Do suppliers benefit from supply chain sustainability programs? The case of Wal-Mart

Many studies have shown that sustainability initiatives within individual firms increase their financial performance; however, the impact on the firms’ suppliers is not clear. We conduct an event study to investigate whether supply chain sustainability initiatives (SCSIs) of a buying firm are related to suppliers’ performance. The analysis is based on the shareholder value effects (as measured by stock market reaction reflected by abnormal returns) on Wal-Mart’s direct suppliers associated with Wal-Mart’s announcements SCSIs. Wal-Mart is renowned for its ability to organize the supplier base and optimizing supply chain settings and it has implemented many SCSIs. We find a significant positive relationship between suppliers’ performance and SCSIs enforced by the buying firm and this expands our understanding of sustainability benefits from firms to supply chain partners while providing support for collaboration on sustainability between supply chain actors.