Buyer-Supplier Relationships

Globalization has resulted in broadened relationships worldwide. These connections have created challenges for organizational leaders. The concept of liability extends far beyond customers and suppliers; organizations have become responsible for worldwide social welfare and the environmental impact of operations. Within integrated supply chains, managers have looked across traditional boundaries to interfirm relationships to manage risk and advance corporate social responsibility (CSR) requirements, such as sustainability.

The buyer-supplier relationship connects companies through supply chains. Purchasing managers create a link between the internal functions and the external stakeholders of a firm (Carter & Jennings, 2004). It is here that CSR is manifested as purchasing social responsibility (PSR), which includes socially responsible procurement and ethical sourcing (Koplin, Seuring, & Mesterharm, 2007). This link may be understood in terms of stakeholder theory, which is based on a holistic model of the firm and the supply chain. Stakeholder theory explains an organization in terms of integrated relationships with suppliers, customers, employees, governments, media, the community, and competitors. According to stakeholder theory, a firm has an ethical and fiduciary responsibility to conduct business in deference to its stakeholders, not just its shareholders (Freeman, 2010). Stakeholder theory is a foundation of the concept of corporate social responsibility (CSR), and so purchasing social responsibility (PSR) has become a critical method by which stakeholder theory is administered in supply chains.

The concept of sustainable development is at the core of CSR. In 1987, the United Nations World Commission on E...

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