Implementing Voluntary Sustainability Standards in Value Chains

This paper discusses organizational key capabilities allowing focal firms to implement previously defined voluntary sustainability standards (VSS) (e.g., codes of conduct) in their entire value chain(s). Our case study research identifies five key capabilities of a focal firm to make value chain partners (i.e. direct tier-1 as well as indirect tier-2..n subsuppliers) comply with VSS: inter-firm dialogue, risk management, external stakeholder collaboration, cross-functional integration, and
continuous improvement. We propose that those capabilities are contingent on the prevailing power relationship between the firm and its suppliers. The organizational key capabilities identified may extend the theory of institutional entrepreneurship with concepts that facilitate the institutional change in value chains with respect to corporate sustainability.