Alisa Flinck Pahkasalo Leveraging relational buyer-supplier collaboration for supplier sustainability development: Towards Scope 3 emission reductions A qualitative case study Vaasa 2025 School of Management Master’s Thesis in Strategic Business Development 2 UNIVERSITY OF VAASA School of Management Author: Alisa Flinck Pahkasalo Title of the thesis: Leveraging relational buyer-supplier collaboration for supplier sustainability development: Towards Scope 3 emission reductions Degree: Master of Science in Economics and Business Administration Degree Programme: Master’s Programme in Strategic Business Development Supervisor: Anni Rajala Year: 2025 Pages: 100 ABSTRACT: Viime vuosikymmenten saatossa kasvanut ymmärrys monikansallisten teollisuusyhtiöiden mahdollisuuksista vaikuttaa ilmastonmuutoksen lieventämiseen on vauhdittanut yrityksiä kehittämään toimintojaan ja tekemään merkittäviä investointeja vastuullisuutensa edistämiseksi. Silti yhä suurimman osuuden yritysten kokonaispäästöistä muodostavat niin kutsutut Scope 3 -päästöt, joilla viitataan epäsuorista lähteistä koostuviin päästöihin, joita yritys ei itse omista tai hallitse. Pääsääntöisesti epäsuorat päästöt aiheutuvat toimittajaverkostoista yrityksen arvoketjussa, minkä vuoksi huomiota tulisi kohdistaa erityisesti toimittajien vastuullisuuden kehittämiseen. Toimittajat voivat kuitenkin olla vastahakoisia ottamaan omistajuutta vastuullisuustoimistaan, sillä ne vaativat huomattavasti resursseja eivätkä niiden tuomat hyödyt ole välittömästi ennustettavissa. Siksi ostaja-toimittajasuhteilla sekä yhteistyöllä voi olla keskeinen rooli toimittajan vastuullisuuden kehittämisessä. Koska yrityksen pyrkimykset kohti hiilineutraaliutta eivät riipu ainoastaan yrityksen omista toimista, yritysten välisen kilpailun on todettu siirtyneen enenevissä määrin toimitusketjujen tasolle. Relationaalinen näkemys ehdottaa, että yrityksen keskeisimmät resurssit ja kilpailuedun lähteet juontuvat organisaatioiden välisistä suhteista luoden suhteen osapuolille poikkeuksellista arvoa suhdekohtaisten investointien, tiedonjakamisen, toisiaan täydentävien resurssien sekä tehokkaan suhteiden hallinnan kautta. Tämä tutkimus tarjoaa relationaalista lähestymistapaa strategisena mahdollisuutena tapausyritykselle rakentaa ja ylläpitää toimittajayhteistyötä ja siten kehittää toimittajiensa ympäristöllistä vastuullisuutta. Tutkimus tarkastelee erityisesti millaisten mekanismien kautta erilaiset relationaaliset tekijät voivat luoda yhteistyöhön perustuvaa arvoa ostaja-toimittajasuhteissa, mikä ilmenee tehokkaina toimittajankehittämiskäytäntöinä sekä parantuneena toimittajan vastuullisuutena. Tutkimus on toteutettu kvalitatiivisena tapaustutkimuksena monikansallisesta teollisuusyhtiöstä haastattelemalla kuuden ostaja-toimittajasuhteen molempia osapuolia. Tutkimus osoittaa, että keskeisimmillä relationaalisilla tekijöillä, joita ovat luottamus, sitoutuminen, vastavuoroisuus, joustavuus ja vastaanottavaisuus, on tärkeä rooli ostaja- toimittajasuhteissa. Nämä tukevat ja mahdollistavat toimittajankehittämisstrategioita, joihin lukeutuvat toimittajien tukeminen ja kouluttaminen, sitouttaminen ja motivointi, toimittajayhteistyön vaaliminen, vastuullisuustoimien seuranta sekä resurssien ja riskien jakaminen. Tutkimustulokset laajentavat näkemystä relationaalisesta lähestymistavasta osoittamalla, että relationaalisia tekijöitä, kuten luottamusta ja vastavuoroisuutta voidaan soveltaa myös auktoritatiivisiksi miellettyihin käytäntöihin, kuten vaatimusten asettamiseen tai vastuullisuustoimien seurantaan. Relationaalisen yhteistyön sekä strategisten kumppanuuksien vaaliminen tukevat näiden käytäntöjen edistämistä. Tutkimus kuvaa toimittajan vastuullisuuden kehittämistä jatkuvana kehänä, sillä se vaatii relationaalista yhteistyötä toimiakseen mutta vastaavasti tarjoaa molemminpuolisia hyötyjä ostaja-toimittajasuhteessa sekä vahvistaa kilpailuetua. KEYWORDS: buyer-supplier relationship, supplier sustainability, relational view, collaborative advantage, supplier development practices, sustainable supply chain management 3 Contents 1 Introduction 6 2 Theoretical background 9 2.1 Understanding buyer-supplier relationships 9 2.1.1 Nature of BSRs 9 2.1.2 Relational approach to BSRs 14 2.1.3 Relational factors for creating collaborative advantage 17 2.2 Fostering environmental sustainability in supply chains 25 2.2.1 Complexity of sustainability 25 2.2.2 Sustainable supply chain management 27 2.2.3 Challenges of implementing SSCM 30 2.2.4 Supplier sustainability development 32 2.3 Theoretical framework 39 3 Methodology 42 3.1 Research approach 42 3.2 The case company and study sample 45 3.3 Data collection 46 3.4 Data analysis 48 3.5 Assessment of the quality of the data 48 4 Findings 50 4.1 Key characteristics of buyer-supplier relationships 50 4.2 Challenges in sustainability implementation 55 4.3 Relational factors in supplier sustainability development practices 60 4.3.1 Providing support and knowledge sharing 60 4.3.2 Engaging and motivating suppliers 64 4.3.3 Cultivating relationships and collaboration 67 4.3.4 Monitoring sustainability actions 70 4.3.5 Sharing resources for mutual risks and rewards 73 4.4 Synthesis of the findings and the revised framework 75 4 5 Discussion 78 5.1 Theoretical contribution 78 5.2 Managerial implications 81 5.3 Limitations 83 5.4 Suggestions for further research 84 References 86 Appendices 100 Appendix 1. Invitation letter for interviewees 100 5 Figures Figure 1. Key concepts of the study. 8 Figure 2. Stages of buyer-supplier relationships evolution (Aghazadeh & Maleki, 2024). 10 Figure 3. Dimensions of interorganizational integration, relationship performance and behavioral mechanisms (Vesalainen & Kohtamäki, 2015). 16 Figure 4. Framework of corporate interventions to reduce supply chain emissions (adapted from Wieland & Creutzig, 2025). 33 Figure 5. Strategies for supplier sustainability development (adapted from Wamalwa & Meyer, 2024; Coşkun et al., 2022). 35 Figure 6. Theoretical framework. 41 Figure 7. The research onion (adapted from Saunders et al., 2023). 43 Figure 8. Relational factors facilitating collaboration. 76 Figure 9. Revised framework with synthesis of empirical findings. 77 Tables Table 1. Environmental sustainability performance indicators (Chen & Kitsis, 2017). 29 Table 2. Supplier incentives. 38 Table 3. Supplier penalties. 39 Table 4. List of interviewed suppliers. 47 Table 5. List of interviewed buyers. 47 6 1 Introduction Whilst global manufacturing companies have taken major leaps pursuing environmental sustainability and decarbonization in their operations, interrelated players within the companies’ value chains have posed a significant challenge for emission reductions (Khan et al., 2023; Patil et al., 2022; Dahlmann & Roerich, 2019). Since the indirect emissions, also known as Scope 3 emissions, generated by the supply chain actors can be up to 26 times higher than the company’s own emissions (Wieland & Creutzig, 2025), supply chain networks can play a crucial role in mitigating climate change by providing opportunities for emission reductions (Lin et al., 2024; Patil et al., 2024). As a matter of fact, procurement is one of the most challenging activities in the supply chain due to its critical role in the initiation of a value system; the sustainability issues occurring in sourcing spread across the entire supply chain making the emissions immediately visible in the end product (Kaur & Singh, 2016). As a part of European Green Deal, the companies within the scope of Corporate Sustainability Reporting Directive are mandated to report their environmental and social impacts in accordance with European Sustainability Reporting Standards to enable external parties, such as investors, civil society organizations and customers evaluate the company’s performance in terms of sustainability (European Comission, n.d.). Among these standards, ESRS E1 standard addresses climate change, which requires to disclose a company’s Scope 1, 2 and 3 emissions, contributing to achieving net-zero emissions by 2050 (European Commission, 2023). Scope 1 emissions are directly related to a company’s own activities, whereas Scope 2 emissions emerge through purchased heating, cooling, steam, and electricity (Wieland & Creutzig, 2025). Remainder of the emissions coming from indirect sources that the company does not own or cannot control are be categorized as Scope 3 emissions (Butt et al., 2024). Hence, the efforts to promote environmental sustainability should be directed at suppliers, who in turn can reduce their environmental impact through their own contributions (Patil et al., 2022). 7 However, companies are often hesitant to place resources in supplier development to promote supplier sustainability, since the upfront costs can be high without a proof of financial return (Rogers et al., 2023). It has been observed that supplier sustainability development is often reviewed through monitoring performance and is mainly focused on supplier selection; therefore Patil et al. (2022) suggest that more emphasize should be put on buyer-supplier relationships and collaboration in addition to exploring supplier attitudes towards sustainability implementation. Several studies (e.g. Steiner et al., 2023; Saghiri & Mirzabeiki, 2021; Bai et al., 2021; Håkansson and Ford, 2002) have demonstrated that buyer-supplier relationships can play an integral role in supplier development and supply chain sustainability, as the results of actions, shared resources and lessons learned in dyadic relationships are being spread within the supply networks creating shared value. Indeed, as it has been suggested, the most crucial resources may reach beyond the company boundaries (Dyer & Singh, 1998, p. 660). Nevertheless, the literature lacks precision about role of buyer-supplier collaboration from the perspective of supplier sustainability development, as the case studies with empirical observations are scarce (Dahlmann & Roerich, 2019; Butt et al., 2024). Despite buyer-supplier collaboration being a vital driver in achieving competitive advantage, the existence of companies that have been able to thoroughly implement collaboration remains limited (Sun & Xu, 2025). Hence, this study answers the calls of Butt et al. (2024) for “gathering data from suppliers to better capture the idea of efficient supplier engagement” and Falcone et al. (2024) who suggested to examine how dyadic buyer- supplier interactions and behaviors impact on sustainability-related cooperation. Furthermore, it has been argued that deploying relational capabilities in buyer-supplier collaboration could support sustainability initiatives (Wamalwa & Meyer, 2024; Chen & Kitsis, 2017). Therefore, this study utilizes a relational view and offers its principles as a strategic opportunity for buyer-supplier dyads to create sustainability-improving collaborative advantage. More precisely, it examines the role of relational factors in buyer-supplier collaboration for developing supplier’s environmental sustainability and aims to create an understanding of how to manage supplier sustainability development 8 to pave the way for decarbonization. Consequently, the purpose of the study is exploring this research opportunity by answering the research question: RQ: Through which mechanisms do relational factors in buyer-supplier relationships foster supplier sustainability improvement? The research question will be answered through interviewing several buyer-supplier dyads, including external suppliers as well as purchasing experts working in the case company. Hence, this study contributes to the literature in three ways. Firstly, it deploys the relational view to sustainability collaboration which is less utilized in academic literature. Secondly, the study does not solely focus on identifying the elements of buyer- supplier relationships but enriches the literature by creating further understanding about the mechanisms which convert relational factors into supplier development practices. Lastly, the study also explores how different qualities in buyer-supplier collaboration can foster reaching sustainability targets and engaging suppliers into the mission of continuous sustainability improvement. Figure 1. Key concepts of the study. This study is divided into five main chapters. The present chapter is the introduction where the motivation of the study and the research question are presented. The second chapter reveals the theoretical foundation and builds a tentative theoretical framework. The third chapter introduces and justifies the methodological choices applied for the study. The fourth chapter presents the study findings and analyses the empirical data, and builds a revised framework with a synthesis of the findings. The final chapter concludes the study with a discussion of theoretical and managerial implications in addition to the study limitations and future research suggestions. 9 2 Theoretical background This chapter explores the theoretical background of the study. The literature review is divided into two main themes allowing them to be reviewed individually and comprehensively. The first section focuses solely on buyer-supplier relationships and the role of relational factors within them for creating collaborative advantage. The other section reviews the topic of sustainability within supply chains and strategies for developing supplier sustainability. In the last section of this chapter, the discussed topics build a foundation for the theoretical framework through which the research question will eventually be answered (Bansal & Corley, 2012, p. 511). 2.1 Understanding buyer-supplier relationships 2.1.1 Nature of BSRs To begin with, dyadic relationships can be identified as “systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses” (Cheung et al., 2011). The aim of these relationships is to benefit both a single actor and the entire supply chain. In essence, buyer-supplier relationships (BSRs) refer to establishment of a special function between different businesses to exchange of goods and services (Wieland & Ivens, 2025). According to Carr & Pearson (1999), buyer-supplier relationships range from adversarial to cooperative types of relationships: In adversarial BSRs the supply products may not be urgent and there are multiple suppliers to choose from, whereas in cooperative BSRs the supply products are of higher importance, but sources for the supply are scarce. Although the competition between sources may increase the product price, they state that only cooperative type of BSRs can be aligned with the organization's long-term strategic goals. Despite the existence of a wide range of different kind of BSRs, 10 a company value chain can consist of all of these types simultaneously (Wieland & Ivens, 2025). Figure 2. Stages of buyer-supplier relationships evolution (Aghazadeh & Maleki, 2024). Silva and Resende (2025) have argued that the history and duration of BSRs can imply a certain status of the partnership and contribute to further cooperation and interdependency between the parties. Along the same lines, Aghazadeh and Maleki (2024) have distributed the evolution of BSRs into five different stages with the parallel growth of cooperation intensity in Figure 2: In the initial stages of the relationship evolution, it is considered important that the relationship is financially favorable for both parties. As the relationship matures, the parties learn about each other’s resources, capabilities, and objectives, which strengthens their interaction and cooperation. According to Selnes and Sallis (2003), cross-functional and interorganizational operational processes also start turning to more complex at this point. This requires the relationship to become more intentional and allow for more flexibility within the frames of common agreements (Aghazadeh & Maleki, 2024). In the latter stages, informal interaction becomes more frequent and non-economic factors, such as relationship 11 quality, trust, conflict resolution and interorganizational learning, gain importance and stabilize the relationship. Buyer-supplier collaboration is crucial for company performance which strengthens the need for buying companies to commit to improving their relationships with suppliers (Rajala et al., 2025). Coordination in buyer-supplier relationship refers to the systematic alignment, negotiation, and agreement of mutual goals, whereas cooperation refers to working together over a longer period towards integrating these goals in a mutually decided way (Castañer & Oliveira, 2020; Carr & Pearson, 1999). On the contrary to the framework of Aghazadeh and Maleki (2024), Castañer & Oliveira (2020) consider collaboration as the highest level of working together by defining it as a continuous interactive process that involves voluntary assistance to reach either mutual or individual goals. In line, Moradlou et al. (2022) describe that supply chain collaboration consists of two or more actors working together towards achieving a competitive advantage, improved profitability, and end customer satisfaction by information and benefit sharing, and joint decision-making. Furthermore, collaborating partners usually share a mission and vision and common trust, and the relationship is long-term oriented (Ferrer et al., 2010). Despite the cooperation and efforts towards common objectives, a variety of challenges may also occur in buyer-supplier relationships increasing the complexity of the BSRs. Wieland and Ivens (2025) have identified the partner’s diverse competences and professional backgrounds, geographical locations, and conflicting personal objectives as some typical challenges, especially when multiple stakeholders are participating in the cooperation. Cheung et al. (2011) have pointed out that especially in global context, the nature of a buyer-supplier relationship may impact the outcomes of the cooperation. This is because the partners may have significant cultural differences and incompatible goals by operating in different economies. For example, committing to expensive investments, sharing sensitive data and knowledge between partners can pose risks to cooperation. Therefore, Butt et al. (2024) state that to prevent misunderstandings, 12 distrust and possible sabotage, the relationships should be based on reliability and communication between partners. Due to the changes in environment and increasing competition, the relations between suppliers and buyers have evolved from operational short-term relationships to a smaller number of strong long-term partnerships, and especially the consideration of sustainability issues indicates that short and cost-driven supplier partnerships are no longer an optimal alternative (Giannakis, et al., 2020). It has been argued that the relationships are not optimally governed if the interactions and relations between the partners are merely transactional (Butt et al., 2024). Dwyer et al. (1987) describe that discrete transactions are poor in communication and content, and they have punctual frames for the exchanges. In fact, companies tend to create organizational boundaries and increase vertical integration to decrease the transaction costs that come from negotiating, monitoring, and contract implementation and termination (Carr & Pearson, 1999). Despite the benefits of long-term partnership are evident, Ferrer et al. (2010) argue that it is not necessary for all relationships to be long-term partnerships or the same type of relationships due to the diverse needs in supply chains and constant changes in the business environment. However, this poses a multidimensional challenge for companies to manage their relationships in a suitable way in each context. Some transactional relationships can be recognized as arm’s length market relationships with non-specific investments, minimal information exchange, unintegrated technological systems, low transaction costs, and the absence of governance mechanisms (Dyer & Singh, 1998, p. 661). All these factors maintain low interdependency between the relationship partners, which may not encourage better cooperation. Thus, transactional relationships perceive buyers and suppliers as independent actors who produce value individually (Cheung et al., 2011). Nevertheless, Dwyer et al. (1987) suggest that the stages of fostering awareness, exploration, expansion, commitment, and dissolution in buyer-seller relationships lead to increased partner interdependency, where both buyer’s and supplier’s motivational investments on the relationship are high. Likewise, Ferrer et al. (2010) have utilized the continuum of 13 relationship closeness and reciprocity to classify inter-firm relationships into arm’s length relationships, cooperative relationships, collaborative relationships, and alliances. They argue that the relationship forms of this continuum and willingness to cooperate are impacted by the presence of various relational factors in the relationship. On the other hand, Vesalainen and Kohtamäki (2015) challenge the unidimensional perspective of dyadic industrial buyer-seller relationships by using relational governance theory to develop eight relationship types that fall into structural, economic, and social dimensions: intermediate relationships, partnerships, balanced relationships, social relationships, unbalanced relationships, enabling relationships, transactional relationships, and structural relationships. Their findings indicate that the opposite types of relationships occur frequently but have significant differences in their performance; for example, the partnership-type relationships were considered ideal, and they outperformed their opposite, transactional relationships. This argument is supported by Touboulic and Walker (2015), who argue that partnerships are the best relationship form for sustainability-oriented collaboration. Especially, the relationships in larger industrial companies’ supply chains are more coordinated and structured, and thus, cannot be based only on social relationships (Vesalainen & Kohtamäki, 2015). These findings reinforce the need for integrated relationship types, relational learning processes and mutual commitment of both buyer and seller. The more buyer-supplier cooperation increases over time, the relationships start to change from transactional to relational relationships (Vesalainen & Kohtamäki, 2015); and to put it another way, the exchanges within the relationship shift from discrete transactions to relational exchanges with high levels of cooperation and mutual efforts towards common objectives (Dwyer et al., 1987). The purpose of relational relationships is not to generate immediate financial gains but to nurture the relationships through commitment, interaction, trust, and investment to reach strategic goals in a longer run (Aghazadeh & Maleki, 2024). Consequently, the actors in a buyer-supplier relationships start to increasingly pay attention to their partner’s expectations, objectives, and motives, which can lead to fruitful collaboration. The combining aspect for these 14 relationship types is that they are prevailed by relational factors, and as Ferrer et al. (2010) have stated, the relational factors, such as sharing, interdepencendy, and power, have an integral impact on supply chain relationships. In turn, relational practices are a sum of trust, commitment and cooperation which especially in buyer-supplier relationships can improve supply chain performance and help reaching mutual objectives (Rajala et al., 2025). Building strong buyer-supplier relationships can result in enhanced performance and cost reductions, market share growth and gained competitive advantages, as well as further integrated supply chains and increased value creation (Aghazadeh and Maleki, 2024, p. 5680; Carr & Pearson, 1999). These factors have increased buyer and supplier motivation for cultivating close and long-term oriented relationships with each other. Managing supplier relationships strategically is vital because the purchased spare parts define the end product quality and cost (Carr & Pearson, 1999). However, some authors still suggest maintaining transactional contractual relationships with those suppliers that are not strategically critical (Moradlou et al., 2022; Carr & Pearson, 1999). 2.1.2 Relational approach to BSRs The ability of companies to obtain and retain competitive advantage has been studied broadly, and several scholars (e.g., Silva & Resende, 2025; Bai et al., 2021; Touboulic & Walker, 2015; Theißen et al., 2014) have suggested that the relational view can be utilized to explore buyer-supplier partnerships and their efforts to improve competitiveness. The relational view pioneered by Dyer and Singh (1998, p. 660) is an approach that suggests that competitive advantage lies in interorganizational relationships as the most crucial resources may reach beyond the company boundaries. They describe these special synergies and mutual gains achieved in interorganizational relationships as relational rents that can exclusively be generated through the joint efforts of the alliance partners by combining, exchanging, or investing resources and capabilities, such as unique assets or knowledge (Dyer & Singh, 1998, p. 662). According 15 to Vanpoucke et al. (2022), relational rents can be related to improved company reputation, innovation, social ties within interorganizational relations, new technological capabilities, or other factors that enhance the company performance. Dyer and Singh (1998, p. 662) classify relational rents as: 1. Relation-specific investments 2. Knowledge-sharing routines 3. Complementary resources and capabilities 4. Effective governance Value creation is a central driver in buyer-supplier relationships. An individual company can gain competitive advantage through value co-creation in partnerships (Cheung et al, 2011, p. 1062). Jap (1999) highlights that collaborative efforts may lead to remarkable benefits that would not be achievable without the idiosyncratic contributions of each partner. As the key resources and capabilities may derive from interorganizational relationships, suppliers can produce a significant part of the final product’s value (Dyer & Singh, 1998, p. 660). Therefore, suppliers that are strategically critical for the buying company should be viewed as collaborating partners and enablers of competitive advantage, rather than considering them as outsiders or solely one of the numerous actors in the value chain (Rajala et al., 2025). In contrast, arm’s length relationships are incapable of creating relational benefits and offering rare or inimitable competitive advantages. This can be due to their low switching costs and lack of deeper engagement, which are consequences of indefinite and scarce asset investments and a low level of interconnectedness in terms of technological systems and information exchange (Dyer & Singh, 1998, p. 661). However, competitive advantage as a concept is largely related to the company’s own advantages despite being created in interorganizational relationships. Therefore, Bai et al. (2021) suggest that collaborative advantage reflects the gains that mutually benefit both sides of the buyer-supplier dyad, which then has a strong emphasis on the mutual efforts of the partners. This collaborative advantage can be seen as a relational capability that buyers and suppliers can mutually build in close cooperation. Moreover, supply 16 chain relationships alone can be perceived as intangible resources that the company holds when they are strategically managed (Theißen et al., 2014; Carr & Pearson, 1999). Collaborative advantage and interorganizational performance are formed through cooperative behaviours that are impacted by (economic) relation-specific investments, (social) relational capital, and (structural) relational structures (Vesalainen & Kohtamäki, 2015). Figure 3 illustrates how all the aspects need each other to support cooperation and providing the generaton of collaborative advantage. Figure 3. Dimensions of interorganizational integration, relationship performance and behavioral mechanisms (Vesalainen & Kohtamäki, 2015). The relational view of Dyer and Singh (1998) has been utilized as a foundation for several studies to describe how the desired outcomes can be achieved. Similarly, Bai et al. (2021) have utilized the relational view to evaluate buyer-supplier relationships as a relational capability from the sustainability perspective and described them as (1) investments on sustainability issues, (2) sustainable knowledge exchange, (3) resources and capabilities sharing, and (4) joint management effort. Their study supports the applicability of the relational view in exploring how buyer-supplier relationships can create collaborative advantage to tackle sustainability challenges. The following subchapters describe the 17 four relational rents and present the main relational factors that support achieving collaborative advantages. 2.1.3 Relational factors for creating collaborative advantage 2.1.3.1 Relation-specific investments Rungsithong et al. (2017) argue that a buyer-supplier relationship becomes critical when the parties make significant investments into the partnership. These investments can be relation-specific, for example tailored products or investments in technology, human resources, or other crucial assets, and the amount of time and resources invested impacts the relationship closeness (Luo et al., 2015). Relation-specific investments increase the level of partner’s vulnerability: the more customized, critical, or special the asset is, the larger are the risks and possible switching costs (Ferrer et al., 2010). Relation-specific investments produce unique processes and products, that the competitors could not achieve in the same way (Rungsithong et al., 2017). Nevertheless, this also makes the investment less valuable outside of the dyad because the outcome cannot be replicated to other contexts, and this is why the decision of making relational investments is strategically remarkable (Luo et al., 2015). According to Luo et al. (2015), relational investments reinforce both partners’ willingness to collaborate. This is explained by the higher interdependency that the parties share with each other. Relation-specific investments intensify the partner’s interdependency through increased mutual value creation and alleviating the need of considering other partner options (Rungsithong et al., 2017; Ferrer et al., 2010). Interdependency refers to which extent different actors in the supply chain or buyer-supplier relationship are reliant on each other in terms of processes, resources, and capabilities to be able to achieve their objectives (Ferrer et al., 2010). This dependency on other supply chain partners encourages the effort to build stronger collaboration and operate in a way that benefits the other side as well, specifically, if the relationship is perceived advantageous. 18 Similarly, when it comes to technology investments and sustainability efforts, Akram et al. (2024) have seen that collaboration is required in all stages of supply chains. Relational factors are crucial drivers for investment-related collaboration (Touboulic & Walker, 2015). Becoming interdependent on other supply chain actors requires commitment and trust (Ferrer et al., 2010; Touboulic & Walker, 2015). Commitment becomes evident when the partners share the risks and rewards based on relation- specific investments. Trust is a prerequisite for the mindset towards long-term oriented collaboration. These are needed to be able to enter new markets, gain new resources, and adapt new technologies (Ferrer et al., 2010). 2.1.3.2 Relational learning One of the valuable benefits that buyer-supplier relationship collaboration may bring, is learning from each other. It has been noted that the majority of a company’s innovative ideas come from its suppliers and customers (Dyer & Nobeoka, 2000). Hence, the main driver for relationship learning is the instability of the business environment which the company cannot control (Selnes & Sallis, 2003). According to Huikkola et al. (2013), the relationships between organizations can create regeneration, innovation and learning. Therefore, partner scarcity and lack of expertise among the partners may pose a barrier for joint learning (Touboulic & Walker, 2015). Interorganizational or relational learning can be described as “a joint activity through which parties share information, interpret it and integrate it into relationship-specific memory” (Rajala, 2018; Cheung et al., 2011). Relational learning allows the integration of tacit knowledge based on personal experiences, making it difficult to imitate or transfer it to other relationship contexts (Moradlou et al., 2022). The learning capabilities that the partners have developed, define how well the relationship performs (Cheung et al., 2011). According to Bae & Grant (2018), interorganizational learning refers to sharing capabilities with other supply chain partners, whereas learning capability refers to 19 companies mutually leveraging their core competences in the supply chain. According to Theißen et al. (2014), interorganizational learning and fostering expertise through it enhances the company’s capacity to engage in partnerships, which in other words, can be described as absorptive capacity. It has been noticed that in long-term oriented partnerships, learning happens in constant interaction between the partners, whereas in short-term oriented relationships, learning happens through observation (Rajala, 2018; Dyer & Nobeoka, 2000). Therefore, companies should consider the target and scope of the interorganizational relationships in order to optimize the mutual benefits. Relational learning can be seen as an alternative for coordinated information exchange, as through relational learning both partners are engaged into finding ways to enhance cost-efficiency, flexibility, and quality, and mutually create more value than individually (Cheung et al., 2011; Selnes & Sallis, 2003). Cheung et al. (2011) propose that relational learning consists of (1) information sharing, (2) joint sensemaking, and (3) knowledge integration, which impact the supply chain actors and the relationship success. According to Selnes and Sallis (2003), information sharing refers to sharing insights about the product experiences, issues, technological avancements, end-user details, partners’ strategies and finances, and market fluctuations. It promotes supply chain transparency, agility, and collaboration, which are essential factors in creating competitive advantages and flexibility (Baah et al., 2022). Joint sensemaking aims to link knowledge and understanding of the past or upcoming efforts and to analyze their success, which can lead to more effective process innovations and product solutions that better respond to customer needs (Cheung et al., 2011). Furthermore, knowledge integration means that the knowledge and values that are being shared in the relationship are transferred to relation-specific memory that informally and formally guides the interactions and routines between the partners. The study of Parente et al. (2022) pointed out that in- person interaction promotes knowledge integration more effectively than virtual communication by creating a positive culture of knowledge sharing. Especially in industrial context, where the shared information is highly valuable due to its complexity, trustworthiness is a central factor (Dyer and Chu, 2003). However, in a global context in- 20 person communication is not always possible, which may hinder trust building and partner involvement. 2.1.3.3 Resource and capability sharing The relational view extends the resource-based view that focuses on an individual company as the unit of analysis and suggests that a company’s own resources and capabilities that are valuable, rare, inimitable, and non-substitutable are likely to yield competitive advantage (Dyer & Singh, 1998). By contrast, the relational view sees that the collaborative aspirations in interorganizational relationships can lead to mutual value creation. This is because business networks consists of companies and business units carrying valuable knowledge, capabilities and resources that have been formed through “complex interactions, adaptations and investments within and between the companies over time“ (Håkansson and Ford, 2002). Furthermore, the opportunities to improve performance can be tied to certain organizational units, for example procurement, which makes the role of sharing complementary capabilities and expertise vital especially at an operational level (Rungsithong et al., 2017). Global competition in the business environment has increasingly evolved from an individual company level to supply chain level, and therefore, the opportunities to share and acquire knowledge, resources, and techniques play a significant role in developing supply chains and gaining competitive advantage (Rajala, 2018; Chen & Kitsis, 2017). It is a matter of establishing, extending, and transforming the company’s resource base, and deploying the resources that lie in the network relationships so that they support the company’s goals and performance (Parente et al., 2022), and certain relational factors can help leveraging these complementary resources and capabilities (Ferrer et al., 2010). The mutual sharing of scant and complementary resources through several operational interfaces allows developing new solutions and technologies that hold unique value that the partners would not be able to achieve on their own (Dyer & Singh, 1998). However, Dyer and Hatch (2006) argue that occasionally the capabilities that 21 companies share and acquire are tied to specific relationships and thus, cannot be transferred to other relation settings. Leveraging relational competences in relationships and supply chain management practices can foster the supply chain performance (Wieland & Wallenburg, 2013) as the relational competencies and capabilities may have a positive impact on how supply chain activities are managed (Paulraj, et al., 2012). Changes in regulations, demand and market dynamics necessitate companies to rapidly react to these fluctuations to respond the needs of the customers and the environment, and to achieve relational gains in buyer- supplier dyads, the relationship partners need certain characteristics. For example, developing dynamic capabilities may increase the ability to manage and renew the company’s resources and capabilities (Akram et al., 2024). It has been argued that the lack of relational capabilities, such as expertise, training, or culture for cooperation, can hinder building strategic partnerships which, in turn, decreases the opportunities to share and acquire relational resources (Corte et al., 2021). Some authors (Touboulic & Walker, 2015; Wieland & Wallenburg, 2013) have highlighted that the interplay between communication, cooperation, and integration as relational competences can help creating relational rents. Communication as a relational competence refers to the ability to interact transparently and timely with an appropriate tone (Rajala et al., 2025). Moreover, another important factor is commitment (Andersen and Kumar, 2006). Cooperation enables the efforts of coordinating the sharing of intangible or tangible resources and working towards mutual objectives by reforming practices and processes (Ferrer et al., 2010). It often involves the expectation of reciprocity in the future if the cooperation activity has only benefitted the other side of the buyer-supplier dyad. Also, Chowdhury et al. (2019) emphasizes that relational capital can be built in relationships where reciprocity, trust, respect, and interpersonal dynamics are present. Integration in buyer-supplier relationships determines to which extent companies can share and combine knowledge and resources in the supply chain (Parente et al., 2022). Therefore, a barrier for relational collaboration is the indivisibility of 22 resources and capabilities but also, unaligned targets (Touboulic & Walker, 2015). Nevertheless, the process of integrating knowledge, resources, and competences in interorganizational setting may not be simple, as it involves plenty of tacit information that is based on unique and personal experiences. For example, competences in advanced technologies help adapt to market requirements in real-time but those companies also tend to embrace stronger knowledge sharing routines and governance mechanisms (Akram et al., 2024). Supplier involvement and trust have been shown to support integration and knowledge sharing and thus, are vital for buyer-supplier collaboration (Parente et al., 2022). 2.1.3.4 Relational governance Liu et al. (2009) define that relational governance constitutes of the behavioral and managerial techniques that foster informal self-enforcing safeguards in collaborative buyer-supplier relationships. In order to ensure effective governance, relationships can be managed through self-enforcement governance mechanisms which refer to the use of formal or informal interaction in different situations (Chowdhury et al., 2019 ; Dyer and Singh, 1998). Successful relational governance can create a transaction quality rent that lowers transaction costs that come from relationship management and contracting (Vanpoucke et al., 2022; Adler, 2001). This increases the partners willingness to participate in activities that support value co-creation, enables partners to understand each other better, and foster joint problem solving (Dyer & Singh, 1998; Liu et al., 2009). It has been noticed that informal governance is possible when the relationship is based on long-term commitment, common respect, and trust (Vanpoucke et al., 2022 ; Ferrer et al., 2010). However, managing relational governance and balancing the self- enforcement mechanisms in different buyer-supplier settings can become more challenging when the number of supplier relationships and the level of network complexity increases (Chowdhury et al., 2019). 23 Generating relational rents requires appropriate governance mechanisms for which Vanpoucke et al. (2022) have highlighted trust and fair contracting. Relational governance can be applied alongside formal contractual governance. However, relational governance refers to “implicit understandings, shared cooperative norms and informal routines that are mutually defined and adjusted by the parties” (Cantú et al., 2021). In other words, relational governance constitutes of collaborative practices and relational norms. Relational norms refer to expectations that decrease opportunistic attitudes and foster collaboration, and value creation (Singh et al., 2024; Liu et al., 2009). Studies have identified flexibility, trust (solidarity), and power as relational norms that determine BSRs and preserve the relationship (Bonatto et al., 2020; Singh et al., 2024; Vanpoucke et al., 2022). Flexibility is needed for efficient relational governance, and the study of Singh et al. (2024) has showed that flexibility occurs as a mediator among the other relational norms. Especially, a highly institutional environment with little flexibility poses a barrier for relational governance (Touboulic and Walker, 2015). Interestingly, Singh et al. (2024) found that flexibility is less needed when power occurs in the relationship. Especially, in the later stages of buyer-supplier relationship maturity, the partners aim to increase their partners’ opportunities to influence, which may lower the need of intensive scrutiny but foster mutual planning efforts among the supply chain partners (Aghazadeh & Maleki, 2024). Trust is essential in creating relational synergies, and therefore, a deficient level of trust between BSR partners poses remarkable barriers for relational activities, such as relation-specific investments or knowledge transparency (Theißen et al., 2014). Andersen and Kumar (2006) have argued that trust can be seen as a strategic asset and is especially important in all stages of the partnership evolution as it fosters the psychological commitment and partners' flexibility in the relationship. On the other hand, Olander et al. (2010) argue that in the later stages of interfirm collaboration and R&D 24 projects where the focus is on producing income, the importance of trust may decrease, and excessive trust may even jeopardize suitable contract making. Building supplier trust requires reliability, transparency, consistency of the actions (Rajala et al., 2025). As the interpersonal dynamics have a significant impact on buyer- supplier relationships, they also involve various silent norms and psychological contracts, which are related to the individual’s perception of the terms and conditions of the contract (Andersen & Kumar, 2006; Blessley et al., 2018). Relational psychological contracts differ from transactional contracts in the sense that they have non-financial and unwritten social obligations, such as trustworthiness and loyalty, and therefore, communication in relational obligations becomes essential (Andersen & Kumar, 2006). The absence of interpersonal skills may hinder the process of building trust or even the relationship establishment. Power can also be used to achieve efficient governance. As Vesalainen et al. (2020) have stated, individual buyers can act as boundary spanners that build trust between supply chain actors on interpersonal level beyond transactions, and for example, use persuasive rhetoric to influence the partners. It has been stated that suppliers tend to be more responsive for buyers’ obligations in cooperative relationships (Carr & Pearson, 1999). Interorganizational relationships can act as a driver and enabler for companies to influence each other as well as other companies through the network, and it has been stated that a change can only be attained with the help of the company’s networks (Håkansson and Ford, 2002). As a result, the importance of the company’s interfaces with other companies needs to be strongly addressed in strategic decision-making. Companies that influence others through the network relationships are to a certain extent reliant of each other (Touboulic & Walker, 2015). The company must be able to convince its partners about the vision, address their expectations, and try to clarify how the targets could be aligned with internal resources and relationships (Håkansson and Ford, 2002). To achieve this, Rajala et al. (2025) 25 propose that a positive supplier experience promotes suppliers’ motivation to cooperate towards common advantages. The study showed that the use of non-coercive power by buyers worked more efficiently than demanding power, which can be explained by the fact that non-coercive power is based on trust and supports cooperation in a longer run. Therefore, trust has been preferred over the use of coercive power in relationships (Touboulic & Walker, 2015). A central goal of relational governance is also hindering opportunistic behavior in cooperation and so called “free-riding” (Bai et al., 2021; Falcone et al., 2024). However, when the aforementioned norms flexibility, trust, and solidarity are present in the relationship, there is a decreased need for authoritative behaviors, such as the use of power (Bonatto et al., 2020). Nonetheless, the study of Liu et al. (2009) has proposed that transactional mechanisms, such as formal contracts and transaction-specific investments, may hinder opportunism more powerfully compared to relational governance with relational norms. Yet, the quality and performance of buyer-supplier relationship was enhanced by relational factors as well as relation-specific investments, which in turn, decreases opportunism. 2.2 Fostering environmental sustainability in supply chains 2.2.1 Complexity of sustainability When exploring any aspect of sustainability, it is important to understand the complexity of it. Sustainability still lacks a precise definition in academic studies, as the universal definitions do not cover the whole concept of sustainability due to the relational differences among communities and ethnicities (Virtanen et al., 2020). Instead, Hallin et al. (2021) suggest that sustainability occurs “through its translation, use, and practice”, focusing on the process of how sustainability constantly changes through daily measures in a company. To put it bluntly, sustainability is bound to time and place, and can be subjectively perceived. According to Ciasullo and Troisi (2012, p. 44), sustainability in 26 business can be seen as the transparency behind a company’s relations, proposals, and visions that lead to a more ethical society, where economic aims, cooperation, and public wellbeing are in better balance. Moreover, business sustainability also includes the focus of stakeholders, volunteers, resilience, and long-term sustainability (Ahi & Searcy, 2013). One of the most known concepts of reviewing sustainability is triple bottom-line framework (TBL) first presented by John Elkington in 1994, which encapsulates a company’s efforts to impact and optimize their network’s consequences on Earth through economic, social, and environmental factors (profit, people, and planet) (Laurell et al., 2019). Despite this classification, none of these factors excludes one another as they are interrelatedly rather a sum of efficiency, equity, and intergenerational equity (Srivastava et al., 2022, p. 58; Adhikary et al., 2020). For example, it has been noticed that within a short span of time environmental sustainability efforts may have a negative influence on a company’s economic performance but in the long run, both economic and environmental sustainability targets can be reached (Sharma et al., 2022; Laurell et al., 2019). However, TBL philosophy has faced criticism since there are no exact guidelines how to follow TBL nor how it can be measured (Evans et al., 2017), and thus the term can be exposed to misuse and false claims about a company sustainability (Srivastava et al., 2022). According to Hallin et al. (2021), sustainability implementation requires long- term structural changes as well as the parallel evolution of organizational culture, technology, and economy. Companies who implement TBL approach to their core operations, can contribute to more sustainable supply chain management that poses stability between environmental and social wellbeing, and economic viability (Hariyani et al., 2024). Nonetheless, after acknowledging the complexity of sustainability, this study focuses primarily on the environmental aspect of sustainability improvement and excludes the social and economic factors. 27 2.2.2 Sustainable supply chain management Supply chain management (SCM) incorporates three main themes which are supply chain (1) activities related to physical material, finances, services, and information flows, and intra- and interorganizational relationships; (2) benefits resulting from value creation, efficiencies, and customer satisfaction; and (3) constituents and components (Stock & Boyer, 2009). Thus, according to Wolf (2011), supply chain sustainability stems from the integration of these intra- and interorganizational processes within companies which strategically involve collaboration from both manufacturers and supply chain partners. From a more detailed perspective, Ahi and Searcy (2013, p. 339) have described that sustainable supply chain management (SSCM) consists of organized supply chains intentionally aligning environmental, economic, social sustainability aspects to cross- organizational business systems in order to “efficiently and effectively manage the material, information, and capital flows associated with the procurement, production, and distribution of products or services in order to meet stakeholder requirements and improve the profitability, competitiveness, and resilience of the organization over the short- and long-term”. Earlier studies have also used the term of green supply chain management (GSCM) to emphasize the environmental focus. For example, Handfield et al. (1997) has described it as the use of environmental management principles that occur throughout procurement, manufacturing, packaging, and distribution. Likewise, Srivastava (2007) has emphasized implementing “environmental thinking” into SCM, that is applied into product design, sourcing, manufacturing, delivery, and product end- of-life management which also incorporates a long-term orientation. Furthermore, Touboulic and Walker (2015) have stated that collaborative supply chain operations foster green supply chain management. These include environmental innovation, joint development of recyclable products, and decreasing toxic materials and waste. The prior studies have identified that the assessment of sustainable suppliers, utilization of renewable resources in production, and carbon emissions caused by transportation 28 are the main practices to develop supply chain sustainability (Lin et al., 2024). According to Agrawal et al. (2024), SSCM impacts on environmental sustainability by preventing pollution by reducing emissions, minimizing waste, and optimizing efficient use of resources, such as water and energy. Further, these actions can be grouped into pollution prevention and pollution control (Paybarjay et al., 2024). Environmental sustainability performance refers to the supply chain’s potential to minimize its emissions and use of hazardous waste (Khan et al., 2023). Efforts to minimize greenhouse gas emissions in supply chains can be operated by the utilization renewable energy sources, substitution of traditional fuels with energy-efficient fuels, shifting to electric vehicles, optimizing logistics and distribution, and developing more sustainable packaging solutions, which are likely to improve the operational efficiency as well (Hariyani et al., 2024; Butt et al., 2024). Furthermore, companies can participate in carbon emission compensation programs by investing in clean energy and reforestation initiatives. The benefits of adopting green or sustainable supply chain management are broad, and in an ideal situation, SSCM can provide operational cost savings due to lower use of energy and more efficient use of resources, and smaller amounts of waste (Hariyani et al., 2024). Particularly, circular closed loop supply chains enable material repurposing, recycling, and reusing, which shrinks the overall stress for the environment. Also, emission reductions lead to more ecological products and processes, and thus, increased energy savings (Theißen et al., 2014). Furthermore, increased sustainability can yield significant competitive advantages, for example through meeting standards and enhanced brand reputation (Hariyani et al., 2024). Buyer-supplier relationships play an integral role in supply chain decarbonization, as the results of actions, shared resources and lessons learned in dyadic relationships flow in the supply networks (Steiner et al., 2023; Håkansson and Ford, 2002). Supplier emissions become immediately visible from the material purchasing to the distribution of goods, and therefore, sustainability improvement and decarbonization should be started from the procurement stage (Kaur & Singh, 2016). For example, buyer-supplier relationships 29 can foster emission reductions in supply chains by collaborating in production planning, configuration, and emission contracting (Steiner et al., 2023). This argument is also supported by Chen and Kitsis (2017), who have emphasized that buyer-supplier collaboration is not only beneficial for building relationships but enhancing both actors’ sustainability performance. Thus, they have identified eleven indicators of environmental sustainability in supply chains, which are presented in Table 1. Table 1. Environmental sustainability performance indicators (Chen & Kitsis, 2017). Construct Indicators Environmental sustainability performance Decrease in consumption of hazardous/harmful/toxic materials Decrease in energy consumption due to conservation and efficiency improvements Reduction in air and water pollution Decrease in frequency of environmental accidents Decrease in the use of natural resources Improvement in measuring environmental impact Reduction in production waste Improvement in the preservation of natural resources and eco-system Improvement in compliance with environmental laws Increase in the recycling and re-use level Improvement in tracking and rewarding employees for “good environmental deeds” Sourcing is a critical function impacting on supply chain sustainability; hence, sustainable sourcing encourages the use of more ecological purchasing activities, whereas green purchasing refers to sourcing spare parts and raw materials that enable manufacturing cleaner products that cause less harm for environment and human wellbeing (Khan et 30 al., 2023). Sustainable sourcing can be addressed in (1) selecting sustainable suppliers, and (2) assessing their sustainability performance (Giannakis et al., 2020; Patil et al., 2022). Sustainable supplier selection considers social and environmental impacts, and prefers the use of renewable resources, recycled materials, and biodegradable options that decrease waste and the dependency on non-renewable resources (Hariyani et al., 2024). Supplier performance evaluation can be assisted with strategic purchasing, that can include planning, assessing, implementing, and controlling to purchasing processes (Carr & Pearson, 1999). As strategy occurs on functional, business unit and corporate level, the daily functional level activities within the supply chain must be in line with the business unit and corporate strategies. As a consequence, the organizational change that the supplier needs for adopting sustainable practices and enabling the buyer company to shift from SCM to SSCM, requires strong relationship management (Touboulic & Walker, 2015). It is increasingly about a mindset change that the suppliers need, which can lead the supply chains towards a more sustainable direction and decarbonization. 2.2.3 Challenges of implementing SSCM According to Rogers et al. (2023), companies are often hesitant to place resources in developing their suppliers’ environmental sustainability and guaranteeing sustainability throughout the supply chain, since the upfront costs can be high without a proof of financial return. It requires intentional prioritization of limited resources and considering the trade-offs of sustainability efforts within and beyond the company (Rogers et al., 2023). Especially for the suppliers, the costs of investing in certifications, training, or more eco-efficient facilities, technologies and materials might be high if they are expected to take ownership of their own sustainability improvement, and the outcomes are not immediately quantifiable (Hariyani et al., 2024). In addition, transforming outdated technologies and infrastructures to match current needs and requirements can be initially unprofitable. The contract duration of the projects may not be as short and clear as usual, and there might be unclear or conflicting targets (Theißen et al., 2014), and the transition towards sustainable practices requires assessing the investments to 31 long-term gains (Hariyani et al., 2024). The reluctance of sharing financial risks and rewards may also stem from conflicting targets in the buyer-supplier relationship (Aditi et al., 2024). Regardless, the study of Rogers et al. (2023) also indicates that it is no longer controversial whether allocating resources on supplier sustainability improvement is advantageous, as especially negative events in terms of environmental sustainability demonstrated to impact the company financially. This strengthens the importance of focusing on preventative measures in supplier sustainability and the fact that price should no longer be the leading factor when considering the trade-offs. Companies may face challenges in terms of rapidly changing policies and legislations when implementing sustainability into supply chains (Zayed & Yaseen, 2021). Especially in global supply chains, the regulations vary between geographical regions and countries. Climate change emerges with plenty of new information asymmetry that occurs in both physical and regulatory risks that companies may face (Dahlmann & Roerich, 2019). Although some regulations can offer frameworks or mandates for implementation, poor communication of standards between organizations may cause confusion, and lack of resources to invest in clean technologies can hinder sustainable these efforts (Hariyani et al., 2024; Aditi et al., 2024). Furthermore, climate change, global disasters and uncertainty in competitive markets pose significant risks for supply chains, which necessitates them to build resiliency and flexibility to repair business operations when facing issues (Kaur & Singh, 2019). Companies may also face organizational resistance, which stems from deficient understanding of the sustainability challenges and advantages that sustainability initiatives can bring. Aditi et al. (2024) have identified that especially the lack of joint activities related to recycling planning and waste material management, and asynchronized practices and techniques for pollution control and prevention create barriers for sustainability. Touboulic and Walker (2015) who emphasize the challenge of getting the stakeholders on board with supply chain sustainability aspirations, which may partially stem from the resistance of giving up traditional practices (Zayed & Yaseen, 32 2021). Especially, attracting the interest of the stakeholders and engaging them for example into eco-friendly product development is a complex task. The absence of trust and credibility in buyer-supplier relationships and with the management, and a lack of focus and leadership in supplier collaboration in addition to lack of joint learning would also pose a barrier for sustainability (Aditi et al., 2024). The task of making major changes in existing buyer-supplier relationships is also perceived difficult, especially when there is not commitment or trust (Hariyani et al., 2024). For example, regardless of the multiple benefits of using supplier incentives and penalties, the effect may be reversible when it comes to sustainability: suppliers may be tempted to hide or modify sustainability-related information (Patil et al., 2022). Judging by this, sustainability improvement requires competent relationship management building trust, commitment and clarifying the mutual advantages. 2.2.4 Supplier sustainability development Suppliers impact the end product’s costs, profits, quality, technology, flexibility, and delivery, which buyer companies aim to improve by utilizing different supplier development strategies with the selected key suppliers (Jia et al., 2023). Besides these, buyers are increasingly focusing on an additional factor, supplier sustainability. The intensity of supplier development practices that involve more resources is high in manufacturing companies since the supplier’s raw materials and spare parts are significantly visible in the product (Krause & Scannell, 2002, p. 18). In prior studies, supplier development refers to all kinds of buyer actions that foster supplier performance and capabilities to respond to the buyer’s supply needs by either limited or extensive endeavors (Krause, 1997, p. 12). However, the main categories for supplier development practices have been identified as supplier evaluation, the use of competitive pressure or incentives, and supplier engagement through investments and employee training (Krause & Scannell, 2002, p. 15). The key driver for these practices is 33 that they increase the level of the supplier’s direct involvement to buyer activities which can result in enhanced supplier performance. Figure 4. Framework of corporate interventions to reduce supply chain emissions (adapted from Wieland & Creutzig, 2025). According to Jia et al. (2023), sustainability-oriented supplier development extends the traditional purposes of operational efficiency improvement by including sustainability efforts into supplier development. There are various approaches to managing sustainability practices in supply chains. Wieland and Creutzig (2025) have proposed a framework for reducing supply chain emissions in buyer-supplier relationships in Figure 4. They argue that supply chain interventions vary on the range of behavioral, collaborative, operational and authoritative dimensions. (1) Collaborative practices that aim to drive behavioral change include supplier education, joint knowledge and information sharing, and incentivizing. In the other end of the axis, (2) collaborative efforts with operational improvement goals refer to providing both operational and financial support for suppliers in their product design innovation, renewable energy implementation, and emission mitigation. These can also include data sharing to ensure operational optimization. (3) Authoritative approach to behavioral practices is related to requiring emissions compliance from suppliers, setting and assuring supplier targets and contract terms, and incorporating emissions into tendering. Finally, (4) authoritative operational practices consist of analyzing emissions from financial perspective, 34 implementing cleaner transport alternatives, and using various requirements for suppliers. For example, requirements to use renewable energy, provide data about emissions, or create action plans for climate transition. Especially, collaboration that extends coordination and cooperation to an enduring relationship and addresses both strategic and operational choices within supply chains, is essential for reaching environmental targets (Kumar et al., 2018). This kind of collaboration including mutual planning initiatives and solution-oriented cooperation for environmental sustainability improvement is needed in both upstream and downstream activities of the supply chain: they can promote manufacturing performance, for example through increased efficiency and cost savings, as well as environmental sustainability in terms of emissions reductions and more effective resource utilization (Kumar et al., 2018). Collaboration builds over time and requires informal contribution of strengthening relational factors in the relationship, but it is evident that SSCM also needs authoritative formal contribution, for example improving contracting and incentivizing (Touboulic & Walker, 2015). Another way to review strategies for supplier sustainability development, is to divide them into direct and indirect strategies (Coşkun et al., 2022; Jia et al., 2023). In addition, Wamalwa & Meyer (2024) identify relational strategies, since it has been found that relational capabilities also facilitate sustainability initiatives. The indirect strategies are socially more distant, whereas relational and direct strategies involve interpersonal relations, human capital, and resources into the relationship (Coşkun et al., 2022). These strategies contribute to supplier’s environmental sustainability by pollution prevention, sustainability practices and product stewardship (Wamalwa & Meyer, 2024). Patil et al. (2022) have observed that supplier sustainability is often adressed by measuring and monitoring the performance. They argue that buyer-supplier collaboration for sustainability should be prioritized and supplier behaviour in sustainability implementation should be examined, ensuring efficient and purposeful supplier collaboration that provides a win-win set-up for both parties where possible liabilities, risks, and gains are considered. However, Touboulic and Walker (2015) remind that SSCM 35 practices rarely lean on fully relational collaboration, as those often involve compliance mechanisms as well, such as supplier evaluation or audits. Judging by this, supplier development strategies can be interlinked and combined into a unique mix to achieve optimal outcomes. Figure 5. Strategies for supplier sustainability development (adapted from Wamalwa & Meyer, 2024; Coşkun et al., 2022). Direct strategies The main objective of direct strategies is to enable the transfer of tacit knowledge that is implicitly carried by individuals (Jia et al., 2023). In fact, several authors (Bartos et al., 2024; Krause & Scannell, 2002; Patil et al, 2022) have stated that supplier sustainability and their ability to meet sustainability requirements can be enhanced by trainings and knowledge sharing, for example in the form of on-site visits, workshops, and webinars. The study of Bartos et al. (2024) shows that especially longer training sessions that were highly interactive and participative with clear learning objectives and junctures to local sustainability issues were highly impactful. Hence, the trainings should be specific and customized for each supplier group, for example by emphasizing certain learning goals and expected actions to be taken after the training. Long-term partnerships can build trust which in turn can increase the supplier’s performance in sustainability (Bartos et al., 2024). The sustainability aspects, that stem from the needs and expectations of customers and other stakeholders, can be addressed with a variety of participative activities, such as enhanced risk management, transparency, or organizational culture, which also have an influence on the company reputation and mutual trust (Giannakis et al., 2020; Hariyani et al., 2024). Companies can also place investments on suppliers directly, meaning that they can promote the supplier in their sustainability efforts not 36 only by educating them but also supporting them in sustainability initiatives by sharing the risk and reward (Patil et al., 2022). Bae and Grant (2018) have found in their study that learning capability can positively contribute to the environmental supplier collaboration by optimizing employee learning and attitudes towards sustainability practices in the supplier company. When the buyer company distributes the learned capabilities with its supply chain partners and internal groups, the environmental performance can be improved. The ways of processing and sharing information define the level on which the supply chain partners engage with each other. The study of Dahlmann and Roerich (2019) shows that companies interact with their supply chain partners and a wide range of other stakeholders through three ways that are basic, transactional, and collaborative types of engagement. Different actors in supply chains tend to convey and process especially climate-related information in nonlinear ways as the information rather flows through circular and overlapping ways between upstream and downstream and is being exchanged through various interactions. Therefore, tackling the sustainability challenges and maintaining competitiveness requires creative thinking, and that can be achieved by engaging with network partners and learning from others (Aditi et al., 2024). Relational strategies The study of Wamalwa & Meyer (2024) has showed that relational capabilities in buyer- supplier relationships can support sustainability initiatives remarkably. Contributing to the environmental sustainability of suppliers requires commitment, communication, and trust within the interorganizational relationships (Bae & Grant, 2018), and the quality of those relationships and social factors affects how environmental sustainability can be improved (Steiner et al., 2023). By preferring relational and informal relationship building and management mechanisms, collaboration can be perceived as an intangible resource that enhances relationship quality and discourse (Touboulic & Walker, 2015). Kumar et al., (2018) have stated that the growth of supply chain partner companies that 37 collaborate towards environmental sustainability can be seen as a dynamic capability that contributes to achieving competitive advantages. Relational supplier sustainability practices refer to joint goal setting and target alignment so that they benefit both sides of the dyad (Hariyani et al., 2024). Implementing practices, such as joint decision-making, commitment to joint sustainability efforts, innovation, and cultivating close relationships, help engaging suppliers to a journey towards decarbonization targets (Butt et al., 2024; Wamalwa & Meyer, 2024). When it comes to managing emissions that come from indirect sources, and engaging with suppliers, Butt et al. (2024) have introduced six strategies: efficient communication, building trust, support and guidance, efficient supplier data utilization, incentive programs, and feedback-based engagement program development. Despite these practices being interlinked to other strategies, engagement is a crucial part of relational supplier development strategies. Indirect strategies Indirect strategies aim to transfer codified knowledge in the form of using competitive pressure among suppliers, incentivizing, supplier assessment, and feedback (Jia et al., 2023). These measured are explained by the findings of Steiner et al. (2023), who state that suppliers’ responsiveness to sustainability and decarbonization practices depends on the power balance in the buyer-supplier relationship, which can be utilized in strategic goal setting to engage suppliers into sustainability initiatives. When the investments to the relationships are significant, suppliers tend to be more willing to respond to environmental sustainability requirements (Lou et al., 2015). Regulations, policies, and standards act as drivers to promote sustainability improvement by requiring, recommending, or motivating suppliers to improve their capacity to adjust to the requirements with more responsible activities (Hariyani et al., 2024). A part of indirect practices of supplier sustainability is also monitoring and assessing the set sustainability targets. Hence, companies may utilize supplier audits, applying supply chain traceability, 38 and ensuring meeting ISO 14001 standards and cradle-to-cradle requirements for recycling (Hariyani et al., 2024). The purpose of incentives (Table 2) is to lower financial barriers related to sustainability implementation, foster innovation, and the adoption of clean technologies (Patil et al., 2022 & Hariyani et al., 2024), and to motivate suppliers to monitor and report their carbon emissions (Theißen et al., 2014). Bartos et al. (2024) suggest, that if the level of supplier participation in sustainability activities is low, companies can utilize different kinds of incentives to encourage them, for example by achieving longstanding partnerships or gaining credits. Joint investments for innovations and common initiatives, for example renewable energy systems, may play a significant role in contributing to sustainability when the gains are shared equally (Patil et al., 2022). Moreover, incentives have been studied to have an influence on supplier sustainability in terms of lowering costs (Patil et al., 2022). For example, buyer company could share the revenues with the supplier if the value of the sold product has increased due to the sustainability factors. Table 2. Supplier incentives. Incentive Author Increased business Shared revenues Preferred supplier status Public recognition Price premiums Offering long-term partnerships Direct financing on supplier Subsidies for cleaner technologies Tax credits for renewable energy investments Grants for R&D Patil et al. (2022) Patil et al. (2022) Patil et al. (2022) & Hariyani et al. (2024) Butt et al. (2024) & Patil et al. (2022) Patil et al. (2022) Butt et al. (2024) & Hariyani et al. (2024) Butt et al. (2024) Hariyani et al. (2024) Hariyani et al. (2024) Hariyani et al. (2024) 39 If the supplier is not able to meet the requirements set by the buying company, the buyer can mitigate the risk of the supplier’s incomplete sustainability information or standard violation by using different kinds of penalties (Patil et al., 2022). Buyers can use penalties in the form of monetary fines, business reductions in existing relationship, contract termination, delayed payment contract, or increased bid markup in supplier auctions, as presented in Table 3. For example, Wieland and Creutzig (2025) highlight incorporating a carbon fee into the product price. Porteus et al. (2015) have discovered that contract violation is more effective measure than business reduction as it may prevent future violations as well. However, with reduced business supplier can work towards restoring its status in the supplier network. Table 3. Supplier penalties. Penalties Author Contract termination Rogers et al. (2023) & Porteus et al. (2015) Business reductions Porteus et al. (2015) Fines Porteus et al. (2015) Delayed payment contract Bid markup increase Patil et al. (2022) Patil et al. (2022) 2.3 Theoretical framework The previous sections have reviewed relevant academic literature related to buyer- supplier relationships, the relational view, sustainability in supply chains, and supplier sustainability development. As the importance of buyer-supplier relationships and collaboration for supply chain performance have been widely acknowledged in the literature (Moradlou et al., 2022; Steiner et al., 2023; Chen & Kitsis, 2017), their role in supply chain decarbonization is worth examining. With the key theoretical approaches 40 encapsulated, this section proposes a tentative theoretical framework for improved supply chain sustainability and reduction of Scope 3 emissions. The ultimate objective of the framework is to address how suppliers’ environmental sustainability can be improved: as the suppliers generate the largest part of Scope 3 emissions in the company value chain, improved sustainability implementation has a direct decreasing impact on the buyer’s Scope 3 emissions (Butt et al., 2024; Kaur & Singh, 2016). The aspiration of supplier’s environmental sustainability improvement needs to be considered in all supply chain operations from procurement, manufacturing, and packaging, to the distribution of goods in order to prevent and control pollution by reducing emissions, minimizing waste, and optimizing efficient use of resources (Handfield et al., 1997; Paybarjay et al., 2024; Agrawal et al., 2024). Hence, the framework suggests that successful supplier development practices are facilitated by various forms of joint buyer-supplier efforts which create collaborative advantage (relational rents) for the partners in the form of improved supplier sustainability (Touboulic & Walker, 2015; Bai et al., 2021) which eventually result in buyer’s reduced Scope 3 emissions. The framework illustrates that buyer-supplier relationships where relational factors are present enable effective collaboration, and promote environmental sustainability and thus, also mitigate various challenges related to sustainability implementation (Kumar et al., 2018). Previous studies have grouped supplier sustainability development practices into direct, relational and indirect strategies (Wamalwa & Meyer, 2024; Coşkun et al., 2022), and on the other hand, these range from collaborative to authoritative, and from behavioral to operational practices (Wieland & Creutzig, 2025). The relational view provides a lens to explore how joint cooperation efforts create mutual advantage that benefits both sides of the buyer-supplier dyad. Since previous studies have shown that collaborative advantage can exclusively be generated through the joint efforts of partners combining, exchanging, or investing their resources and capabilities (Dyer & Singh, 1998, p. 662), the results of collaboration foster supplier development practices 41 through sustainability knowledge-sharing, relation-specific investments on sustainability issues, resource and capability sharing, and effective joint governance efforts (Bai et al., 2021). With these conceptual approaches summarized, the theoretical framework presented in Figure 6 explores the mechanisms through which relational factors generate collaborative advantage and foster supplier development practices. Figure 6. Theoretical framework. 42 3 Methodology This chapter focuses on how the research was conducted by introducing general characteristics of an academic research process that guided the selection of appropriate research methods. Following the principles of Zhang and Shaw (2012), this chapter aims to provide a description of the methodology in a clear, complete, and credible way. The research design presented in the following sections explains how the research was constructed and how the research question is answered through various components of the research (Saunders et al., 2023). The first subchapter presents the research approach from an academic perspective. In the second subchapter, the case company and study sample are described. These are followed by demonstrations of the data collection and data analysis, and finally, the quality and rigorousness of the data is assessed. 3.1 Research approach Academic research process is more than solely choosing methods; the research methodology covers the underlying philosophical aspects needed to be considered (Massaro et al., 2019). The research onion by Saunders et al. (2023, p. 130) reflects the complexity of research methodology: in order to go deeper into the study, the initial layers reflecting the choices of research philosophy, theory development, methodology, strategies, and time horizon must be gradually opened before choosing the optimal measures for data collection and analysis. By this, they mean that the examined questions lie at the core of the research onion, but the various philosophies, strategies, and techniques need to be clearly understood first. Guba and Lincoln (1994, p. 105) emphasize that the choice between qualitative and quantitative research method is not as important as selecting a suitable research paradigm for the study. In fact, they argue that any research method and paradigm may create an optimal fit if the paradigm is carefully chosen. They define these paradigms as 43 a belief system that shapes the entire research process and affects the research attributes also in an ontological and epistemological sense. In this study, the paradigm of interpretivism was chosen. Interpretivism considers that reality is a subjective matter in which the perspective and individual interpretations play a significant role (Mahadevan, 2024). This requires the researcher to understand and challenge the internal meanings and use of power that emerge in the specific organizational contexts (Mahadevan, 2024; Saunders et al., 2023). Instead of seeking a unanimous way to see the world, interpretivism aims to explore individuals’ different ways of such sense- making. Figure 7. The research onion (adapted from Saunders et al., 2023). The theory development adopted inductive reasoning as the dominant approach, which is common for studies with an interpretivist philosophy. Inductive reasoning utilizes existing propositions to draw conclusions that have not been proven yet (Saunders et al., 2023). In other words, the emerging generalizable theory is derived from specific observations. However, this study also used deductive reasoning to some extent by reflecting on existing literature and guiding theoretical concepts (Kim, 2025). The research was initiated by exploring the phenomenon in question through collected research data, which led to building the conceptual framework (Saunders et al., 2023). 44 Inductive reasoning was appropriate for this study as it allowed generating a wider range of different explanations about the phenomenon by collecting insights and subjective perceptions from the experts (Saunders et al., 2007, p. 133). This study was conducted with a single data collection method, which was the qualitative mono-method (Saunders et al., 2007, p. 145). This enabled discovering answers to the questions of how and why, whereas the quantitative method would have assessed the phenomenon numerically, addressing questions of how often or how many, for example (Eisenhardt & Graebner, 2007, p. 26). It has been described that qualitative research aims to “see the forest through the trees” instead of picking only a few trees and drawing conclusions from them (Bansal & Corley, 2012, p. 511). According to Bansal and Corley (2012), the purpose of qualitative research is to combine two theory narratives with the data and form a coherent story. The synthesis of the current literature provides lenses through which the research problem will be reviewed, and the data sets a more precise context for the phenomenon. Alleviating possible risks related to the use of qualitative data requires a clear justification of the theory, interviews with mitigated bias, and a clear demonstration of the data and theoretical contributions (Eisenhardt & Graebner, 2007, p. 30). Using case studies for theory formulation have emerged to an increasing extent, and as Eisenhardt and Graebner (2007, p. 30) have acknowledged, case studies are a feasible research strategy for theory building when applied considerately. This study is a single- case study aiming to explore the linkages between two academic study streams in a real- life company (Leoni, 2015). Choosing the single-case study approach was appropriate, especially when the related studies are scarce because it can also explain the existence of the phenomenon (Leoni, 2015). Considering the complex nature of buyer-supplier relationships and sustainability, incorporating respondents from multiple different supplier companies to this single case study was suitable (Beverland & Lindgreen, 2010). This allowed the research to go into detail and get practical insights about the relationships and actions towards environmental sustainability. 45 All research must determine the scope of time on which the study is focused. The time horizon builds a foundation for observations, depending on whether a longitudinal or cross-sectional approach was applied. This study adopted a cross-sectional time horizon focusing on what the research evidence and academic literature says about the phenomenon at that specific time (Saunders et al., 2023). In conclusion, the chosen research methods described in this subchapter lead to the data collection and analysis in the following subchapters. 3.2 The case company and study sample The case company is a multinational manufacturing company headquartered in Finland. The case company was selected due to its global presence and high complexity of products, which puts pressure to source responsibly and foster environmental sustainability through supply chains. Despite the present study being a single case study, it incorporates qualitative data from companies that act as suppliers for the case company, as suggested by Kim (2025). As the case company sources globally, it provided an access to multiple different supplier contacts worldwide. However, due to the regulational aspects relevant for this study, the chosen study sample focused solely on European suppliers. A smaller study sample was considered appropriate for this kind of inductive research, as Saunders et al. (2023) have indicated. As the aim was to understand the role of BSRs in a supplier sustainability development context, this study applied the finding of Guest et al. (2006, p. 78) who suggested that six interviews could be sufficient to gain meaningful and comprehensive insights about the cases. Therefore, six buyer-supplier dyads and twelve interviews in total were selected for this study. When exploring buyer- supplier relationships as the unit of analysis, it was important to incorporate both perspectives of the dyad, and thus, besides the case company representatives, suppliers were also involved to strengthen the theoretical contribution of the study (Yin, 1994). 46 The first part of the study sample consisted of six buyer representatives who work as a strategic purchaser, a supplier development engineer or a category manager in the case company. The buyer representatives were selected from different purchasing categories to review various types of BSRs and their experiences of the suppliers’ sustainability efforts. The other six interviewees represented the supplier companies where they operated either in the sales department or in the Health, Safety, and Environment (HSE) function. The supplier companies were all selected from the same business unit and the selection was based on the case company’s similar amount of yearly spend on each supplier. However, the supplier differed in terms of company size, nationality and the products that they supply. Another important criterion was that previous cooperation between the parties must have existed to some extent, which was ensured with the purchasers. In order to study the sustainability phenomenon without significant regulatory and bureaucratic differences and conflicts, the selected suppliers were all from EU countries. These differences reinforced the confidence that the set of interviewees could provide interesting and valuable insights about the phenomenon. 3.3 Data collection The primary source of data for this study was interviews. The collected data consisted of six buyer-supplier dyad interviews, and the partners of the dyads were interviewed individually with no dependency on each other. The interviews were conducted as thematic interviews that allowed flexibility within the frames of the planned key topics. The interviews were initiated with questions of the interviewees’ background and work, and after that, the discussion was guided by two main topics: 1) the relationship and experiences on possible collaboration between the case company buyer and the supplier, and 2) the efforts and practices for suppliers’ environmental sustainability improvement. The questions that emerged during the interviews were initiated with how or what (Saunders et al., 2023). Leaving space for deeper reflection and additional questions was 47 essential, as the concepts of buyer-supplier relationship management and supply chain sustainability are extremely complex and subjectively perceived. All the interviews were conducted during the summer 2025. The interviews of suppliers and purchasers were held via Microsoft Teams. The time slot allocated for each interview was approximately 45 minutes, as presented in Table 4 below. All the interviews were recorded to guarantee the interview credibility and transparency that was also fostered by ensuring the interviewee anonymity (Leoni, 2015). Table 4. List of interviewed suppliers. Supplier Company nationality Position in the company Duration Supplier 1 United Kingdom Sales Manager 34 min Supplier 2 Finland Managing Director 35 min Supplier 3 Italy Sales Representative 60 min Supplier 4 Germany Key Account Manager 43 min Supplier 5 Germany HSE Manager 34 min Supplier 6 France Supplier Quality Manager & HSE Advisor 45 min Table 5. List of interviewed buyers. Case company buyer Position in the company Duration Buyer 1 Strategic Purchaser 35 min Buyer 2 Strategic Purchaser 30 min Buyer 3 Category Manager 45 min Buyer 4 Supplier Development Engineer 43 min Buyer 5 Senior Strategic Purchaser 32 min Buyer 6 Strategic Purchaser 31 min 48 3.4 Data analysis The data analysis of the inductive study aimed to apply analytical and systematic approaches to it. The interviews were video recorded in Microsoft Teams and the system transcribed the interviews automatically into text form. Once the interviews were conducted, the transcriptions were read through in the present context in order to avoid any misunderstandings in the later stages of data processing. The material was then read over multiple times to understand the data and its nuances. Exploring how buyer- supplier collaboration can foster the implementation of environmental sustainability practices in supplier companies was reflected through the various interviews from purchasers and suppliers, and the most relevant quotes and insights were highlighted. Active coding was used in the data analysis which helped to find emerging patterns and theme categories from the data, as suggested by Grodal et al. (2021). The coding was done manually using different colors until the repeated patterns and themes formed saturation amidst the data material (Guest et al., 2006, p. 65). At this point, all the key findings of the phenomenon where recognized and grouped under various themes and no more additional variations were identified. The qualitative data acquired from the interviews was also strongly linked to the theoretical framework of the study that was formulated in chapter 2.3, which supported reflecting on the study data. 3.5 Assessment of the quality of the data To ensure the rigorousness of the data, the interview content of the suppliers and buyers were compared with each other. The relational approach of the study required to involve and assess both sides of the buyer-supplier relationship for validation, as Brennan and Turnbull (1999) have proposed. Incorporating both perspectives of the dyad to the interviews can compensate a smaller study sample, whereas the smaller number of interviews allowed to focus on each buyer-supplier relationship more thoroughly. To alleviate bias and expand the dispersion within the study sample, the interviewees were selected from different purchasing categories making sure that there was no 49 dependency between the suppliers or purchasers. The data was mainly acquired and interpretated in the same language, English, throughout the process, despite two Finnish interviews. In addition, the research components of this study were demonstrated in a clear and transparent manner (Massaro et al., 2019), reflecting the research problem and providing valuable insights to the research question. Nevertheless, as qualitative research is subjective by nature, none of the interview responses can be generalized. That is why qualitative data needs to be constantly assessed and validated so that it meets the research objectives, requirements and matches the theoretical foundation in the study. 50 4 Findings This chapter presents the findings collected from the interviews to analyse how supplier sustainability development can be fostered through buyer-supplier collaboration. Firstly, to create a solid foundation for sustainability collaboration, the key characteristics in buyer-supplier relationships are identified based on the interviewees’ experiences and descriptions. Secondly, the key challenges in supplier sustainability implementation highlighted by the buyers and suppliers are presented. The last section finalizes the analysis by reviewing the role of relational factors in various supplier development strategies and understanding through which mechanisms they can improve supplier sustainability. 4.1 Key characteristics of buyer-supplier relationships The interviews were initiated with an open discussion about the buyer-supplier relationships between the representative buyers of the case organization Company A and Suppliers 1-6. Both the buyers and suppliers were unanimous about some of the key characteristics that are essential to building successful buyer-supplier relationships. The most important relational factors that arose from the interviews were trust, reciprocity, commitment, and transparency. Several buyers emphasized that they specifically value their supplier’s flexibility, adaptability, and responsiveness, and that they are available when their assistance is needed. In turn, some suppliers highlighted direct and open communication with the buyers as important, and also valued the opportunity to learn from Company A through the r