Abstract
It is widely argued that managing supply chain partnerships following environment friendly principals could protect the focal firm’s reputation and improve its financial performance. However, the understanding of the role of supply chain partnership governance according to the environmental criteria on corporate financial performance is still nascent. This paper aims to investigate how green supply chain partnership governance (i.e., governance of supply chain partnership based on environmental criteria), in terms of supplier selection and the readiness to terminate a partnership with a supplier if environmental criteria are not met, will affect corporate financial performance. Drawing on the social capital theory, this paper uses the panel data from UK public listed companies (PLCs) in the FTSE All-share index to gain evidence that readiness to terminate the partnership with a supplier, when the environmental criteria are not met, has a positive effect on corporate financial performance. This paper extends the understanding of the green governance strategies at the supply chain level and provide practical implications to supply chain managers.