Buyer-supplier relationships in response to climate change risks: The role of innovation capability

Abstract

In recent decades, climate change has impacted every aspect of life tremendously, including more extreme weather phenomena, global economy uncertainty, and supply chain disruptions. This causes climate change risks for firms due to increasing regulatory pressures, market shifts toward sustainable products, and demanding stakeholder expectations. To combat these challenges, many companies have adopted climate response strategies to reduce greenhouse gas emissions or to improve their resilience. This thesis focuses on examining how implementing these response strategies and buyer firms’ innovation capability affect their buyer-supplier relationships.

By using empirical approaches such as coded firm announcements and a multinomial logistic regression model, the study found that in response to climate change risks firms are transforming their supply chains favorably through buyer-led collaborations, with mitigation strategies being the dominant driver. Besides, although innovation capability significantly has some influence, its weak effect suggests that firms may prioritize other factors when choosing suppliers, rather than innovation capability alone. Finally, mitigation strategies and innovation capability together did not significantly increase firms’ preference for buyer-led collaborations.