The role of power asymmetries in implementing multi-tier sustainable supply chain initiatives

Large companies face increasing pressure to manage sustainability across their supply chains (SCs), requiring an orchestration of initiatives by focal companies, suppliers, and sub-suppliers. The industrial electronics sector is a cornerstone for mass electrification and decarbonisation of the energy and transport system, yet it is not immune from these pressures. Given the multiplicity of materials and components embedded in the high-tech products of this industry, the role of the SC for tackling sustainability is particularly critical (Johnsen et al., 2022). However, there is a lack of evidence on whether and how companies engage the SC in their sustainability initiatives. Thus, the purpose of this research is to investigate the approaches adopted by organisations to manage sustainability beyond their borders and the role of power asymmetries in the implementation of such initiatives in different production tiers. Through a multiple case study methodology, we implemented an inductive investigation of the main mechanisms leveraged by industrial electronic companies to engage the SC in their sustainability strategies. We interviewed ten multinational companies operating in industrial electronics’ SCs - including appliances, energy, and electric mobility companies – at different tiers of the SC. Organisations adopt multiple tactics to spread sustainability requirements in the upstream SC (Wilhelm & Villena, 2021), following a gradual and incremental approach. Codes of conducts are used as an entry-level requirement to establish minimum sustainability thresholds, while sustainability scorecards are increasingly adopted to assess the sustainable performance of suppliers at the organisational level. Occasionally these measures are accompanied by suppliers’ training, especially targeting small suppliers unable to pursue assessments or certifications independently. Financial measures are emerging tools, yet not widespread and rarely formalised into contracts. The choice of different levers is linked to the power relations in these multi-tier SCs. Asymmetric power in terms of company size and supplier dependence enhances the ability to influence 2 upstream suppliers (Villena & Craighead, 2017). Finally, the multi-tier SC approach, influences the SC coverage of sustainability initiatives and the scope for substantial improvements. Tackling sustainability in industrial electronics requires the participation of multiple tiers of suppliers to reduce environmental impacts (Dou et al., 2017). However, given the lack of standardization and legal frameworks on most decarbonization and sustainability targets, engaging the SC remains one of the key hurdles for companies. Ambitious players able to exercise a significant pressure on their suppliers are leading the transition, steadily introducing requirements such as measurement and reporting of environmental impacts, but will gradually encompass and contractually require the reduction of these impacts. While the evolution of future regulation remains uncertain, our results indicate that SC pressure will increase, especially from the largest and most influential companies. This study is the first work to investigate multi-tier sustainable SC initiatives under a power asymmetries lens. The work contributes to the multi-tier sustainability SC literature by (a) identifying the formal and informal actions adopted by organisations in the industrial electronics industry to implement sustainability across their SCs and (b) distinguishing the key power asymmetries that allow cascading the sustainability requirements in the upstream SC.