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Market Reactions to

Sustainability Initiativesand ViolationsJasmina Tacheva

Department of Operations Management andStrategy

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Fig. 1: United Nations Forum on SustainabilityStandards (UNFSS)

The Three-HeadedMonster of Sustainability

Can progress across the three pillars be

achieved simultaneously, considering that

their objectives are at odds with each

other?

If perfect synergy is not realisticallypossible, how do variations across the

three pillars interact with each other in the

eyes of stakeholders?

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Research uestions

Sustainable Operations should be assessed notust through e!"ien"y but also throughefectiveness.

1.#o$ do sustainability initiati%es and %iolationsa"ross the supply "hain "hange sta&eholders'

per"eptions

.*hat fa"tors should managers ta&e into"onsideration $hen de"iding on a sustainability

pra"ti"e

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!iterature Revie"#c$uirin% sta&eholder so"ial support is no less im&ortantthan securin% resources '(reeman) *+,. Ver%ne) /0*/1.

The 2oint e3ect of disappro%aland stigmati+ation'Ver%ne)/0*/1.

,nstitutional de-e"tion as a &ossible e4&lanation of the

&er&etuation of $uestionable unsustainable &ractices'5rane) /0*61.

The com&any as an actor on the continuum bet"eenagen"y theory '7etti%re") *+,81 andpopulation e"ology

'Hannan 9 (reeman) *+881 #n uno$ned/ %ie$ of :rms 'Mac;ay and 5hia) /0*61

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5once&tual Model

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5ontent #nalysis0ange: 12314

Database: Fa"ti%a5ey$ord Sear"h: 6ositi%e 7 (sustainable O0 en%ironmentalO0 so"ial O0 green O0 labor O0 *or&er) 8ND (,nitiati%e O0,nno%ation O0 9nergy) O0 (supplier O0 "ollaborator O0"ompetitor) Negati%e;

? ne$s items

FocalInitiativeAlone

FocalInitiativewithSupplier

FocalInitiativewithCompetitor

FocalInitiativewith Other

Total

8 '*=1 +> '/8=1 /6, '*6=1 6>? '*+=1 *),66

FocalViolation

FocalViolationfromSupplier

FocalViolation withCompetitor

FocalViolationwith Other

Total

*)*?8 '6?=1 8,* '/=1 >/ '*=1 ,?* '/?=1 6)/?*

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Hy&otheses

Hypothesis 1: Sustainability initiati%es in $hi"h the fo"al"ompany in"ludes a &ey supplier or an unrelated other "ompany$ill lead to a stronger positi%e mar&et rea"tion e@pressed byhigher abnormal returns follo$ing the announ"ement thaninitiati%es in $hi"h the fo"al "ompany a"ts on its o$n or those in$hi"h it is not a uniAue player.

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Hy&otheses

Hypothesis 2:*ith a negati%e sustainability3related ne$sre%elationB the negati%e mar&et rea"tion as measured bynegati%e abnormal returns follo$ing the announ"ement $ill be

stronger in the "ase of the fo"al Crm being singled out as a soleperpetrator or the "ase of a group of "ompetitors from the sameindustryB as "ompared to the situation of a supplier of the fo"alCrm being a""usedB or the fo"al Crm along $ith unrelated Crmsfrom other industries.

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Mana%erial @ecision-Makin% (actors

5om&anyAnvironmental B&erations

Su&&lier Tier*

Anvironmental B&erations

RivalAnvironmental B&erations

BtherAnvironmental B&erations

Su&&lier Tier*

Anvironmental B&erations

Su&&lier Tier*

Anvironmental B&erations

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Methodolo%y9mpiri"al %eriC"ation

Avent StudyC>)0+ (activa ne"s items for the to& /> retailers in the&eriod /0*6-/0*>.

5om&ute standardiDed abnormal return 'S#R1 &er com&any&er time &eriod.

5om&ute cumulative abnormal return '5#R1 for eachcom&any 'McEilliams and Sie%el) *++81.

#ssum&tionsC

Market AFciency

Avent Gne4&ectedness

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Thank you