSCM이 성공하려면 원청이 공급업체의 환경역량을 공유된 이해를 바탕으로 최대한 활용해야 한다. 본 연구는 국내 대형 건설사 1개사와 106개 공급업체로 구성된 공급망을 대상으로, 원청과 공급업체의 환경역량 평가가 얼마나 일치하는지를 분석했다. 결과적으로 공급업체의 자기평가 점수가 원청의 평가 점수보다 높았고, 양측 모두에서 2차 협력업체와의 관계 항목이 가장 낮고 원청과의 관계 항목이 가장 높았다. 두 평가의 일치도는 공급업체의 산업유형·기업규모· 원청과의 거래기간 등 특성과 관련이 있었다.

FAQ

Q. Why does the perception gap matter?
If a contractor's supplier ESG programme is built on ratings the supplier does not recognise, the improvement targets will not land. Measuring the gap is a precondition for managing it.

Q. What is the weakest point in the chain?
The relationship with second-tier suppliers — rated lowest by both the contractor and the suppliers themselves, which is where green supply chain requirements tend to stop propagating.

Q. Related work by the authors?
See Woo, Kim, Chung & Rho (2016, Journal of Cleaner Production), which shows that agreement between buyer and supplier evaluations raises supplier competitiveness.

Full abstract

Green supply chain management (GSCM) enhances a firm’s competitiveness for sustainable growth. GSCM is especially important in the construction industry, a project-based business that often results in heavy environmental pollution. For the successful implementation of GSCM in the construction industry to occur, contractors should make the best use of suppliers’ environmental capabilities based on shared understanding of the capabilities. This paper examines the shared understanding of suppliers’ environmental management capabilities between the contractor and suppliers by assessing the consistency between the contractor’s and suppliers’ evaluations of the capabilities. This explorative case study investigates a supply chain comprised of a major construction firm and 106 suppliers in Korea. The results of the case analysis show that the suppliers’ self-evaluation scores of environmental capability are higher than the contractor’s evaluation scores. Furthermore, from both evaluators, suppliers received the lowest scores in the evaluation item rating the relationship with second-tier suppliers and the highest in the evaluation item rating the relationship with the contractor. The consistency between the suppliers’ and contractor’s evaluation is related to several characteristics of suppliers, such as industry type, firm size and partnership duration with the contractor. This study contributes to the literature of GSCM and strategic alignment amongst supply chain partners for the construction industry.

How to cite

APA: Moon Kim, Chungwon Woo, Jae Rho, Yanghon Chung (2016). Environmental Capabilities of Suppliers for Green Supply Chain Management in Construction Projects: A Case Study in Korea. Sustainability, 8(1), 82. https://doi.org/10.3390/su8010082

BibTeX:
@article{woosupplierenvironmentalcapab,
  title={Environmental Capabilities of Suppliers for Green Supply Chain Management in Construction Projects: A Case Study in Korea},
  author={Moon Kim and Chungwon Woo and Jae Rho and Yanghon Chung},
  journal={Sustainability},
  volume={8}, number={1}, pages={82},
  year={2016},
  doi={10.3390/su8010082}}

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