Ensuring Sustainability Beyond Tier-One : The Issue of Second-Tier Suppliers

Abstract: Background: Exposure of non-sustainable practices put MNCs in bad light, hurting their brand image. Therefore, it is of great importance to ensure supplier sustainability upwards the chain. Vast focus has been put on the first-tier suppliers. However, there are few studies that have investigated the issue of second-tier supplier sustainability, and there are many real life examples of firms’ who failed to ensure second-tier supplier sustainability. Hence, the need for further investigation within the subject.   Purpose: The purpose of this study was to investigate how two Scandinavian-based MNCs ensure second-tier supplier sustainability within their supply chain.   Methodology: This thesis is conducted with an inductive approach, collecting qualitative data through semi-structured interviews and archival research, at two independent companies. Thus, a multiple case study. Empirical findings were analyzed through a template analysis. Based on the theoretical framework and formulated research questions, categories have been derived, constructing the outline for our empirical findings and analysis.   Conclusions: (I) Social and cultural distance are major determinants settling which second-tier suppliers being regarded as critical. Conclusively, these two factors are the major determinants identifying whom to prioritize. Furthermore, IT is recognized as a vital and beneficial tool to utilize when mapping the network of second-tier suppliers. (II) In order to achieve second-tier supplier compliance of CoC, “the grey area approach” is identified as the used approach by investigated companies. Further, long-term relationships with first-tier suppliers are a major key in order to ensure second-tier sustainability in long-term perspective. (III) Last but not least, first-tier supplier network investigation is regarded prior to choosing a first-tier supplier. However, it is nothing decisive since other factors are more important in the process.