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Shareholder value effects of ethical sourcing : comparing reactive and proactive initiatives
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Kim, Seongtae and Chae, Sangho (2022) Shareholder value effects of ethical sourcing : comparing reactive and proactive initiatives. Journal of Business Ethics, 179 (3). pp. 887-906. doi:10.1007/s10551-021-04841-0 ISSN 0167-4544.
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Official URL: http://dx.doi.org/10.1007/s10551-021-04841-0
Abstract
With the advent of responsible business, ensuring social responsibility in sourcing is of interest to both academics and practitioners. In this study, we examine one way of achieving this goal: ethical sourcing initiatives (ESIs). ESIs refer to a firm’s formal and informal actions to manage sourcing processes in an ethical and socially responsible manner. While ESIs have been established as an important part of corporate social responsibility, it is unclear whether, how, and when this corporate effort is economically beneficial. We conduct an event study estimating the shareholder value effect of 159 publicly traded firms’ ESIs and find that the stock market reacts positively to ESIs in general. We also compare market reactions under different conditions including reactive versus proactive ESIs, and their interactions with initiative timing, firm size, and financial risk. Additionally, we find that ESIs are associated with long-term stock price and operating performance. Overall, our findings clarify the potential economic benefits of corporate ESIs and encourage buying firms to take these initiatives selectively according to business contexts.
Item Type: | Journal Article | ||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HF Commerce |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Operations Management Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Social responsibility of business, Industrial procurement -- Moral and ethical aspects, Business ethics, Business logistics, Purchasing | ||||||
Journal or Publication Title: | Journal of Business Ethics | ||||||
Publisher: | Springer Netherlands | ||||||
ISSN: | 0167-4544 | ||||||
Official Date: | 24 May 2022 | ||||||
Dates: |
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Volume: | 179 | ||||||
Number: | 3 | ||||||
Page Range: | pp. 887-906 | ||||||
DOI: | 10.1007/s10551-021-04841-0 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Date of first compliant deposit: | 21 September 2023 | ||||||
Date of first compliant Open Access: | 25 September 2023 |
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