Framework of Stakeholder Reactions on Sustainability Risk Mitigation Practices and Sustainability Performance in Supply Chains

Stakeholder expectations and interest in supply chain (SC) sustainability is increasing and hence, environmental and social performance of upstream suppliers may cause sustainability risks for a focal company. Different stakeholders weight environmental and social aspects of sustainability differently and also, adequate level of sustainability is viewed differently in the sense, how far beyond legal requirements a company should extend its sustainability demands for the suppliers. Respectively, stakeholders’ reactions to the investments in sustainable supply chain management (SSCM) may vary. Therefore, companies need to balance between the key stakeholders’ interests and appropriate sustainability practices in mitigating sustainability risks from suppliers and avoiding losses from various stakeholders’ reactions, which may affect the business performance. Also for further research, this paper develops a conceptual framework of how sustainability performance of a focal company and its SC may influence stakeholder reactions. With regards to SSCM, it suggests making a difference between the plain compliance with the law and market-driven sustainability practices beyond legislation.