Environmental Development of Emerging Economy Suppliers: Antecedents and Outcomes Matthias Ehrgott 1 , Felix Reimann 1 , Lutz Kaufmann 1 , and Craig R. Carter 2 1 WHU—Otto Beisheim School of Management 2 Arizona State University A s supply chains spread toward emerging economies, Western buying firms frequently face the question of whether they should commit resources to develop their suppliers in these regions in terms of environmental issues. Supplier development researchers have just begun to consider environmental aspects, and thus far, the peer-reviewed literature has remained primarily qualitative, and often descriptive. Large- scale empirical evidence indicating the antecedents and benefits of environmental supplier development for a buying firm is still scarce. Addressing this gap, we use stakeholder theory to complement and extend the work of Ehrgott et al. (2011) and investigate how pressures from customers, governments, and employees act as antecedents to environmental supplier development. Furthermore, we build on the resource-based view to examine how supplier capabilities, buying firm environmental reputation, and organizational learning in the buying firm can result from such supplier development initiatives. We test the resulting model with a sample of 244 corporate procurement executives from the United States and Germany. Keywords: environmental sustainability; supplier development; emerging markets; international purchasing; stakeholder theory; resource-based view INTRODUCTION As supply chains spread toward emerging economies (Kusaba et al. 2011; Gereffi and Lee 2012), the debate about the responsi- bility of Western buying firms to educate their suppliers with regard to environmental issues has become increasingly relevant to supply chain and sustainability research. Suppliers from many parts of Asia, Eastern Europe, and Latin America often lack the necessary managerial and technological capacities, as well as the awareness to address the environmental issues inherent in their businesses (Child and Tsai 2005; Zhu et al. 2011). Thus, buying firms in developed nations that source from these regions face the question of whether to commit resources to environmental concerns beyond their own organizational boundaries, toward their upstream supply chains (Pagell and Wu 2009; Bai and Sar- kis 2010). The supplier development literature has only recently started to recognize such environmental efforts as part of firms’ supplier development initiatives. This recent literature has focused on providing a descriptive overview, formal modeling, or case-based investigation of issues related to environmental supplier development (Pagell and Wu 2009; Bai and Sarkis 2010; Reuter et al. 2010; Fu et al. 2012). While Ehrgott et al. (2011) examine the influence of key stakeholders to socially sus- tainable supplier selection, we note a dearth of large-scale empirical studies that examine the stakeholder antecedents to buying firms’ engagement in environmental supplier development efforts, and the precise benefits the buying firm can reap through such engagement. Notable exceptions that have made initial headway into the phenomenon are Eltayeb et al. (2010) and Vachon and Klassen (2008). We add to this evolving stream by investigating two research questions: (1) Which stakeholder pres- sures act as antecedents for Western buying firms to engage in developing the environmental capabilities of their emerging econ- omy suppliers? and (2) Which tangible benefits can firms capture through such environmental supplier development efforts? Our definition of “environmental supplier development” encompasses all activities through which the buying firm helps its suppliers reduce their negative environmental impact. Such activities typically include environmental supplier education (e.g., training that reduces emissions through better filtering and waste treatment, as well as improved efficiency in production technology), environmental on-site supplier support (e.g., provi- sion of on-site technical assistance to redesign existing pro- cesses), and joint environmentally oriented business projects (e.g., collaboration to jointly develop green innovations and tech- nologies) (Carter and Carter 1998; Min and Galle 2001; Eltayeb et al. 2010). Also, such activities typically involve several of the buying firm’s functions (including purchasing, research and development [R&D], production, human resources, and logistics) to collaborate in a cross-functional team (Schaefer and Kosansky 2008; Paulraj 2011). We denote firms’ environmental efforts in general (i.e., beyond environmental supplier development) using the term “environmental sustainability” and efforts including both environmental and social sustainability aspects by the broader term “sustainability.” The theoretical lenses through which we examine our research questions are stakeholder theory (Freeman 1984; Frooman 1999) and the resource-based view (RBV) of the firm (Wernerfelt 1984; Barney 1991)—concepts that scholars frequently draw on for investigating sustainability efforts (Clarkson 1995; Hart 1995; Sharma and Vredenburg 1998; Aragon-Correa and Sharma 2003; Garriga and Mele 2004; Ehrgott et al. 2011). Stakeholder theory posits that firms must consider a broader set of stakeholder interests—beyond financial firm performance—to maintain their business activities in the long run (Freeman 1984). These interests increasingly include the preservation of the natural Corresponding author: Matthias Ehrgott, WHU—Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany; E-mail: matthias.ehrgott@ whu.edu Journal of Business Logistics, 2013, 34(2): 131–147 © Council of Supply Chain Management Professionals