Aims and Research Questions
The purpose of this paper is to explore how companies in controversial industries make themselves attractive to a potential supplier market. In Marketing, the task of attracting buyers has been extensively investigated, the study of the equivalent task in the Purchasing field is still in its infancy. We add to this field by exploring two research questions:
- Do companies in controversial industries use communication and reporting to attract high-quality suppliers?
- Do companies in controversial industries focus on sustainability in the supply chain to attract high-quality suppliers?
Background and Rationale
We investigate 12 companies in controversial industries: agricultural chemicals, alcohol, armaments, coal mining, oil & gas and tobacco to understand their use of company communications to attract potential suppliers. We use the web communications and reporting to investigate the issues they focus on, how suppliers are portrayed in their reporting and how they report on sustainability.
Methodology
We selected a sample of companies based on the Domini Social Investments list of excluded industries (2017). These activities include agricultural chemicals, alcohol, armaments, coal mining, oil & gas and tobacco. We included a company if they appear on the Forbes (2017) list of publicly-listed companies and were a leader in the activity. This could mean either over 30% of revenues from the activity or the company is a market leader in the activity.
We analysed several factors: how the companies report controversial issues in their industry, portray their suppliers in their reporting and communication and their sustainability reporting. We analysed annual reports, sustainability reports, company web pages and published policies.
Key Results
The results from the research can be summarised in the following propositions:
Proposition 1: Companies will focus on controversial issues if they can market their core business as part of the solution
Proposition 2: Companies will avoid a dominant controversial issue if it is part of their core business and will give prominence to another controversial issue
Proposition 3 Companies reliant on small, vulnerable suppliers for their core product will give prominence to those suppliers in their reporting
Proposition 4 Companies reliant on small suppliers for their core product will report on relationship support in their reporting
Proposition 5 Companies in vertically-integrated industries with indirect suppliers will not give prominence to suppliers in their reporting
Proposition 6 When new regulation is passed companies will emphasise their own compliance to regulation rather than the relationships they have with suppliers
Proposition 7: Sophisticated sustainability reporting and communication is essential for controversial companies in the developed world to maintain their social contract
Proposition 8: Controversial companies will make a choice between a scientific and marketing oriented reporting strategy
Proposition 9: Controversial companies with nation-state ownership, from developing countries, will have less focus and sophistication on sustainability and supplier reporting.
Contributions
This paper adds to sustainable supply chain theory and purchasing and supplier management theory.
References
Domini Social Investments (2017), “Note on excluded industries”, http://www.domini.com/note-exc... [Accessed 17th January 2017].
Forbes (2017), “The world’s biggest public companies”, http://www.forbes.com/global20... [Accessed 17th January 2017].
