Sustainable procurement: comparing in-house and outsourcing implementation modes

Sustainable supply chain management practices can be particularly difficult to implement when the responsibility for sustainable procurement (SP) rests with buyers employed by a contractor, rather than an in-house procurement team. Yet there is no extant research that investigates the effect of outsourcing on SP. To address this research gap, this paper uses multi-case study data to explore the impact of outsourcing versus in-house implementation modes in the pursuit of SP. The findings suggest that each implementation mode has distinctive challenges and facilitators. However, by considering Transaction Cost Economics, results reveal that the advantage of outsourcing to professionals, with well-established SP expertise, brings information asymmetries in developing initial outsourcing contracts, which can lead to poorer sustainability performance than initially expected. Furthermore, when applying Principal Agency Theory, results suggest that sustainable performance can be improved in the long term through the effective design of well-constructed contractual relationships as SP maturity increases.

Automated summary

This study uses multi-case study data to explore the impact of outsourcing versus in-house implementation modes on sustainable procurement (SP), finding that each mode presents unique challenges and facilitators. Through the lens of Transaction Cost Economics, outsourcing to professionals with established SP expertise may lead to information asymmetries in initial contracts, resulting in poorer sustainability performance than expected. Additionally, applying Principal Agency Theory suggests that sustainable performance can be enhanced through well-designed contractual relationships as SP maturity increases.