Promoting socially responsible purchasing (SRP):The role of transaction cost economics dimensions

We investigate the mechanism of socially responsible purchasing (SRP), the consideration of both environmental and social criteria in corporate purchasing decisions, its transfer between buyers and suppliers and the role of transaction cost economic theory (TCE) in this context. Using a dyadic perspective, we develop a conceptual model to investigate the role of supplier behavioural uncertainty, buyer-specific investments and transaction frequency for buyer and supplier SRP. We empirically validate our model using Structural Equation Modelling, based on a sample of 137 firms involved in 89 dyadic supply chain relationships. Focusing on the textile industry, our results show the presence of an underlying mechanism governing buyer SRP vis-à-vis supplier SRP. This chapter illustrates the special nature of TCE dimensions: they appear almost non-relevant as antecedents, rather they act as moderators for the SRP relationship. We find that buyer investments and transaction frequency positively moderate the SRP relationship, while supplier behavioural uncertainty has a negative impact. From a practical perspective, we identify TCE-related conditions for buyers’ and suppliers’ increased engagement in socially responsible firm behaviour. Our paper gives guidance on how buyers could take TCE dimensions into account for managing upstream Corporate Social Responsibility (CSR) behaviour