Abstract
Purpose
This study aims to develop an in-depth understanding of how supplier selection helps social enterprises achieve their social missions while maintaining commercial viability.
Design/methodology/approach
The paper applies a multiple-case design to study the supplier selection processes of 15 Dutch social enterprises.
Findings
Social enterprises tend to build supply relationships through existing networks and evaluate suppliers based on value alignment, relationship commitment, resource complementarity, and cost. Depending on the possibility of social value creation in supplier selection, the importance of these criteria varies across different social enterprise models and between key and non-key suppliers. Moreover, suppliers’ long-term relationship commitment can help reconcile tensions between the social and commercial logic of a social enterprise and facilitate impact creation.
Research limitations/implications
Data collection is limited to the perspectives of buyers – the social enterprises. Future research could collect supplier-side data to explore how they engage with social enterprises during the selection process.
Practical implications
Managers of social enterprises can use our research findings as guidance for selecting the most suitable suppliers, while organizations that want to collaborate with social enterprises should actively build network ties to be identified.
Originality/value
We contribute to the cross-sector collaboration literature by showing the underlying reasons for the preference for network reinforcing and indirect networking in supplier identification. We contribute to the social impact supply chain literature by revealing the critical role of supplier selection in shaping collaboration outcomes.
Keywords
Citation
Zhang, X., van Donk, D.P., Xiao, C. and Pullman, M. (2024), "Finding the right one: understanding the supplier selection process of social enterprises", International Journal of Operations & Production Management, Vol. 44 No. 13, pp. 195-228. https://doi.org/10.1108/IJOPM-09-2023-0742
Publisher
:Emerald Publishing Limited
Copyright © 2024, Xiying Zhang, Dirk Pieter van Donk, Chengyong Xiao and Madeleine Pullman
License
Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
1. Introduction
Social enterprises are organizations that primarily aim to solve social issues by participating in various business activities (Battilana and Lee, 2014; Doherty et al., 2014). Different from for-profit organizations and charities, social enterprises pursue both commercial and social missions to foster societal changes (Battilana and Lee, 2014; Mair et al., 2012). Although making profits is not their end goal, social enterprises need to actively participate in product provision and engage their supply chain partners to overcome resource scarcity (Battilana and Lee, 2014; Pullman et al., 2018). However, such a collaboration can be fraught with tensions because of the dual mission (Di Domenico et al., 2009). While previous research has explored collaboration strategies (Longoni et al., 2019; Pullman et al., 2018; Taylor and Rosca, 2022) for social enterprises to sustain supply relationships, limited attention has been paid to the initial stage of such relationships (i.e. the stage before signing a contract). Yet, the ability to identify and evaluate partners plays a crucial role in mitigating potential conflicts and avoiding problematic buyer-supply relationships (Hahn and Gold, 2014).
A lack of fit between buyer and supplier can erode the relationship from the beginning (Cummings and Holmberg, 2012; Krause et al., 2007). Before social enterprises can leverage resources from partners, they need to select suitable organizations to form a supply relationship (Feilhauer and Hahn, 2021; Kurpjuweit et al., 2021). However, extant procurement literature offers little guidance due to the dual mission of social enterprises, which differentiates them from typical commercial organizations. On the one hand, traditional evaluation matrices (e.g. Ellram, 1990; Haq and Kannan, 2006) predominately focus on the supplier’s efficiency (e.g. price, quality, and delivery) but ignore the importance of common prosperity. On the other hand, contemporary sustainable procurement practices observed in leading firms (e.g. Govindan et al., 2018; Pagell et al., 2010) and small-medium enterprises (SMEs) (e.g. Gupta and Barua, 2018; Tong et al., 2022) either neglect the resource constraints of social enterprises or pay limited attention to sustainability. Finally, the nascent social procurement literature (e.g. Barraket, 2020; Barraket et al., 2022) concentrates on governmental purchasing from social enterprises but overlooks social enterprises’ role as buying organizations. Hence, our research question is: “How do social enterprises identify and evaluate suppliers to achieve their social missions while being commercially viable?”
Following prior practice (c.f., Huang et al., 2008; Kurpjuweit et al., 2021), we separate supplier selection into two major stages: supplier identification and supplier evaluation, to obtain more nuanced insights. We use a multiple-case design of 15 social enterprises located in the Netherlands that vary in size, maturity, and industry to answer our research question. Our findings contribute to the literature in three ways. First, we complement the cross-sector collaboration literature by providing more subtle insights into the supplier identification process. In addition to confirming the prevalence of network-reinforcing (Beckman et al., 2004; Feilhauer and Hahn, 2021) in social impact supply chains (i.e. social enterprises as supply chains’ focal actors), we further unpack underlying reasons. Moreover, we find indirect networking as a complementary approach by which social enterprises scout new suppliers through existing partners’ recommendations. Second, we contribute to the procurement literature by adding a novel path for buying organizations to pursue sustainability that moves beyond simply increasing buyer cost (c.f., Pagell et al., 2010). Our findings suggest that organizations can involve imperfect but highly motivated suppliers in development programs to simultaneously pursue sustainability and competitive advantages. Finally, we contribute to the growing literature on social impact supply chains by revealing underlying mechanisms for supplier selection of social enterprises. Next to highlighting the importance of supplier selection in alleviating potential conflicts, we also detect value alignment and long-term relationship commitment as important antecedents for successful buyer-supplier relationships in a social impact supply chain. Therefore, social enterprise managers can rely on our findings to effectively identify and evaluate suppliers for operational efficiency and social impact creation. Commercial organizations that aim to work with social enterprises can actively make themselves visible at networking events of such enterprises to be identified as potential suppliers.
2. Literature review
2.1 Social enterprises and their supply networks
As a promising alternative to corporate social responsibility and charity efforts in addressing thorny social and environmental issues (Doherty et al., 2014; Pullman et al., 2018), social enterprises are emerging as a new type of organizations that primarily pursue a social mission through involvement in commercial activities (Battilana and Lee, 2014). This dual mission of profit-making and social impact generation has made social enterprises important actors in economic growth and social innovation in many countries (Battilana et al., 2015). Compared to typical commercial firms, social enterprises display two unique characteristics: hybridity and resource scarcity (Doherty et al., 2014). First, social enterprises combine aspects of different organizational forms and are guided by competing institutional logics – profit generation and social welfare creation, making them hybrid in nature (Battilana and Lee, 2014; Di Domenico et al., 2009). While hybridity can be an important source of innovation, it also causes challenges in social enterprises’ internal organizing and external interactions (Battilana and Lee, 2014; Pullman et al., 2018). Second, since social enterprises prioritize their social objectives over profit-making and need to internalize social costs, they generate lower financial returns and are less attractive to investors (Doherty et al., 2014). Subsequently, resource scarcity constrains social enterprises’ operations and impact scaling (Desa and Basu, 2013).
To overcome these difficulties, social enterprises must actively forge partnerships to obtain resources and maintain their hybridity (Di Domenico et al., 2009; Nicholls and Huybrechts, 2016). However, close collaborations with external organizations, especially with commercial firms, can be complicated for social enterprises, because of underlying organizational asymmetries such as institutional logic (commercial vs social), organizational aim (profit generation vs social welfare creation), and accountability (shareholders vs the community) (Di Domenico et al., 2009; Moshtari and Vanpoucke, 2021). Additionally, partners with different foci in the collaboration may easily misunderstand the other’s behaviors and erroneously blame each other for opportunism (Di Domenico et al., 2009; Estrada et al., 2016). The ensuing conflicts may weaken the attitudinal alignment and hinder the creation of trust between collaboration partners (Estrada et al., 2016). As a result, higher transaction costs are often incurred when social enterprises source from cross-sector suppliers (Moshtari and Vanpoucke, 2021).
Extant studies have explored relationship development (e.g. Ahmadsimab and Chowdhury, 2021; Nicholls and Huybrechts, 2016), tension management (e.g. Longoni et al., 2019; Moshtari and Vanpoucke, 2021), social capital optimization (e.g. Taylor and Rosca, 2022), and stakeholder engagement (Pullman et al., 2018) in cross-sector collaboration and social impact supply chain management. However, they mainly focus on relationship management during the collaboration, but overlook how social enterprises select the right suppliers and cope with tensions before signing a contract. As indicated by Berger et al. (2004), many collaboration issues, including misunderstanding, mistrust, and resource mismatches are avoidable at the relationship’s initial stage. Therefore, we aim to unpack the supplier selection process of social enterprises, which is fundamental to the realization of their social impact (Feilhauer and Hahn, 2021; Münch et al., 2022).
We next elaborate on the supplier selection process, which is generally divided into two major stages: supplier identification and supplier evaluation (Huang et al., 2008; Kurpjuweit et al., 2021; Münch et al., 2022).
2.2 Supplier identification
Supplier identification refers to the process of searching for potentially suitable and synergistic suppliers to strengthen the organization’s supply network (de Boer et al., 2001; Feilhauer and Hahn, 2021). In general, organizations can build buyer-supplier relationships by either searching for new suppliers from the market as a form of network broadening, or by building additional relationships with existing suppliers as a form of network reinforcing (Beckman et al., 2004).
Common practices of network broadening include hiring scouts, attending networking events, and directly searching on the Internet (Kurpjuweit et al., 2021). Forming new ties with unknown suppliers could bring buying firms access to new resources, novel practices, and reduced dependency on existing suppliers (Beckman et al., 2004; Feilhauer and Hahn, 2021). Although recent information technologies have substantially reduced search costs, scouting and evaluating a large number of newly identified suppliers is still time-consuming (Kurpjuweit et al., 2021). Additionally, buying firms may also face hidden costs related to communication and control over new suppliers (West and Bogers, 2014).
Compared to network-broadening, network-reinforcing has the advantages of search efficiency and reduced risk of opportunistic behaviors from unknown suppliers (Feilhauer and Hahn, 2021). Based on defined needs, buying firms can reinforce their supply networks by repeating ties or forming new buyer-supplier relationships with existing suppliers (Beckman et al., 2004). In particular, buying firms will prefer network-reinforcing when they find it difficult to assess the competencies and reliability of new suppliers because of different organizational characteristics and expertise (Dahan et al., 2010; Feilhauer and Hahn, 2021).
While previous research on firm-to-firm collaboration (e.g. Beckman et al., 2004; Bierly and Gallagher, 2007; Kurpjuweit et al., 2021; West and Bogers, 2014) has provided valuable insights into the benefits and downsides of these two supplier identification approaches, we know little about how social enterprises, with limited managerial and financial resources compared to large multinational enterprises, will act. In addition, related studies on cross-sector collaboration (Bryson et al., 2006; Feilhauer and Hahn, 2021; Hahn and Gold, 2014; Meqdadi et al., 2020) suggest that buying organizations tend to use a network-reinforcing approach when lacking community knowledge and prior experience. Yet, this stream of literature exclusively analyzes supplier identification from the for-profit organizations’ perspective, neglecting the needs of non-profit organizations or social enterprises for supplier identification. The exception is the work of Gold et al. (2020), which takes the social enterprises’ perspective and indicates that their ability to identify synergistic suppliers would heavily depend on their past collaboration experience, internal search and evaluation capabilities, and organizations’ network positions to form the pool of potential candidates and make a good match. Nevertheless, they remain silent on when and how these factors interact and impact the supplier identification of social enterprises.
2.3 Supplier evaluation
Evaluating potential suppliers against a set of pre-defined criteria is one of the critical tasks in supplier selection and has been extensively investigated in for-profit purchasing literature (Huang and Keskar, 2007; Kurpjuweit et al., 2021). The basic premise is that in any organization where the procurement function sources multiple types of materials, it has limited resources that must be optimized (Pagell et al., 2010). Thus, the majority of research treats supplier evaluation as a complex decision-making process that takes both quantitative and qualitative aspects into account to select the best-fit supplier from a pool of available candidates (Huang and Keskar, 2007; Kim and Wagner, 2012; Kurpjuweit et al., 2021). Usually, quantitative criteria are objective determinants, such as price (or cost), quality, service, responsiveness, delivery and flexibility (Huang and Keskar, 2007; Kannan and Tan, 2002); and qualitative criteria are partnering-related factors that are highly dependent on managers’ judgments, such as trust, organizational culture and ethics, supplier’s commitment, and ease of communication (Bierly and Gallagher, 2007; Cummings and Holmberg, 2012; Kannan and Tan, 2002). While the inclusion of specific criteria varies from case to case, price, quality, and delivery are consistently identified as the three most important supplier selection criteria (Kannan and Tan, 2002; Kumar et al., 2014; Verma and Pullman, 1998), and their relative importance depends on the profitability and supply risk of the intended materials (Kraljic, 1983; Pagell et al., 2010).
Yet, the purchasing practices of commercial organizations may not be directly applicable to social enterprises due to the latter’s hybridity and resource constraints. However, other related procurement literature streams can be helpful in understanding the supplier evaluation of social enterprises, although an incomplete picture is obtained. For example, Pagell et al. (2010) in their studies of sustainable procurement found that leading practitioners start to incorporate social and environmental criteria into the evaluation and increase buying costs in the pursuit of sustainability. While the shift from purely cost-focused assessment and the integration of sustainability criteria are insightful for social enterprises, findings from sustainable procurement literature are based on for-profit organizations with slack resources to support sustainability initiatives. It is unclear if and how social enterprises with prominent resource scarcity will display similar patterns. From an SME’s procurement perspective, Tong et al. (2022) find that SMEs’ supplier evaluation is heavily driven by cost and operations efficiency, while social and environmental criteria are only applied to avoid sustainability-related risks and to realize economic goals. Although social enterprises share many similarities with SMEs (e.g. small scale, shortage of resources, and lack of financial capital), the primarily social orientation may push social enterprises to put higher weight on sustainability rather than simply as a way of reducing reputational risks. Finally, our research also differs from the emerging topic of social procurement where purchasing activities are primarily dependent on policy compliance and social enterprises are suppliers (Barraket, 2020; Barraket et al., 2022). Instead, we are more interested in understanding the supplier selection behaviors of social enterprises as buying organizations in their endeavor to achieve the dual mission through inter-organizational collaboration.
Overall, existing literature is scant on how social enterprises identify and evaluate suppliers. Drawing upon the discussion above, we aim to explore how hybridity and resource scarcity would shape the supplier selection practices of social enterprises.
3. Methodology
3.1 Research design
We chose a multiple-case design for several reasons. First, it allows us to evaluate both common characteristics as well as diversity between case phenomena (Yin, 2009). Second, multiple case studies following the replication logic enhance the generalizability and internal validity of the findings (Eisenhardt, 1989). Finally, the rich data collected from the case studies enables more confidence in its representativeness as well as a deep understanding of underexplored phenomena (Yin, 2009).
To answer our research question, we apply a theory elaboration approach. We explore if established concepts from procurement and collaboration literature are applicable for social enterprises to identify potential suppliers and select the right ones (Ketokivi and Choi, 2014). In other words, our theory elaboration aims to improve construct validity and scope in a novel context of cross-sector collaboration through construct specification (Fisher and Aguinis, 2017).
3.2 Case selection
We identified social enterprises in the Netherlands as the sampling population because it adequately reflects the European social enterprise landscape (European Commission, 2014). Moreover, having cases from the same country helps to control environmental variation (Eisenhardt, 1989). We selected social enterprises that produce tangible products as they are involved in supplier selection more frequently than service-oriented ones. This choice also enables a comparison of findings with the existing procurement literature that has predominantly studied supplier selection in a manufacturing context (Kurpjuweit et al., 2021).
We selected our cases from the database of Social Enterprise NL, one of the most prominent Dutch social enterprise support organizations. To qualify as a member, a social enterprise needs to be at least 50% financially independent. This condition is well-aligned with our definition of social enterprises and ensures the appropriateness of data. Consequently, 135 organizations that met the criteria were approached through emails and phone calls. To increase the external validity, we aimed for maximum variety in our sample and selected cases that differ in final products, organizational size, and year of founding (Eisenhardt, 1989; Yin, 2009). We followed the practice of Taylor and Rosca (2022) and targeted three commonly mentioned social enterprise models: the Social Procurement Model that addresses inequality issues by sourcing fairly from upstream suppliers (Huybrechts and Nicholls, 2013); the Workforce Integration Model that provides job opportunities for the disadvantaged (Battilana et al., 2015); and the Green Product Provision Model that focuses on environmental challenges through green products (Bals and Tate, 2018). In the end, 15 social enterprises agreed to participate in our study, with a balanced distribution across different models (Table 1), comparable to similar studies (Gold et al., 2020; Pagell et al., 2010; Taylor and Rosca, 2022). For confidentiality, all cases are anonymized.
3.3 Data collection
For each social enterprise, we interviewed at least one key person with a comprehensive understanding of the supplier selection process (i.e. the production manager or the founder). We asked interviewees for additional informants, and seven cases granted us the opportunity. The participation of these informants allowed us to elaborate on theory and generate valuable insights into intra- and inter-organizational interactions involving social enterprises and their partners (Ketokivi and Choi, 2014). We relied on semi-structured interviews for data collection. Prior to the interviews, we sent interviewees an interview protocol with open-ended questions (Appendix 1) for preparation. During the interviews, we tried to understand how the social enterprises identified and chose a specific supplier, and if the selection processes differed for key and non-key suppliers. Moreover, we asked questions about relationship management and collaboration outcomes after the selection to assess the impact of supplier selection on the supply relationship.
The interviews took place between April 2021 and October 2023 with an average duration of 44 min. Interviews were held online or face-to-face subject to COVID-19 regulations. All interviews were conducted in Dutch or English depending on the informants’ preference. Dutch interviews were translated into English and checked by a bilingual research assistant who joined the interview. In total, we conducted 25 interviews which were recorded and transcribed. After each interview, we took notes to capture first impressions of the cases. Unclear details were clarified in follow-up emails or telephone calls. To increase reliability, transcripts were shared with informants for verification. Secondary data from social enterprises and their disclosed suppliers, such as company brochures, annual reports, related blogs and podcasts, and other publicly available data were collected to triangulate the information obtained from interviewees (Eisenhardt, 1989). Finally, we created a database of these materials by using ATLAS.ti to facilitate data retrieval and analysis (Yin, 2009).
3.4 Data analysis
Following an abductive coding approach, our analysis aimed to use the established concepts from the literature as an overarching anchor for our deductive analysis, while allowing new insights to inductively emerge from the data (Gold et al., 2020).
As a first step, we applied initial codes from the literature review (e.g. network reinforcing, network broadening, quantitative criteria, and qualitative criteria) to guide the analysis, but at the same time, we used open coding to gain a thorough understanding of each case’s supplier selection and evaluation The next step started with axial coding to generate second-order themes inductively with more abstract categories, merging similar codes (Corbin and Strauss, 2014; Gioia et al., 2013). In the final step we distilled 24 second-order themes into seven aggregate dimensions (constructs) under the topics of supplier identification and supplier evaluation. During this process, we also revisited the existing literature to check if our aggregated dimensions could be related to initial codes (e.g. network reinforcing and network broadening) or if new constructs were identified (e.g. indirect networking and value alignment) (Gioia et al., 2013). We conducted repeated iterations between data and literature until a strong match emerged, thereby ensuring the content validity of the findings. Descriptions for each aggregated dimension were then added. Figure 1 captures the final result, showing the initial codes from the literature and their links to the new codes derived from the data and aggregate dimensions; Appendix 2 provides an overview of the resulting data structure with sample quotes.
Throughout the process, two researchers independently reviewed and coded the data to avoid bias (Corbin and Strauss, 2014; Gioia et al., 2013). Several rounds of discussion were conducted to identify unclear information, compare codes, and resolve deviating interpretations. To ensure reliability, diverging codes were discussed until all the authors agreed.
The coded data were further analyzed using within and across cases. We started by constructing a detailed case description of the supplier selection process of each social enterprise to understand the specific context. We then compared and contrasted cases to establish common patterns of how suppliers are identified and evaluated across different types of social enterprises (Eisenhardt, 1989; Yin, 2009). Through this process, we further split Work Integration Social Enterprises into two models to better differentiate their activities – the Green Product Workforce Integration Model and the Contract Manufacturing Workforce Integration Model.
Our cross-case comparison showed that social enterprises have varying emphases on different evaluation criteria. To reflect this, we allocated intensities (L, M, H) for each criterion to facilitate a systematic analysis. To this end, we looked for similarities and differences in our aggregated dimensions, themes, and patterns pairwise to draw conclusions (see Table 2). Appendix 3 further illustrates our research process, and Appendix 4 summarizes measures we took to ensure quality and rigor.
4. Findings
In this section, we first present our findings from the within-model analysis based on the four social enterprise models, as the supplier selection process of cases sharing the same model turned out to be very similar. For each social enterprise model, we describe their supplier characteristics, supplier identification approach, and supplier evaluation criteria. As the strategic importance of suppliers can impact the selection behaviors of a focal social enterprise, we further distinguish key suppliers from non-key suppliers in this subsection. This step is analogous to a within-case analysis (Rodríguez et al., 2016). Second, we compare the supplier selection process across different social enterprise models, which is equivalent to a cross-case comparison (Rodríguez et al., 2016).
4.1 Within-model analysis
4.1.1 Social Procurement Model
Our cases with a Social Procurement Model include a chocolate retailer (Chocolate Store), a chocolate producer (Chocolate Factory), two B2B coffee retailers (Amy’s Coffee and George’s Coffee), and a tea retailer (Jonny’s Tea). For these social enterprises, raw material suppliers of agricultural products are their key suppliers since their main objective is to help farmers earn a fair income. Social enterprises can purchase directly from farmer cooperatives or rely on intermediaries. Yet, the majority of them prefer to have direct transactions with local farmers to ensure they receive a fair income.
Network reinforcing is frequently used to identify key suppliers: “We know them [the farmers] all either directly or as part of an informal community. […] Our main suppliers from Congo and Peru are partners whom I have known for 20 years” (Chocolate Factory). At the same time, social enterprises also actively seek opportunities to bring more farmers into their supply networks and expand their social impact, even though network broadening takes more time and increases risks. Particularly, many interviewees mentioned the important role of using existing suppliers, local foundations, and fair-trade supporting organizations to identify new suppliers, especially in areas where communication infrastructures are not well developed.
Intriguingly, the primary purpose of supplier evaluation is not to select the “best” farmer cooperatives with the highest product quality at the lowest price: “Very well-developed corporations are not interesting for us, because we try to help cooperatives that are at the beginning stage of professionalizing their organizations. […] It is more interesting to find highly motivated coffee suppliers with a social mission to develop the [farming] area with good management and with quality coffee” (Amy’s Coffee). Therefore, rather than scouting suppliers with a strong resource complementarity, social enterprises prefer suppliers who share the mission of fair trade and a long-term commitment to the supply relationship: “We ask a lot of questions about sustainability – how you produce, how you live, and how you make sure there is a future for the next generation. […] Besides, we always make a plan together, like how to collect rainwater, how to make the shade, and how to pick red cherries more selectively. […] Then we have our first order, we evaluate, (and) we go back next year” (George’s Coffee). The founder of Amy’s Coffee further explained the importance of relationship commitment: “The problem is if you only buy for one year, the next year they (farmers) will find a new buyer again, and they will not be really motivated to work together.” In this case, price is not a dominant evaluation criterion. Instead, social enterprises pay a much higher price than the market average to improve farmers’ living conditions.
Typical non-key suppliers of the Social Procurement Model include packaging, logistics, and warehouse suppliers. Here, network reinforcing is still the most popular supplier identification approach, but occasionally network broadening and indirect networking are adopted to improve purchasing outcomes. Accordingly, the resource complementarity and cost of suppliers have become the two most important criteria to ensure profitability. Although a long-term relationship is still expected, changing suppliers becomes easier as their strategic importance is lower and there are adequate suppliers in the market.
4.1.2 Green Product Workforce Integration Model
Cases with a Green Product Workforce Integration Model include a second-hand furniture manufacturer (Furniture Renew) and two textile product renovators (Textile Relive and Let’s Remake). With a clear focus on the circular economy, these social enterprises not only protect the environment by reducing waste but also provide job opportunities to people distanced from the labor market. After re-processing, renewed products are sold to individuals and businesses, and profits are invested in business expansion and employee development.
Their key suppliers are organizations that can provide discarded materials regularly, such as large corporations that want to get rid of their old uniforms or office furniture. Pre-existing networks and personal contacts of managers provide an important base for the collaboration: “The relationship starts from some personal contacts between the top management team. They already knew each other from earlier business” (Furniture Renew). Moreover, network events, such as sustainability conferences and trade fairs, have also provided valuable opportunities for buyers and suppliers to build informal contacts.
When evaluating key suppliers, Green Product WISEs do not look for suppliers that fully embrace their social and environmental objectives. Instead, suppliers who share some social values can be ideal candidates: “From our point of view, a good supplier has to be aware of the circular economy” (Furniture Renew); and “… a company [that] is internally motivated to carry out the message or take a stand in sustainability will move the process a lot faster” (Textile Relive). However, a strong relationship commitment is crucial for Green Product WISEs to schedule production activities. As the founder of Textile Relive explained: “We actually want a long-term relationship, so we can make products on an annual basis. […] We would want to have a continuous material flow and reliability in our production”. A high level of resource complementarity becomes the major consideration in supplier selection so that social enterprises can receive enough materials for recycling: “We are mainly focused on big companies because they have a lot of clothes. Our product is only possible to make if there are a lot of clothes” (Let’s Remake). Once the buyer-supplier relationship is formed, green product WISEs pay a reasonable price for the materials or provide recycled products to suppliers in return. Hence, suppliers can be customers for green product WISEs.
However, green product WISEs also have irregular exchanges with organizations that only occasionally have materials to dispose; thus, we regarded them as non-key suppliers. While social enterprises often have a separate team to search for desirable materials from the market, some organizations also proactively contact them for help. In such cases, no value alignment or long-term commitment is required, while social enterprises are more cautious about the price and quality of the materials. “We now have a purchasing department and they search in the marketplace for good chairs. Because we deliberately choose from a number of brands [with high-quality chairs], we can search very specifically. On the other hand, we don’t want to become a thief of our own wallet […] so we also have to look at quality and price” (Furniture Renew).
4.1.3 Contract Manufacturing Workforce Integration Model
Cases of Contract Manufacturing WISEs include two contract manufacturers that provide assembling services to business customers (Social Factory and Bright Workplace) and one sub-contractor that produces custom-made window frames (Impactful Window). Due to the nature of contract manufacturing, procurement activities are carried out less frequently: “Our customers supply us with all the needed parts. We do the assembly, and then deliver the finished or semi-finished products back to the customers” (Bright Workplace). Depending on customers’ requests, social enterprises can purchase raw materials for customers, but they do not distinguish between key and non-key suppliers any further.
To identify potential suppliers, Contract Manufacturing WISEs apply both network-reinforcing and network-broadening approaches. For regular items, network reinforcing is applied to achieve search efficiency; for order-specific new items, network broadening is used to identify competent suppliers in the market. The supplier evaluation criteria of Contract Manufacturing WISEs are mainly based on customers’ requirements, which are not different from for-profit organizations: “Since we’re a contract manufacturer, it’s actually the client who determines his product and how sustainable the product is” (Social Factory). As a result, suppliers do not have to share their social value to be selected: “There are some [suppliers] who say: yes, we want to do business with you because you are a social enterprise. But the majority just has a very commercial objective” (Social Factory). However, contract manufacturing WISEs do emphasize high-quality raw materials at a competitive price in evaluation. The founder of Impactful Window explains: “To offer the deaf employees good work, quality, price, and delivery deadlines – those are three things that matter. […] that’s competence, otherwise, you do not have a professional relationship”. Finally, since the market is highly competitive, a long-term relationship is not required.
4.1.4 Green Product Provision Model
Our cases under the Green Product Provision Model include a paper towel producer (Green Paper), a street light producer (Enlight), a notebook producer (My Notebook), and a wooden product maker (Woodmaker). Being active in different industries, these social enterprises provide environmentally friendly products to B2B and B2C markets. The interviewees indicated that contract manufacturers and material suppliers are usually the key suppliers, while logistics suppliers are less critical. Although the importance of suppliers differs, their selection processes are highly similar. Moreover, since contract manufacturers may help social enterprises purchase small parts and raw materials, the number of suppliers becomes smaller: “We very much wanted them [the contract manufacturer] to buy parts for us. We didn’t want to buy all the components, screws and bolts ourselves” (Enlight). To further minimize efforts for supplier selection, these social enterprises often apply a single sourcing strategy, and indirect networking is frequently used to identify potential suppliers: “That’s just a lot of networking – so you look into your network [to see] whether there are people who know a supplier” (My Notebook). Network reinforcing is then applied to maintain a long-term relationship: “As long as everything goes well, we just stay with that party” (Enlight).
To achieve their environmental mission, Green Product Provision social enterprises only source from sustainable suppliers who have appropriate certificates (e.g. Forest Stewardship Council, ISO 26000, and Blue Angel). Here, sustainability certificates work as a baseline: “Someone can have very low prices but if they don’t have those certificates, we will never do [business] with them” (Green Paper). Additionally, sustainable procurement is important for social enterprises’ marketing: “Somehow, we believe that’s the reason why people want to buy from us because it is a complete story. The notebooks are made entirely from sustainable materials” (My Notebook). However, social enterprises neither audit suppliers’ compliance nor require suppliers to prioritize environmental goals over economic goals.
Even though social enterprises express their willingness to work with familiar suppliers, the high level of supplier substitutability makes them less committed to long-lasting relationships. As a result, three out of four cases switched to a new supplier who could provide better quality products at the same price. The mismatch between the growth rate of buyer and supplier is another reason to end the relationship: “That is simply no longer possible from a certain size because you are scaling up” (My Notebook). Nonetheless, Green Product Provision social enterprises pay extra attention to suppliers’ resource complementarity, which can significantly impact their competitive advantage: “Quality is certainly a very essential topic in our processes. That is actually the basis of the products, from then on you can continue to build” (My Notebook). Subsequently, cost is less important than resource complementarity: “We will never be the cheapest party. […] There are companies that focus purely on price. But there are also companies that focus purely on quality and consider price less important – and we apply exactly the same requirements” (Enlight).
4.2 Cross-model comparison
4.2.1 Supplier identification of social enterprises
4.2.1.1 The preference for network-reinforcing approach
Compared to network broadening, network reinforcing seems to be preferred by all social enterprise models to identify suppliers. This tendency is attributed to three reasons. First, at the organizational level, reinforcing existing relationships helps social enterprises to increase resource efficiency and overcome resource constraints. Many of our interviewees highlighted the ease of coordination and planning when working with extant suppliers: “We go there, we taste and we decide, then they supply. So that’s easy” (Jonny’s Tea), “… we share our warehouse with them (coffee roaster) and that’s easier to arrange the logistics” (Amy’s Coffee), “it’s nice for us to move into long-term collaboration, which makes the production more predictable” (Textile Relive). Network reinforcing also saves the time needed to set up and develop a new supply relationship. “When we start a new relationship, it takes time” (Chocolate Factory), that is why “people are interested in stable relationships, which they don’t have to lose too much time with all kinds of checks or controls. You know goods will be delivered in quality and time” (Impactful Window). In addition to the reduced cost and time, some interviewees draw special attention to the investment in existing partnerships, which prevents them from switching suppliers: “… because you are investing in that party, in machines and other resources. Those are heavy investments” (Enlight). Therefore, as long as the supply relationship works well, social enterprises will keep working with the same suppliers to efficiently leverage the resource investment.
Second, at the relationship level, network reinforcing enables social enterprises to safeguard against opportunistic behaviors of unknown suppliers. As explained by the managing director of Enlight, “If there is a party that already has good experiences … then you are more open to that one than a party you have no experience with at all”. To minimize risks and gain enough experience with a supplier, social enterprises start with small orders and gradually develop the supply relationship: “We always start with small quantities when we do a new order. For example, we included a Columbia farmer cooperative three years ago, and we bought 2 tons of cocoa beans from them. Last year we bought 7 tons, and this year we are going to buy 10 tons” (Chocolate Factory). Positive experiences ensure the trustworthiness of suppliers. Accordingly, our interviewees often mentioned trust in a stable and well-functioning supply relationship that encourages them to stay with the same suppliers: “I think trust is important. For our supplier Alpha, the relationship is so good that I am sincerely not interested in looking for others” (My Notebook).
Thirdly, forging a deeper relationship with existing suppliers offers both parties valuable opportunities for joint capability development. The director of Enlight provided an example of substituting an overseas supplier with a local contract manufacturer to achieve a win-win situation: “We ended up at this social workplace where we asked why you didn’t do more and why you didn’t assemble entire products for us. We looked into that together and it seemed to be perfectly feasible”. Thereafter, Enlight reduced its delivery time from 14 to 6 weeks, while its supplier acquired extra assembly technologies. Similarly, My Notebook works closely with the printing supplier and arranges annual meetings to explore if there is any better binding technique or more sustainable materials in the market. In conclusion, reinforcing the embeddedness with existing suppliers not only inhibits opportunistic behaviors but also facilitates resource pooling, coordinated adaption, and the development of reciprocity among collaborating parties (Lashitew et al., 2022).
Apart from the apparent benefits of network reinforcing, the scarcity of suitable suppliers may further contribute to the prevalence of this approach. Social enterprises, especially those following a Social Procurement or Green Product Provision Model, tend to apply strict sustainability requirements to their suppliers. New suppliers with a high level of resource complementarity but poor sustainability performance would be directly excluded. Thus, the limited number of qualified suppliers forces social enterprises to strengthen existing ties within supply networks. It is noteworthy that such a preference is less visible in non-key supplier identification, because the supplier scarcity and the negative impact from an opportunistic supplier are less of an issue. This leads to our first observation:
Network reinforcing is preferred by social enterprises in supplier identification because it increases resource efficiency, reduces the risk of opportunistic suppliers, and facilitates joint capability development. The strategic importance and scarcity of suppliers further strengthen this preference.
4.2.1.2 The implementation of network-broadening approach
The network-broadening approach is more likely to be employed when the strategic importance of suppliers is relatively low or when new suppliers are essential for the impact scaling of social enterprises. For example, organizations with the Social Procurement Model would actively form new ties whenever possible to reach out to more farmers from different locations. Similarly, Green Product WISEs have to search for new suppliers when they obtain additional production capacity for recycling so that they can provide more jobs for the vulnerable. The broadening of supply networks enables social enterprises to scale up their social impact and eventually bring about systemic change in the industry (Lashitew et al., 2022). Contract Manufacturing WISEs expand networks and form new ties passively when extant suppliers cannot supply them with unique materials requested by customers. Here, network broadening is necessary for social enterprises to acquire new resources to fulfill customer requirements and pursue their commercial goals.
Moreover, our results show that the commercial success of a social enterprise may further push social enterprises to form new network ties. George’s Coffee, Green Paper, and Enlight shared their experience of switching to new suppliers because the resources of previous suppliers became incompatible. Additionally, “when you get bigger, you actually want to have a backup for every supplier. If a supplier disappeared, then you cannot have your products – that is simply unbearable” (My Notebook). The network-broadening approach then allows social enterprises to reduce their dependency on existing suppliers by providing additional resources to deal with increasing demands at the growth stage.
To cope with unavoidable network broadening, social enterprises greatly value third-party linkages by seeking recommendations and getting referrals from existing networks when past experience with potential suppliers is unavailable. We label this supplier identification approach as indirect networking. Instead of searching for new suppliers online, “we ask around partners: are you already working with someone that already has positive experiences” (Enlight), or “sometimes you get introduced (to supplier’ networks)” (Textile Relive). Indirect networking diminishes the downsides of network broadening and leverages the advantages of network reinforcing. As explained by the co-founder of Amy’s Coffee, “What we tried to do is to use that network to find more high-quality suppliers, because usually, if a company supplies high-quality products, their partners are very often of high-quality, so it’s really helpful to be referred in that way”. By approaching partners’ partners, social enterprises not only save resources and time from lengthy search processes but also protect themselves from opportunistic newcomers (Feilhauer and Hahn, 2021). Thus, indirect networking is extremely useful for organizations operating under resource constraints to efficiently identify trustworthy partners and expand their supply networks.
Network broadening is applied when the strategic importance of new suppliers is low and when additional network ties have to be created for the impact scaling of social enterprises. To mitigate risks and save resources required from unavoidable network broadening, social enterprises largely rely on indirect networking to identify reliable candidates.
4.2.2 Supplier evaluation of social enterprises
4.2.2.1 The relationship between social value creation and supplier evaluation criteria
Our analysis identified four main supplier evaluation criteria: value alignment and relationship commitment, which are qualitative-oriented; and resource complementarity and cost, which are more quantitative. Furthermore, we find that the relative importance of these four criteria varies across different social enterprise models as well as between key and non-key suppliers. While some social enterprises do wish to collaborate with organizations that fully embrace their social missions (e.g. other social enterprises), others allocate very limited weight to value alignment and are not necessarily more “sustainable” than for-profit organizations in supplier selection. This varying focus on the commercial mission (i.e. resource complementarity and cost) and the social mission (i.e. value alignment) can be explained by the level of connection between the supplier evaluation and the impact creation of a social enterprise. We will elaborate on this observation by systematically comparing the four social enterprise models.
Social enterprises following the Social Procurement Model aim to improve the living conditions of upstream suppliers through a bottom-up approach of directly engaging with them. As such, the impact creation process starts with farmer selection and the social logic dominates supplier evaluation. These social enterprises tend to select farmers who share the same sustainability values with them to promote fair trade in the supply chain. In order to scale up impact, they purposefully choose farmers with only acceptable levels of product quality and pay these farmers a purchasing price higher than the commodity market price. In contrast, as non-key suppliers do not directly contribute to such social enterprises’ impact creation, the corresponding evaluation criteria are similar to those of for-profit organizations.
For the Green Product Provision Model, target beneficiaries are end-customers who are willing to contribute to creating a greener environment. The impact creation of these social enterprises mainly lies in product innovation and sales, which are only partially linked to supplier selection. A certain degree of value misalignment between social enterprises and suppliers is acceptable, whereas resource complementarity has to be prioritized to ensure product quality and customer satisfaction. Hence, social enterprises following this model tend to treat the value alignment of suppliers – often reflected by the presence of sustainability certifications – as an order qualifier and a marketing tool to influence customers, but not a determinant. In this context, My Notebook and Enlight currently have social enterprises as their strategic partners, but the core reason for this choice is the technology and expertise of these suppliers. Still, a reasonable price is expected from suppliers without compromising product quality.
The social value creation of Green Product WISEs, however, consists of two parts: workforce integration and environmental protection by providing innovative products. Since the workforce integration is managed within the organization, only the environmental protection part is directly related to supplier selection. Similar to the Green Product Provision Model, the business viability of Green Product WISEs relies on providing high-quality green products at a reasonable price. Hence, resource complementarity is the most important criterion, while suppliers’ sustainability and price become order winners and factors that differentiate long-term key suppliers from non-key suppliers.
Finally, the supplier selection process of Contract Manufacturing WISEs is completely separated from their social mission achievement. Customers will not choose a Contract Manufacturing WISE merely because of its contribution to labor participation and social cohesion. To compete with for-profit manufacturers, Contract Manufacturing WISEs follow a commercial logic in the supplier evaluation process. Accordingly, suppliers with the best score on quality, price, and delivery are selected, while value alignment is only relevant if supporting commercial success. These lead to our third observation:
The relative importance of the four supplier evaluation criteria is largely dependent on whether or not supplier selection constitutes an essential process of the social mission achievement of a social enterprise: the more social value can be created in the supplier selection process, the more likely a social enterprise will compromise its commercial logic and emphasize the value alignment of a supplier rather than cost and resource complementarity.
4.2.2.2 The important role of relationship commitment in social enterprises’ supplier selection
Two types of tensions stemming from the dual mission of social enterprises can impact the importance of different supplier evaluation criteria. First, within organizational boundaries, tensions can emerge between the social and commercial logic when defining the most suitable supplier. Second, with inter-organizational relationships, tensions can emerge between the level of value alignment and resource complementarity of a supplier. Nevertheless, we found that having a long-term commitment to the buyer-supplier relationship helps alleviate such tensions. This commitment reflects the extent to which actors are willing to connect and forge a stable, long-lasting relationship at the preparedness stage (Krause et al., 2007; Moshtari and Vanpoucke, 2021).
For social enterprises that prioritize value alignment in supplier evaluation, the supplier’s long-term commitment to the relationship could lay a foundation for future improvement of resource complementarity, which compensates for social enterprises’ short-term commercial sacrifices: “Last year, we have been in touch with a group of farmers from Western Africa. They only provide low-quality cocoa beans, but they have the potential to deliver high-quality cocoa beans. […] We have been testing their beans [and] sending feedback in order to make an initial shipment. For us, it’s [supplier] development” (Chocolate Factory), and “We like to put more love and attention into these farmers, make price agreements with them, and make sure we come back to them every year. If the quality of the coffee improves, which we also help the farmers with, we will pay more” (George’s Coffee). When the values and goals between partners are aligned, buyers and suppliers can have a shared understanding of improvement and the way to accomplish it, resulting in better performance in cost, quality, and delivery (Krause et al., 2007). A long-term relationship commitment further facilitates the reciprocity of partners, reflected in their intrinsic motivation to contribute to the relationship and the willingness to engage in value-adding and knowledge-sharing activities (Lashitew et al., 2022; Moshtari and Vanpoucke, 2021).
For social enterprises that emphasize commercial logic in supplier evaluation, a long-term relationship commitment would create the basis for an in-depth understanding of the other’s culture and ethics during the collaboration (Taylor and Rosca, 2022). For example, after years of close collaboration and knowledge sharing, an important supplier of Furniture Renew managed to adjust its environmentally-unfriendly production processes and move one step further towards the circular economy. Similarly, with successful collaboration experience, the biggest commercial supplier invited Let’s Remake to set up a blueprint so that they can introduce it to their supply partners and even replicate the collaboration model in other countries. By formulating long-term relationship goals and strategic plans together, the partners’ tension from conflicting values can be diminished through coordinated adaptation and shared narratives (Lashitew et al., 2022; Moshtari and Vanpoucke, 2021). This leads to our final observation:
Relationship commitment is fundamental to coping with tensions that can emerge from the dual mission of social enterprises in supplier evaluation. When social logic is dominant in supplier evaluation, a strong relationship commitment facilitates future reciprocity of suppliers; when commercial logic is dominant, relationship commitment facilitates value alignment of suppliers through intensive interactions during the collaboration.
5. Discussion and conclusions
This study aims to develop a comprehensive understanding of the supplier selection process of social enterprises. Based on a case study of 15 Dutch social enterprises, we find that social enterprises prefer to reinforce rather than broaden their networks to improve resource efficiency, prevent opportunistic suppliers, and facilitate joint capability development. However, if network broadening is the only option, recommendations from existing ties are used to quickly identify trustworthy suppliers without substantial resource investment. As for supplier evaluation, our findings reveal that social impact creation is an important explanatory factor for the varying importance of criteria applied by social enterprises. Additionally, value alignment and long-term relationship commitment are important criteria with the potential to mitigate tensions between partners. In the following section, we elaborate on the theoretical and managerial implications of our results. We conclude by acknowledging the limitations of our work with suggestions for further research.
5.1 Theoretical contributions
5.1.1 Contributions to the literature on cross-sector collaborations
Our findings contribute to the literature on cross-sector collaboration by enriching the understanding of the supplier (partner) identification process. In addition to confirming the preference for network reinforcing by social enterprises, we provide further insight into the underlying drivers. Besides organizational drivers (e.g. resource constraints) and relational drivers (e.g. risk considerations) identified previously (Beckman et al., 2004; Feilhauer and Hahn, 2021), we find joint capability development as another driver spanning the organizational and relational level. It facilitates synergistic value creation among partners for product innovation, process-based improvements, and positive organizational change (Austin and Seitanidi, 2012), resulting in maximized social and commercial value. Moreover, our findings suggest an additional supplier identification approach – indirect networking – for social enterprises to expand their supply networks under resource scarcity. While previous research either neglects indirect networking (Beckman et al., 2004; Lavie and Rosenkopf, 2006) or treats it as a means of network reinforcing (Feilhauer and Hahn, 2021), we regard it as a new approach that differs from network reinforcing and network broadening. Different from strengthening existing ties and forming entirely new ties, indirect networking combines the strengths of both approaches by effectively bridging two unknown organizations through reliable referrals and recommendations (Li and Choi, 2009; Meqdadi et al., 2020). It mitigates social enterprises’ weak internal search capabilities while leveraging their network connectedness. Hence, it provides a relatively secure way to involve trustworthy suppliers who are very likely to share the same vision without intensive investment of resources or high opportunistic risks.
5.1.2 Contributions to the literature on procurement
Traditionally, procurement literature regards supplier selection as an optimization process driven by utility maximization, whereby the supplier with the most complementary resources is chosen (Kaufmann et al., 2012; Kurpjuweit et al., 2021; Pagell et al., 2010). Yet, our results challenge this premise and show that social enterprises purposefully select “imperfect” suppliers and help them in capability development when these suppliers contribute to the core social value creation process of the buyer. Our findings demonstrate the possibility of not only increasing the buyer cost or standards but also including not-yet-sustainable suppliers as part of a development process to achieve common prosperity even under resource constraints. Our research, therefore, underlines the importance for sustainable procurement literature to treat supplier evaluation as a total value maximization process that includes both commercial and social considerations, instead of a short-term decision focused solely on maximizing economic efficiencies.
5.1.3 Contributions to the literature on social impact supply chain management
Finally, we contribute to the social impact supply chain management literature by unpacking the supplier evaluation criteria of social enterprises. While the extant social impact supply chain research mainly focuses on tension management during the contract execution stage (Longoni et al., 2019; Taylor and Rosca, 2022), this research indicates that tensions stemming from complex institutional logics can already be managed in the supplier selection stage. Our findings show that selecting suppliers with shared values and long-term commitment would not only enable social enterprises to reconcile the tensions but also be an antecedent that encourages joint resource development and reciprocal value creation in ensuring buyer-supplier collaboration. Thus, our research both acknowledges the importance of supplier selection for social enterprises and shows typical characteristics of those suppliers that have the largest potential for synergy.
5.2 Managerial implications
We outline three recommendations for social enterprises and their partners to form buyer-supplier relationships effectively. First, managers of social enterprises may draw upon our findings to define appropriate suppliers a priori. Before making the selection decisions, managers need to be fully aware of how procurement aims could support their social enterprise models when identifying potential suppliers and formulating evaluation criteria. When supplier selection is highly related to the impact creation, social enterprises may actively broaden their networks and pay more attention to the value alignment and intrinsic motivation of suppliers to collaborate. When supplier selection is weakly linked to the impact creation, social enterprises prefer referrals from existing networks to quickly identify reliable suppliers with a high level of resource complementarity above value alignment. Secondly, to avoid resource mismatch and potential mistrust, social enterprises may pay more attention to highly motivated suppliers with a strong commitment to the partnership and apply a developmental perspective when a difficult trade-off has to be made between social and commercial logic. Our results show that suppliers’ competency and their understanding of social value creation can be improved through close long-term interactions with social enterprises. When collaborating with suppliers who have limited mission alignment but valuable resources, social enterprises may arrange frequent meetings and formulate strategic plans to foster shared missions. When working with suppliers with a high level of value alignment but poor resource complementarity, social enterprises may implement development programs and design specific collaboration goals to enhance suppliers’ capability. Finally, businesses or other forms of organizations that wish to collaborate with social enterprises should consider actively building network ties and attending social events to find these partners.
5.3 Limitations and future research
We are aware of the following limitations of our research. First, we only collected data from the perspectives of social enterprises. While descriptions of the supplier selection process from buying organizations were sufficient to answer our research question, information about suppliers’ opinions and experience of the selection process could further enhance the reliability of our results and may provide additional insights. For example, it could be fruitful to explore how suppliers engaging with social enterprises during the selection process would contribute to the final selection decisions. Second, in some of our cases, we only interviewed a single informant. It was particularly difficult to find additional interviewees from contract manufacturing WISEs, due to the limited procurement activities and the significant reliance on one manager to make the decisions. Although we tried to discuss findings with our informants through emails and phone calls, insights from different informants within a social enterprise could help to increase the generalizability. Thirdly, our research does not include service-oriented social enterprises, such as work integration restaurants that also actively engage in purchasing activities. However, we believe our results are generalizable; depending on their level of emphasis on the environment, the supplier selection behaviors of work integration restaurants would be similar to contract manufacturing WISEs or Green Product WISEs. Finally, our research only focuses on the supplier selection process, while ignoring the selection outcome and its impact on supplier development after signing the contract. Although our interview protocol covered some related questions, it was beyond the scope of our research. Therefore, future studies may investigate the relationship dynamics between supplier selection and supplier development of social impact supply chains by using longitudinal case design.
Figures
Figure 1
Supplier identification and evaluation of social enterprises
Figure A1
Research process
Overview of case social enterprises (SEs)
| No. | Case | Business description | SE model | Industry | Year of founding | Size1 | Interviewee | Interview length (mins) | Secondary data sources |
|---|---|---|---|---|---|---|---|---|---|
| 1 | Chocolate Store | Fair-trade chocolate seller | Social procurement | Retail Trade | 2013 | L | Partnership Manager | 36 | Annual reports, website |
| Chain Director | 52 | ||||||||
| 2 | Chocolate Factory | Fair-trade chocolate producer | Social procurement | Retail Trade | 2011 | S | Founder and CEO | 62 | Website, blogs |
| 3 | Amy’s Coffee | Fair-trade coffee seller | Social procurement | Retail Trade | 2012 | S | Owner and CEO | 48 | Website, blogs, third-party reports |
| Co-founder | 55 | ||||||||
| 4 | George’s Coffee | Fair-trade coffee roaster and B2B seller | Social procurement | Retail Trade | 2016 | S | Founder | 57 | Impact reports, website, blogs |
| 64 | |||||||||
| 5 | Jonny’s Tea | Fair-trade tea seller | Social procurement | Retail Trade | 2005 | S | Founder | 46 | Website of Jonny’s Tea and its supplier |
| 6 | Furniture Renew | Second-hand furniture maker | Green product WISE2 | Manufacturing | 2018 | M | Marketing Coordinator | 59 | Websites, blogs, company brochures |
| General manager | 44 | ||||||||
| Financial manager | 57 | ||||||||
| 7 | Textile Relive | Second-hand textile product producer | Green product WISE | Manufacturing | 2012 | M | Founder | 44 | Annual reports, websites, blogs, third-party reports |
| Sales and Production Manager | 27 | ||||||||
| 8 | Let’s Remake | Second-hand textile product producer | Green product WISE | Manufacturing | 2009 | M | Production manager | 61 | Impact reports, websites, blogs |
| HR manager | 20 | ||||||||
| 9 | Social Factory | A contract manufacturer that provides a workplace for people with intellectual disabilities | Contract Manufacturing WISE | Manufacturing | 1995 | M | Production manager | 36 | Annual reports, websites, blogs |
| 10 | Bright Workplace | A contract manufacturer that provides a workplace for people with intellectual disabilities | Contract Manufacturing WISE | Manufacturing | 2015 | M | Managing Director | 30 | Websites, blogs |
| 11 | Impactful Window | B2B window and door frame manufacturer that provides job opportunities to people with intellectual disability | Contract Manufacturing WISE | Construction | 2007 | M | Founder | 31 | Website |
| 12 | Green Paper | Green innovative SE for toilet paper | Green product | Retail Trade | 2017 | M | Co-founder and CEO | 50 | Annual reports, websites, third-party reports, podcasts |
| Operations Manager | 40 | ||||||||
| Project Management | 22 | ||||||||
| 13 | Enlight | Green innovative SE for street lighting | Green product | Retail Trade | 2008 | S | Managing Director | 56 | Website |
| 14 | My Notebook | Green innovative SE for sustainable/erasable notebook producer | Green product | Retail Trade | 2014 | M | Owner and Co-founder | 34 | Impact reports, website, blogs |
| 15 | Woodmaker | Wooden product designer and maker | Green product | Retail Trade | 2013 | S | Co-owner | 46 | Impact reports, website |
| Founder | 16 |
Note(s): (S) Small: 1 to 10 people; (M) Medium: 11 to 50 people; (L) Large: more than 50 people
WISE: Workforce integration social enterprise
Source(s): Authors’ own creation
Comparing social enterprise procurement models
| Social enterprise model | Social procurement model | Green product WISE | Contract manufacturing WISE | Green product provision model | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Case number | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | |
| Key suppliers | ||||||||||||||||
| Supplier identification | Network reinforcing | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||
| Network broadening | 〇 | 〇 | 〇 | 〇 | 〇 | |||||||||||
| Indirect networking | ● | ● | ● | 〇 | 〇 | 〇 | 〇 | 〇 | 〇 | 〇 | 〇 | |||||
| Supplier evaluation | Value alignment | H | H | H | H | H | H | H | H | M | M | M | M | |||
| Relationship commitment | H | H | H | H | H | H | H | H | M | M | M | M | ||||
| Resource complementarity | M | M | M | H | H | H | H | H | H | H | H | H | ||||
| Cost | L | L | L | L | L | M | M | M | M | M | M | M | ||||
| Non-key suppliers | ||||||||||||||||
| Supplier identification | Network reinforcing | 〇 | 〇 | ● | ● | ● | ● | ● | ● | |||||||
| Network broadening | ● | 〇 | 〇 | 〇 | ● | ● | 〇 | 〇 | ||||||||
| Indirect networking | ● | ● | 〇 | 〇 | ● | ● | 〇 | |||||||||
| Supplier evaluation | Value alignment | M | H | L | M | M | L | L | M | L | L | L | ||||
| Relationship commitment | M | M | M | M | M | L | L | L | M | M | M | |||||
| Resource complementarity | H | H | H | H | H | H | H | H | H | H | H | |||||
| Cost | M | M | M | H | M | H | H | H | M | H | M | |||||
Value alignment
|
Relationship commitment
|
Resource complementarity
|
Cost
|
Note(s): 〇: Supplier identification approach is mentioned
●: Supplier identification approach is frequently mentioned or is explicitly preferred
H: High importance
M: Medium importance
L: Low importance
Source(s): Authors’ own creation
Data structure and representative quotes
| Aggregate dimensions | Second-order themes | Representative quotes |
|---|---|---|
| Supplier identification stage | ||
| Network reinforcing Description Instances in which the focal social enterprise identifies suppliers from a pool of existing suppliers to form supply relationships | Pre-existing social network and personal relationships with potential suppliers | “Because the quality of our product is so important, we buy the critical components ourselves … You often know which parties are on the market that offer good quality products. So, if that’s already known we go down a list and invite parties to explain things and ask what you can supply and what the costs are.” (Director, Enlight) |
| Increase the order amount and/or order ranges with existing suppliers | “We have a company which is called Beta and near Rotterdam who does the buying for us, if we want to do a new tea, we just say to them, well, source all the things you can get of that type of tea. We go there and we taste and we decide and they buy. So that’s easy. We don’t have to do all the fuss with transports and checking if the tea we get is the same as we sourced.” (Founder, Jonny’s Tea) “In 2019, two Alpha employees who were responsible for the entire its100-year collection and were curious about what we could do for them came to visit us. They thought, how cool would it be if we could make this with our old uniforms? – not knowing that we had a collection made from their old uniforms for a while. Their clothing supplier pointed this out to them and that’s how the ball started rolling.” (Blog, Let’s Remake) | |
| New product development with existing suppliers | “Twice a year we have really official conversations with them, such as evaluating this year and looking ahead. And then you have a number of smaller conversations in between when it comes to, for example, a new type of paper that you purchase together with them.” (Owner and Co-founder, My Notebook) | |
| A limited supplier pool constrains the use of network broadening | “There are only two second-hand machinery suppliers in Europe … So the number of options is pretty limited.” “For example, for the rainforest range (acai fruit) there are only two high-quality suppliers nearby. One of them is a social enterprise and I would love to obtain a product from such a supplier.” (Founder and CEO, Chocolate Factory) | |
| Network broadening Description Instances in which the focal organization actively conducts open searches to identify unknown suppliers through the Internet, advertisement, and network events | Look for qualified new suppliers to enlarge the social impact | “So far Sierra Leone has only provided low-quality cacao beans, but it has the potential to deliver high-quality cacao beans. Last year we have been in touch with a group of different farmers, and we’ve been in a process where we have been testing their beans, and sending feedback in order to do an initial shipment. So for us, it’s the product development, but actually, the main reason is that we think it would be nice to have a new origin of quality beans in the cacao market” (Founder and CEO, Chocolate Factory) |
| An open search for unknown suppliers to fulfill new production requests | “Then for the packaging and that sort of thing, we also have a separate department within the sourcing team that looks for the most efficient, but also the best packaging in terms of environmental impact.” (Partnership Manager, Chocolate Store) | |
| Search for a backup supplier to reduce production risks | “What I said earlier, you just want to have a second source. You noticed this last year with a shortage of components on the market. Parties were behind the times and components were no longer supplied. Then you have to start looking. But that happens during the process.” (Director, Enlight) | |
| Indirect Networking Description Instances in which the focal social enterprise indirectly identifies potential suppliers through referrals and recommendations from third-party ties in the existing network | Work with network ties to identify appropriate new suppliers indirectly | “We can work with other foundations or organizations that provide assistance to farmer groups, for example, these will then be our on-the-ground eyes and ears.” (Founder and CEO, Chocolate Factory) |
| Seek partners’ recommendations about potential suppliers to build third-party ties | “… And if it doesn’t work out, we ask around among partners, are you already working with someone, and do you already have positive experiences. Then you start the conversation with the party in that way.” (Director, Enlight) | |
| Supplier evaluation stage | ||
| Value alignment Description: the extent to which the organizational values between a social enterprise and its supplier are compatible when forming the supply relationship. | Embedding social mission into supplier selection | “I think we are critical about who we buy from and what we buy. It’s not acceptable that we’re buying bad materials at the front end, so suppliers who are either social or circular.” (General Manager, Furniture Renew) “Most of our products within the Netherlands are delivered by B-post. It optimizes their delivery routes and minimizes the CO2 emission.” (Annual report, Green Paper) |
| Create (maximize) social impact from supplier selection | “We are not a big company but what we can do is maximize our impact from the purchases we do.” “But to give you another example, in Colombia where we started to buy low volumes, they now have a number of clients to buy beans from them. For this farmer group, cacao is a very important product that they make much more money than coffee … So that’s nice because we realized a lot of additional impact without any costs.” (Founder and CEO, Chocolate Factory) | |
| An aligned social mission with supplier for collaboration | “I think the basic attitude, culture, the shared objectives. I think those companies that share the same type of vision, work the best. So, a farmer cooperative that wants to develop the farmer community and deliver quality, could be a very interesting supplier for us.” (Founder and CEO, Chocolate Factory) The partner cooperatives are incredibly important mission partners: they’re the implementors who deliver a positive impact to each and every farmer (Open Chain Report, Chocolate Store) | |
| Use sustainability certification as an order winner or order qualifier | “Take another example. We get our bamboo from China. We would prefer to do this closer to home and preferably with a certificate.” (Owner and Co-founder, My Notebook) “And we have a lot of that wood, or actually the majority of the wood that we buy from Supplier S or Supplier N carries the FSC label. So that’s a must for us as well. Also, for us to be able to sell the products as FSC-certified products.” (Founder, Woodmaker) | |
| Relationship commitment Description The extent to which a social enterprise and its supplier aim for a close, mutually beneficial, and long-term supply relationship | A social enterprise’s commitment to a long-term collaboration when selecting suppliers | “Sometimes there is a shortage of suppliers in the market (ex. Organic sugar suppliers). Therefore, now we negotiate long-term contracts with suppliers of raw materials and we don’t do spot purchases anymore.” (Founder and CEO, Chocolate Factory) “We believe in long-term partnerships with coffee cooperatives, purchased on a direct trade basis. By purchasing a significant volume annually and paying a good price, we make a real impact.” (Blog, Amy’s Coffee) |
| The openness of suppliers for a long-term collaboration when forming the supply relationship | “A company that wants to build up a long-term relationship, even for packaging materials, is a partner for us. Or a machine company that has good quality machinery and goes for the long term could be a good partner for us … So that’s why we shifted towards companies that wanted to enter into long-term contracts. It’s not that the other people were bad, but they just didn’t have the tools in place to be able to do that.” (Founder and CEO, Chocolate Factory) […] We pay a good price for coffee not just once, but every year. This gives farmers more security and the willingness to invest increases.” (Blog, Amy’s Coffee) | |
| A concrete plan or agreement is formed when making the purchasing decision | “That’s why we try to buy more each year to motivate coffee cooperatives to collaborate with us. Then these farmers can also plan their investment in improving the environment for example their irrigation systems, which give problems they currently face in Africa.” (Founder and CEO, Amy’s Coffee) “Every year again, we buy arabica coffee from 11 cooperatives and we buy robusta from one cooperative. We visit all partners and talk to farmers. This way we learn what every cooperative needs.” (Blog, Amy’s Coffee) | |
| Have a backup supplier to scale up the business and reduce the risk | “We have quite a few suppliers where it falters and then you really look, and especially when you get a bit bigger you actually want to have a backup for every supplier. And if a supplier now disappears and you no longer have your product, that is simply no longer possible from a certain size because you are scaling up your company. So the challenge is always to look at: is there a comparable supplier that can also supply it?” (Owner and Co-founder, My Notebook) | |
| Resource complementarity Description: the extent to which a social enterprise and its supplier need the resources of each other (e.g. quality, delivery, or technology), and the buyer-supplier agreement will provide them access to these resources in need. | Emphasis on the quality of products from suppliers | “The only thing that we would need to know is the moment that we send over the money, is the product as we wished to be. This has only to do with do they know what they need to do and whether are they honest and open in the communication of the product that has been shipped.” (Founder and CEO, Chocolate Factory) |
| Not the best quality suppliers are selected | “Very well-developed cooperatives are not interesting for us, because we try to develop these cooperatives that are at the beginning of professionalizing their organization. That is an important criterion for us.” (Founder and CEO, Amy’s Coffee) | |
| Emphasis on the reliability and final product delivery from suppliers | “Yes, especially for the products that we relatively buy in bigger quantities (ex. Cocoa beans). We need to be sure that the supplier is able to supply its products as we wished to have.” (Founder and CEO, Chocolate Factory) | |
| Emphasis on the resources and capabilities of the supplier | “When we started, it (ex. Supplier Beta) was not a really big company and it was also a family business whose size fits us best. And we learn to appreciate. And we have a good relationship.” (Founder, Jonny’s Tea) | |
| Cost Description: the extent to which a competitive price is required by a social enterprise when assessing the suitability of potential suppliers | The willingness to pay a higher price | “If you pay too little, the farmer cannot benefit from that. We would like to pay a decent price in order to allow a farmer to manage his farm.” (Founder and CEO, Chocolate Factory) “(We) don’t purchase at the lowest possible price, but at a price that is profitable for the cooperatives. […] the basic principle is that farmers are paid a living income.” (Website, Amy’s Coffee) |
| The tension between cost and other selection criteria | “From time to time we could purchase at attractive price levels, but for us, long-term availability is much more important.” “Price is not an important factor for us. Actually, it is the other way around, we don’t want to pay too little.” (Founder and CEO, Chocolate Factory) “This means money is always a means, not the end goal.” (Annual report, Chocolate Store) | |
| A competitive price is expected from the supplier | “Packaging materials is a very opportunistic market segment. There are these types of typical suppliers that try to fool you, the moment they notice you are not aware of prices you get a very different price list. All these simple tricks. There you need to be keen on with whom you’re dealing.” (Founder and CEO, Chocolate Factory) | |
Source(s): Authors’ own creation
Measures taken to ensure the validity and reliability of the research
| Quality criteria | Case study tactic according to the research phase | |||
|---|---|---|---|---|
| Design | Case selection | Data collection | Data analysis | |
| Construct validity Establishing correct operational measures for the concepts being studied |
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| Internal validity Establishing a causal relationship, whereby certain conditions are believed to lead to other conditions, as distinguished from spurious relationships |
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| External validity Establishing the domain to which a study’s findings can be generalized |
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| Reliability Demonstrating that the operations of a study can be repeated, with the same results |
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Source(s): Based on Blome and Schoenherr (2011), Gold et al. (2020), Yin (2009)
Appendix 1 Interview protocol
(A) Profile
Could you give a brief overview of your organization and its supply chain?
Organizational goals, main business, and products
Organizational size and turnover
Suppliers and customers
Could you introduce yourself and your role in the organization?
Job Function, background, and experience
(B) Supplier selection process
Who are the major suppliers of your organization?
How did you identify these suppliers?
How did you evaluate these suppliers?
Which criterion was the most important for you?
What happened after selecting these suppliers? Did you perceive any intentions after working with them?
Could you think about other non-key suppliers you have selected:
What products or services do they provide to you?
How did the collaboration begin?
Why did you select them?
What made this/these supplier(s) attractive to you?
What are the main supplier selection criteria of your organization? What is the minimum request?
What kind of suppliers will you prefer to work with?
Do you see there are any risks when selecting a new supplier to work with? How can you trust them?
Do you think your supplier selection process is different from a for-profit organization?
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Acknowledgements
The authors would like to thank the Co-Editor-in-Chief Constantin Blome, the anonymous Associate Editor, and the two reviewers who provided excellent guidance and feedback to improve this paper. The authors are also grateful to all the interviewees who devoted their time and invaluable insights to our research.