The relationships between corporate social responsibility, environmental supplier development, and firm performance

This research is intended to deepen our understanding of environmental supplier development (ESD), which is the development of suppliers to manufacturers for the purpose of environmental performance. Corporate social responsibility (CSR) is examined as the precedent of ESD. The impact of ESD on firm performance is examined as well. Using the survey method, 314 responses were collected from Turkish manufacturing plants with more than 250 employees. A partial least square structural equation model (PLS SEM) was constructed to test both the reliability and validity of measurement and the structural model. The results indicate that CSR is positively related to ESD and that ESD has a positive influence on the financial performance and competitive advantage of the participating firms. The effects of size and sector were analyzed. It was discovered that while larger firms are slightly more sensitive to CSR, all the links are significant in both group 1 (250–400) and group 2 (>400). However the relationship between CSR and ESD was not significant in heavy industries as compared to the sectors of consumer products, textiles, and chemicals. It is possible that heavy industries (i.e., metal casting) that are somewhat away from the public eye put little emphasis on CSR, or that they may have other reasons as they develop their suppliers. Firms can be encouraged to practice CSR and ESD by being exposed to the performance benefits. To the best of our knowledge, this study is the first to test these specific relationships.