Social Capital and Supplier Adaptation of Social and Environmentally Sustainable Practices

Abstract

Firms in emerging nations face significant challenges in integrating environmental and social considerations into their supplier operations. Weak institutional frameworks, limited government support, resource constraints, high initial capital costs, a lack of expertise and restricted access to financial institutions often compound these challenges. Our study examines how adequate buyer–supplier social capital, characterised by trust, mutual respect, shared values and open communication, enhances socially and environmentally sustainable practices adoption. While the role of social capital in facilitating collaboration, knowledge exchange and innovation is recognised, its impact on suppliers' adoption of sustainable practices still needs to be explored. Our research focuses on manufacturing firms in Kenya—a representative context that exemplifies the challenges and opportunities in developing economies. Survey data from 233 manufacturing firms reveal that structural social capital significantly enhances suppliers' social and environmental sustainability. Relational social capital significantly influences suppliers' adoption of sustainable practices, but only when reciprocity and mutual friendship are strong. Conversely, cognitive social capital has a limited effect on adopting these practices. These findings provide new insights into sustainable supply chain implementation dynamics in developing countries and highlight the roles of various forms of social capital in promoting sustainability.