The Impact of Using Partnerships to Achieve Sustainability on Firm Performance: A Series of Event Studies
Srivastava, Hari Shanker
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To improve overall supply chain sustainability, firms initiate economic, environmental, and social activities. Firms often partner with other organisations to access the knowledge, skills and other resources they need. Using three event studies, this thesis investigates the impact of three kinds of partnership on a firm’s financial performance: partnership for IT-enabled innovations in logistics, partnership for initiating circular economy (CE) activities, and partnership for carrying out social initiatives. This thesis comprises three interrelated manuscripts that contribute to the supply chain sustainability literature as described below. The first study draws on service-dominant (S-D) logic and the resource-based view (RBV) of the firm to conceptualise and explain the relationship between establishing partnerships for developing innovative IT-enabled logistics services and firm market value. This phenomenon was examined using a multi-country event study methodology with a sample of 121 logistics service providers (LSPs), 89 of whom had partners while 32 did not. The analysis revealed that IT-enabled logistics service innovations developed in partnership increase LSPs' market value. This impact is moderated by firm size and growth opportunities. Additionally, collaboration experience did not impact LSPs’ financial performance. However, LSPs that developed several IT-enabled logistics services with the same partner experienced an increase in their market value. The second study uses the natural resource-based view (NRBV) and the relational view of the firm to conceptualise and explain the relationship between the use of partnerships for initiating CE activities and the firm’s market value. The NRBV theorises three levels of strategic capabilities that are relevant for achieving environmental sustainability, ranked from low to high level. Then, using a multi-country event study methodology, this study estimated the effect of 105 CE initiatives on the firm’s market value. Of these 105 firms, 68 used partners for their CE initiatives, while 37 did not. The analysis revealed that using a partnership for initiating CE activities increases a firm’s market value, with the magnitude being greater than that reported previously for green supply chain initiatives. However, the differences in the coefficients between the three levels of strategic capabilities were not statistically significant. This relationship is found to be moderated by financial slack and growth potential. Interestingly, prior positive environmental performance did not have a similar effect. Finally, the third study uses signalling theory and resource dependence theory (RDT) to conceptualise and explain the relationship between setting up partnerships for social initiatives and the market value of firms. Using the event study methodology, this research estimated the effect of 765 social initiatives on the market value of firms from the United States. Of these 765 firms, 705 had partners for initiating social activities, while 60 did not. The ﬁndings showed that the use of partners to initiate social activities did not affect firms’ market value. This relationship was moderated by the firms’ visibility and growth potential. The firms that initiated hunger prevention activities derived positive abnormal returns. While previous studies argued that environmental and social sustainability can be achieved at the expense of economic sustainability, this study suggests that firms can use partnerships strategically to address issues related to the three pillars of sustainability and enhance financial performance from each of these pillars. Theoretically, the studies demonstrate varying levels of support for the different theories used in each study. Study 1, which was based on S-D logic and the RBV, supports the relationship between partnership for IT-enabled logistics innovation and financial performance. The second study, conceptualised on the NRBV and the relational view of the firm, corroborates the relationship between partnership for initiating CE activities and financial performance. However, the third study did not find support for the relationship between partnerships for social initiatives and financial performance that was conceptualised on signalling theory and the RDT. For managers, the results indicate that partnering with other firms to develop IT-enabled logistics innovations and initiate CE activities is positively viewed by investors. In terms of socially responsible activities, focusing on hunger prevention activities is similarly well-regarded.