How Does the Contingent Sustainability-Risk-Cost Relationship Affect the Viability of CSR? An Emerging Economy Perspective

Abstract

Sustainability has become a core strategic initiative for firms in the global economy. Its key benefits aside, sustainability may increase a firm's risks, undermining its prospective value. The intricate relationship among sustainability's impact on various dimensions of firm risk is poorly understood, particularly for firms operating in emerging economies. The purpose of this study is to address this gap by developing a nuanced framework for the sustainability-risk relationship in various industries in emerging economies. A multi-method approach was used to collect both quantitative and qualitative data through interviews and site visits for supply chain members of four industries. A fuzzy AHP method was used to illustrate cross-industry differences in sustainability-induced firm risks. These differences are further illustrated through inductive, interpretive analysis of semi-structured interviews. Sustainability behaves as a limits-to-growth system and engenders different risk profiles across four industries. For all firms in emerging economy, sustainability initiatives increase various unanticipated risks. Thus, these firms must saliently tailor sustainability initiatives uniquely suitable for their industry to avoid compromising their value proposition. Insights gleaned from this study may assist both buyers from multinational corporations in the developed economy to propagate sustainability initiatives and suppliers in the emerging economy to implement sustainability initiatives more saliently.