Do green firms select and terminate supply chain partners based on sustainability criteria? International evidence

Yasir Shahab, Ammar Ali Gull, Muzhar Javed and Tanveer Ahsan
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Yasir Shahab: XJU - Xijing University
Ammar Ali Gull: DVRC - De Vinci Research Center - DVHE - De Vinci Higher Education, VNU - Vietnam National University [Hanoï]
Muzhar Javed: RBS - Rabat Business School [UIR, Morocco] - UIR - Université Internationale de Rabat
Tanveer Ahsan: Rennes SB - Rennes School of Business

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Abstract: The "United Nations Global Compact" reiterates how important supply chain processes are for reaching sustainable growth targets. It points out that only eight supply chains contribute more than half of the world's greenhouse gas emissions. Thus, management of suppliers becomes crucial to meeting these goals. However, how green firms select and terminate their suppliers in response to mounting pressure of sustainability remains an area yet to be explored in operations management. To address these concerns, we investigate the data of listed firms from 38 countries over the 2002 to 2019 time-period. The results show that eco-friendly firms are more sensitive to sustainability practices of their suppliers while offering or terminating their contracts. Surprisingly, the stringency of environmental policy negatively moderates this relationship due to the substitution effect. Finally, we document that eco-innovative firms experience an increase in their market value when they select or terminate their supply chain partners based on sustainability criteria. The results offer vital theoretical and policy insinuations for the discipline of sustainable operations and supply chain management.

Keywords: Supplier termination; Supplier selection; Environmental policy stringency; Eco-innovation; Market value (search for similar items in EconPapers)
Date: 2026-07
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Published in International Journal of Production Economics, 2026, 297, pp.110000. ⟨10.1016/j.ijpe.2026.110000⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05553694

DOI: 10.1016/j.ijpe.2026.110000

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