Networking for sustainable supplier development; evidence from a Finnish industrial cluster

Abstract

This article examines a network approach to sustainably developing suppliers in the context of a Finnish industrial cluster. The approach (HSEQ AP) aims to assess and develop the health, safety, environmental and quality-related capabilities of the suppliers of the buying companies that form the cluster. In this study, the impact of this approach, which has been operating for more than a decade, is examined through a mixed-methods approach. Suppliers that have been audited two times or more (n = 29) were quantitatively analyzed in terms of safety performance, consecutive assessment scores and the relationship between assessment scores and financial indicators. To support the quantitative analyses, interviews were conducted with buyers and suppliers. The results suggest that the HSEQ AP can be linked to improvement in operational results and to enhancing social sustainability in the supply network, and that the suppliers and buyers generally find it a worthy investment. The antecedents for this network approach are partially similar to supplier development in general: Buyer demonstration of commitment, particularly through purchasing processes, is crucial and not fully realized in all cases. The use of a competent, trained third-party assessor was seen to bring value, and the suppliers also rated buyer participation very highly. Interestingly, no significant improvement was found regarding environmental capabilities. The HSEQ AP can be viewed as a CSR practice, but the results show there could be further potential to unlock.