The role of responsible buying practices in supply risk management

Purpose: In today's conscious business world each organization can be viewed only as sustainable as its entire supply network. Supply management of a firm has very significant role when sustainability and responsibility need to be taken into a concrete level as the supply management is responsible for the management of the firm's supply network and external resources. Moreover, several risks are arising from the supply base and therefore, the significance of risk management in purchasing and supply is constantly growing. Thus, the importance of defined principles and practices related to sustainability and responsibility of purchasing are highly critical. Therefore, the aim of this paper is to discuss the role of responsible buying practices in supply risk management. Design/methodology/approach: The role of responsible buying practices in supply risk management is examined by utilizing a quantitative survey data collected from Finnish firms in 2013. The questionnaire was addressed to large Finnish companies and the emphasis was on the fields that were engaged in project business. The included fields were manufacture of machinery and equipment, building of ships and boats, repair and installation of machinery and equipment, construction of buildings, and civil engineering. A total of 99 responses were received. Findings: The results show that active responsible buying practices correlate positively with supply risk management. However, there are differences in terms of risk type. It seems that responsible buying practices impact mostly on the management of corporate social responsibility, third party and delivery risks. The lowest correlation between responsible buying and risks was country risk. Furthermore, it was found that country risk does not correlate with CSR risk and third-party risk and risks vary accordance the industry and nature of the business. Practical implications: The results will help managers to understand the connection between responsible buying and risk management. The results also highlight the significance of determined buying practices and the compliance of those. Originality/value: Risk management has rarely been connected to the studies of responsibility, and empirical evidence on the topic is still lacking. This study provides new empirical evidence and insights concerning both the risk management and sustainability in purchasing and supply management.