Fostering firms' ability to cascade sustainability through multi-tier supply chains: an investigation of power sources

2.1 Resource dependency theory

We adopt the RDT as a theoretical perspective to investigate power sources and their implications for the firm's ability to disseminate sustainability requirements in multi-tier supply chains. RDT focuses on a set of power relationships based on the exchange of resources (Pfeffer and Alison, 1987), as it recognises that companies do not have all the necessary resources needed for value creation. Thus, companies need to seek resources outside their firm's boundaries and thereby they must interact with other companies who own and control these resources (Pfeffer and Salancik, 1978). The basic logic of RDT is that companies are dependent on the resources of other companies, and the dependence between them can be determined, for example, by the importance of the resource, the allocation and use of resources and alternative resources available (Pfeffer and Salancik, 1978). Building on RDT, Cox (2007) stated that a company's ability to influence another company's actions requires having control over specific resources on which the other company is dependent. Medcof (2001) argued that power depends on the resource dependence relationships that a company has with other companies, and if, for example, the buyer is highly dependent on the supplier for a critical resource, the supplier will have power over the buyer. Thus, power and dependence are closely connected (Pfeffer and Leong, 1977).

Paulraj and Chen (2007) stated that RDT provides a solid theoretical background for studies of supply management, because supply management is grounded in the logic of sequential interdependences between companies, and RDT builds on the premise that companies are rarely self-sufficient with respect to critical resources. Even though some SSCM studies (e.g. Paulraj and Chen, 2007; Hollos et al., 2012; Touboulic et al., 2014) have used RDT as a theoretical background, scholars have indicated the need for more studies applying RDT (Carter and Rogers, 2008) and viewing SSCM from the perspective of power and dependence (Touboulic and Walker, 2015; Dabhilkar et al., 2016; Marshall et al., 2019; Sancha et al., 2019).

2.2 Power in multi-tier sustainable supply chain management

Research concerning the phenomenon of power has a long history, and the concept has been defined in different ways by different authors. In the context of social processes, Blau (1964, p. 117) defined power as “the ability of an actor to impose its will on others”, and in the context of interfirm relationships, Mohr et al. (1996, p. 104) defined it as “the ability to influence”. In relation to distribution channels, Wilkinson (1996, p. 32) stated that power is “the ability of a firm to affect decision-making and/or behaviour”, and Stannack (1996, p. 51) defined power in SCM as “the capacity to optimise the behaviour of suppliers and subcontractors in accordance with desired performance objectives”. Kähkönen (2014, p. 18), in the context of buyer–supplier relationships and networks, defined power as “the ability to influence decision-making and actions of the other party”. In this study, we apply the definitions of previous purchasing and supply chain management studies by Stannack (1996) and Kähkönen (2014) and situate these in the context of multi-tier sustainable supply chains, thus defining power as the ability to influence the actions of other supply chain actors in a way that facilitates them to push the entire multi-tier supply chain towards desired sustainability performance outcomes. The premise of our study is that companies' power dynamics affect buyer–supplier relationships, whether or not they intentionally use power.

Tachizawa and Wong (2014) defined power and dependence as contingency factors that affect the structures and management of multi-tier supply chains. They further posit that, in the multi-tier supply chain context, focal firms may use their power over first-tier suppliers to pressure them to monitor or collaborate with lower-tier suppliers and require environmental or social certifications from them. In their study on sustainability implementation efforts across supply chains, Brockhaus et al. (2013) found that these efforts were often initiated by more dominant firms and then forced onto weaker upstream members in supply chains. Dou et al. (2018) noted that when environmental practices were extended along a multi-tier supply chain, power asymmetries can be beneficial when a focal company has power over a first-tier supplier and a first-tier supplier has power over a lower-tier supplier. Gimenez and Sierra (2013) argued that power influences the adoption of sustainability practices, and Grimm et al. (2016) contended that a focal firm's greater power leads to greater engagement in managing its sub-suppliers. If focal firms have power over the upstream supply chain, they can then identify their lower-tier suppliers and set sustainability requirements for their participation in the supply chain (Grimm et al., 2016).

Mena and Schoenherr (2020) demonstrated that a single firm could influence other actors in their multi-tier supply chain to adopt green practices. Non-mediated power, which refers to indirect power embedded in the relationship, which is seen as positive and where the more powerful actor may not even be aware of its existence, has been found to positively affect first-tier suppliers' responsible purchasing practices (Marshall et al., 2019). However, enforcing suppliers' compliance with sustainability standards can be hampered if a focal company lacks power over its suppliers (Grimm et al., 2014). Wilhelm et al. (2016b) found that if the power asymmetries increase towards lower tiers, downstream actors will have difficulties implementing sustainability strategies and practices upstream. Less powerful buyers may be unable to influence suppliers' social and environmental behaviours in a positive way and implement sustainability and auditing programmes at the suppliers' sites (Ciliberti et al., 2008). When a focal firm has less power, first-tier suppliers play a pivotal role because the focal firm depends on them to disseminate sustainability practices further down the supply chain (Grimm et al., 2016). While some studies have focused on the use of power for supply chain sustainability, the determinants behind it are not fully understood. Thus, to better understand how power can be harnessed for good, investigating where firms' power stems from is crucial.

2.3 Sources of power

Previous studies have suggested that firms may be voluntarily or involuntarily constrained in their use of power and that even the existence of power asymmetries, regardless of actual use of power, can lead to disadvantages in collaboration among supply chain parties (Kähkönen, 2014; Crook et al., 2017). It is therefore important to investigate the sources from which companies draw power, as these may affect the diffusion of sustainability initiatives in supply chains. In the context of MT-SSCM, Mena et al. (2013) suggested that competition for control and the importance of structural position determine power dynamics in multi-tier supply chains. Depending on their position in the supply chain, members may draw power from different kinds of sources: Buyers may act as bridges between the multi-tier supply chain and the marketplace, suppliers may act as bridges across multi-tier supply chains and sub-suppliers may have access to resources, namely expertise and raw materials. Larger focal firms may be in a better position to provide technological, financial and human resources when helping suppliers improve their environmental performance (Melnyk et al., 2003), and smaller firms may struggle with having limited purchasing power and thus less power to influence suppliers' sustainability (Zehendner et al., 2021). Although firm size has been acknowledged as an important determinant of power, it is only one of the factors that affects the power of buyers and suppliers.

Kähkönen and Virolainen (2011) examined sources of power in the context of networks and suggested that power sources could be divided into three levels: organisation, relationship and network (Figure 1). The organisation-level sources, such as firm resources and size, are internal to a single firm, whereas the relationship level includes the dyadic relationship, and power sources are connected to dyads. Network-level power sources are investigated in this study in a multi-tier setting. Multi-tier sources are reinforced by firm- and relationship-specific sources and include, for instance, the actors' roles and positions in the wider network context and other network effects. In this study, we apply the framework to the context of multi-tier supply chains, viewing it through the lens of sustainability. Figure 1 presents a further developed framework where the power sources by Kähkönen and Virolainen (2011) are grouped based on the background literature and their influence on the firms' ability to cascade sustainability requirements towards lower tiers are described as resulting from power sources in three different levels.

According to Tachizawa and Wong (2014), managing sustainability in multi-tier supply chains is affected by contingency variables, such as power, dependence, material criticality, knowledge resources and the distance between the supply chain actors. Moreover, Mena et al. (2013, p. 68) indicated that power was “a function of the structural position in the multi-tier supply chain” which highlights the structural perspective of power. The structural perspective builds on structural theories, such as RDT, and sees power steaming from organisational and network structures (Cendon and Jarvenpaa, 2001; Kähkönen, 2014). Chand and Tarei (2021) further stated that the implementation of MT-SSCM was contingent on resource dependencies between firms by following RDT. Moreover, previous studies (e.g. Pfeffer and Salancik, 1978; Ramsay, 1995, 1996; Cox, 1999; Cox, 2001a, b; Cox et al., 2001; Medcof, 2001; Sanderson, 2004; Kähkönen and Virolainen, 2011; Meehan and Wright, 2012; Huo et al., 2017) suggested that critical resources, dependence, knowledge and control of information as well the actor's position in a supply chain and the distance to other actors defines power between buyers and suppliers. Thus, it can be argued that power sources that are based on the principles of RDT affect the management of sustainability in multi-tier supply chains. Furthermore, as Tachizawa and Wong (2014) present, these particularly determine the approach that the focal firm may choose in managing the lower-tier suppliers' sustainability and ultimately affect the firm's ability to cascade sustainability requirements towards lower tiers.

3.1 Research design

A multiple-case study of 24 companies was conducted to investigate the sources of power in multi-tier supply chains. Altogether, 42 informants from five focal companies, 10 first-tier suppliers, and nine lower-tier suppliers were interviewed. The data were collected from Finnish sustainability leaders (focal companies) and their first- and lower-tier suppliers, constituting five multi-tier supply chains. The research design consisted of multiple case studies with several embedded units of analysis (Eisenhardt, 1989; Yin, 1984), which allowed a variety of perspectives to be considered. In this study, we considered the perspectives of focal firms, first-tier suppliers and lower-tier suppliers by conducting firm, dyad and multi-tier supply chain-level analysis. Finally, we analysed the results based on the supply-chain tier, making the tier the main unit of analysis.

3.2 Data collection

The focal firms were selected from the official ranking of the 2018 Sustainable Brand Index, an independent annual study evaluating more than 1,000 brands in the Nordic countries and the Netherlands in terms of sustainability, branding and communication (Sustainable Brand Index, 2018). The selected focal firms can be considered sustainability leaders in the Finnish market and are presumably more devoted to practicing sustainable supply management and applying state-of-the-art knowledge to this practice. The suppliers were chosen using the snowball sampling method. Focal firms were asked to name one to three strategically important suppliers or those with whom they have had issues to be interviewed for the study. The same logic was used with first- and lower-tier suppliers until we reached the saturation point. The saturation point was used to define the sufficiency of the interviews. By following the key characteristics of case studies and data saturation (e.g. Eisenhardt, 1989; Strauss and Corbin, 1998), the saturation point was recognised as the point where adding new interviews would not bring new information relevant to the research question or would not change the codebook. Table 1 provides detailed information on the case companies. Figure 2 illustrates the five multi-tier supply chains that these companies form.

The study focused on focal firms in Finland, with suppliers located mainly in Finland but also in Germany, Belgium and Italy. A total of 42 informants participated in semi-structured interviews, which were held either face-to-face or via video calls and lasted 60 min on average. The interview protocol is shown in Appendix 2. The interviews were recorded and transcribed. To support the results, secondary data were collected from publicly available documents (e.g. sustainability reports, codes of conduct) or from the companies (e.g. supplier guidelines). The secondary material was used to support the interview data related to firms' sustainability initiatives and requirements.

3.3 Data coding and analysis

The data were coded and analysed in NVivo qualitative data analysis software using qualitative content analysis (Miles and Huberman, 1994). Data analysis was performed in two phases. First, we conducted an inductive analysis that was guided by concepts recognised in previous research and the codes grounded in the data (Eisenhardt, 1989). The data were first organised and categorised into broader themes, which were mainly defined by the interview questions. To ensure data familiarisation, the transcribed interviews were read several times, and notes were taken. After a close examination of the data, initial coding nodes were created and discussed by the authors. At this stage, one of the suppliers was removed due to their monopoly position, because it would have affected the reliability of the results as the study focuses on power. The nodes emerging from the empirical data were compared with concepts established in related research (Eisenhardt, 1989).

After comparisons with related research, we found similarities with the results by Kähkönen and Virolainen (2011). Thereafter, we applied an abductive approach, which involves “modifying the logic of the general theory in order to reconcile it with contextual idiosyncrasies” (Ketokivi and Choi, 2014, p. 236). As we identified similarities in the categories in both studies, we applied Kähkönen and Virolainen (2011) framework and modified it to better fit the context of MT-SSCM in order to elaborate existing theory. Compared to the priori categories, volume of sales and purchases was modified to purchasing volumes, as we did not focus on suppliers' sales but instead the purchasing volumes in the upstream direction. Additionally, investments and lock-ins was changed to sustainability investments and lock-ins to better describe the acquired results from interviews, and network effects was replaced by a more specific term actions of third parties, as these were emphasised in our multi-tier supply chain setting and emerged from our data. Finally, dyadic-level sources delivery times, costs and quality and switching costs, as well as organisational-level sources economic base and technology were not included as these were not among the central topics of this study. The final categories, descriptions, and supportive quotations for the results are presented in Appendix 1.

We conducted within-case and cross-case analyses. Like in other multi-tier supply chain studies (e.g. Brockhaus et al., 2013; Mena et al., 2014; Villena and Gioia, 2018), we focused on reporting the results of the cross-case analysis considering the scale and complexity of the research. The data analysis process was done in several phases due to the many layers of the research setting. First, we conducted a firm-level analysis to identify each firms' individual, organisational level power sources. After this, we examined the buyer-supplier dyads within the case supply chains to determine the relationship-level power sources. We proceeded with the multi-tier supply chain level analysis in which we considered the effects of other actors in the multi-tier supply chains. Finally, we compared the results per each supply chain tier to reveal the differences between them. During cross-case analysis, we focused on finding similar patterns between firms but when differences occurred, these were not discarded until we had clarified the uniqueness of the situation that contributed to the difference (e.g. Eisenhardt, 1989).

3.4 Validity and reliability

To assure the validity and reliability of the study, we followed the quality criteria proposed by Welch and Piekkari (2017), which are based on the works by Yin (1984) and Eisenhardt (1989). For construct validity (i.e. the consistency between the construct and its measurement), we used multiple sources of evidence, including approximately two informants per company and interviewees from different firms along the examined supply chains. We also used secondary data sources to validate the results. While reporting the findings from multiple cases, much effort was put into showing the linkages between data and conclusions (i.e. the chain of evidence) by using tables, which has been suggested as a good way to summarise rich empirical evidence within case studies (Eisenhardt and Graebner, 2007). Internal validity (i.e. ensuring that a relationship between cause and effect has been established) was strengthened by pattern matching between the priori categories in the literature and our empirical evidence. Starting with an inductive approach helped us to avoid being limited by categories found in previous studies. In terms of external validity (i.e. specifying the domain which the findings can be generalised), we used replication logic due to inclusion of multiple cases. In total, 24 companies from several industries and supply chains were included in the study, and we used similar interview protocols with them all. We ensured the reliability of the study by using case study protocol database and ensuring transparency of the research process.

4.1 Organisational level power sources

Organisational-level sources refer to power sources that stem from firm-specific characteristics. Together with dyadic relationship-level source purchasing volumes, the size of a firm was mentioned as one of the most crucial power sources in all tiers. The most noteworthy differences between tiers were found regarding the following organisational sources: (1) expertise and special knowledge; (2) resources, capabilities and competences; and (3) brands. While some companies described how the large size of their company helped them in pushing sustainability requirements to the next supply chain tier, notably, this study revealed that in many cases, firms—especially those in lower tiers—were unable to influence their suppliers regarding sustainability issues because of their small size. This is reflected in the following comments:

We do not have the power to say, “We want certified palm oil products, or else we will not buy from you”. In this sense, we cannot control what they are doing. We are not that big after all. (LT Bakery Products)

I do not think that we as a small spinner have had that influence [on sustainability issues], no. I think the suppliers are driven by the combination of all their customers and especially by the brands that are pushing this. (LT Yarn)

Interestingly, while size was found to be a critical power source, we also found evidence of other power sources compensating for its lack. For example, in the case of LT Yarn, sources such as relationships and expertise and special knowledge compensated for the power asymmetry in buyer–supplier relationships with regard to company size. They stated:

In our case, we are dealing with suppliers that are a lot bigger than ours, so compared to our suppliers, I would say that we have less power over them. We are very dependent on them. Does that mean that you cannot have a bilateral relationship that is balanced? Of course, you can, but if you really talk about the balance of suppliers, I think they have the weights. (…) But what we tried to do is to focus on the products where we have the added value and much more balanced relationships.

Asymmetry in company size was also observed as affecting collaboration with regards to supply chain sustainability. For instance, T1 Confiture explained how working with a much larger supplier while being a less-known buyer brand set the tone for their collaboration:

We have to participate in it in a humble way (…) when you talk about cocoa, hazelnuts or whatever, then when we are also like that [small/not well known] to the supplier, it is not worth banging your fist on the table that these things must [be a certain way]. Then, they just say, “I am going to buy elsewhere”. So, we must find the tune of collaboration in quite a humble way.

By contrast, one of the focal firms explained how working with a supplier that was similar in size created a power balance that benefited collaboration and helped them in their efforts to influence suppliers:

We seek to collaborate with suppliers that are of the right size and type, particularly for this topic of power balance. When we are right sized for each other, we can have influence and work on things together. (FF Accommodation)

Furthermore, organisational-level source resources, capabilities and competences occurred as a common power source among focal firms and first-tier suppliers, while expertise and special knowledge were found to be important for first- and lower-tier suppliers. For example, two lower-tier suppliers mentioned supplying a critical or niche product that required special expertise for their customers, strengthening their power position in buyer–supplier relationships. One first-tier supplier mentioned: “We have horizontal collaboration with international actors, and that way, we can bring our sustainability requirements to them and to a wider audience because we are in the forefront and stricter than others related to these issues” (T1 Agri-food Wholesale). Finally, power source brands appeared mainly in the case of focal firms. One of the first-tier suppliers described the benefits of their strong brand as follows:

If we brand ourselves to suppliers in such a way that we are a sustainable company, then when they want to make investments that are environmentally sustainable, they also save money. (T1 Bakery)

Unlike most of the focal firms and a few first-tier suppliers, our results showed that lower-tier suppliers did not benefit from their company's brands in terms of power, which might be explained by their structural position further in the upstream supply chain.

4.2 Dyadic relationship level power sources

The dyadic relationship level withholds sources related to the relationship between buyer and direct supplier. Based on our analysis, dyadic relationship-level sources were evident at all levels, but these were particularly important in the case of lower-tier suppliers.

Our findings showed that market power and alternatives and substitutes were among the most balanced power sources between the supply chain tiers, while the main differences were found regarding: (1) purchasing volumes; (2) information; (3) relationships; and (4) type of product. For example, FF General Retail mentioned how their market power benefits them in terms of influencing suppliers towards sustainable actions: “In our own market, we are the biggest actor. If a supplier wants to be part of this market, we are an excellent partner for them. Then, we have more power”. Furthermore, one first-tier supplier described their advantageous position regarding alternative suppliers as follows: “On a Finnish scale (…), we clearly have influence. It will sting if we take away our volume from some suppliers, and it is not easily replaced (…); there are surely competitors” (T1 Bakery).

Especially for focal firms and some of the bigger supplier firms, purchasing volumes were an important source of power. However, this was mentioned as a source of power by only two lower-tier suppliers. LT Bakery Products stated:

Unfortunately, it is a rare situation where our share of the supplier's turnover would be so significant that we would have some say (…) Nevertheless, as you can see, we have quite open-mindedly embarked on this sustainable development and on these issues with the limited power that we have.

By contrast, the focal firm FF General Retail noted that they greatly benefited from their large purchasing volumes in terms of influencing suppliers on sustainability. However, they noted that if the supplier was geographically distant and purchasing volumes were relatively small, it was more challenging to influence suppliers to improve sustainability performance. Additionally, they discussed how the actions of third parties might affect their power stance:

All these large Finnish firms—we do have a very great position in these cases. On the other hand, when we go to a tuna supplier in Thailand and our purchases might be 2% of their whole year's production, it is quite difficult to start demanding anything. Of course, we do demand, but it is more challenging to get to that position if none of the other customers are demanding the same things.

The power source information was a particularly important power source for focal firms and first-tier suppliers. Based on our analysis, power asymmetries and relations among supply chain members affected firms' ability to reach their lower-tier suppliers and obtain information about them. Hence, firms' efforts to enhance transparency in multi-tier supply chains can be hindered due to suppliers' dominant positions. For instance, FF Textile Retail explained that if they were to purchase a small amount of supply from a big Chinese supplier, the supplier could dictate the conditions and information to be disclosed: “Then, if you want to know something more about that company, you cannot necessarily obtain this kind of information”. To avoid this situation and to map out suppliers that are willing to be transparent, the focal firm requires information about the potential suppliers' supply chains already in the supplier selection phase. On the other hand, T1 Agri-food Production gave an example of how they have been able to acquire information from lower tiers due to their power position:

One of our big packaging suppliers thought for a while that they would not open information about their own sub-suppliers for me because I buy things from them and it's their responsibility. But I have now had a chance to talk to their sub-suppliers. Also, the fact that they have responded to these questionnaires—you can go further when you have leverage.

The abovementioned findings emphasise the importance of power for achieving supply chain transparency. According to our analysis, lower-tier suppliers were more often in situations where they could not access supply chain information or influence their suppliers regarding sustainability issues compared to other tiers.

Furthermore, relationships emerged as an essential power source for first- and lower-tier suppliers, especially for those with relatively weaker power positions compared to their own suppliers. Our analysis showed that this power source did not commonly occur among focal firms. The importance of relationships was reflected in a comment by LT Yarn that explained benefits from good buyer–supplier relationships in terms of better power positioning:

We see suppliers as partners, and we treat them accordingly. When we visit them, we are treated like family, and vice versa. I do not act as a purchasing director shopping around—and this is appreciated. There is a different culture and value in our purchasing organisation, and it helps in certain situations.

The type of product was emphasised, particularly in the cases of lower-tier suppliers. Although LT Yarn described being generally dependent on their suppliers, they noted how their unique product offering strengthened their power position: “For niche products, I think we have a co-dependent relationship where there is a balance in power”. Moreover, LT Grain, who also benefitted from the buyer/supplier concentration in their market, mentioned: “If one [supplier] does not want to export their grain outside Finland, it is quite likely that it will end up with us”. The results suggest that companies that may otherwise have a weak power position can be in a beneficial position in case their product or service offering is unique and if their suppliers do not have many alternative buyers. However, companies offering common products may have to find other strategies to achieve a situation where they can influence their suppliers' sustainability.

4.3 Multi-tier supply chain level power sources

The multi-tier supply chain level comprises sources that stem from firms' position, role and other parties' actions in the multi-tier supply chain. Compared to the dyadic relationship level, it considers the role and position of a firm in a supply chain from a broader perspective, as well as influence from other stakeholders that may affect a firm's power stance and dynamics in a supply chain.

Based on our analysis, the most notable differences in power sources between the examined supply chain tiers were seen at the multi-tier supply chain level, where the power sources were heavily concentrated on the downstream supply chain. Focal firms and first-tier suppliers often drew power from their position in multi-tier supply chains, while lower-tier suppliers did not benefit from their position in the supply chain as much as firms in other tiers. For example, lower-tier supplier LT Yarn described their difficult supply chain position as follows, “If you talk about balance of power, you see a lot of balance between fibre suppliers and brands working together, and then, the rest of the supply chain gets kind of squeezed in there. So, you find your role”. This implies how power asymmetries between supply chain tiers may create a situation in which suppliers are caught between other actors in the supply chain, which can also affect the cascading effect of sustainability requirements. By contrast, one of the larger lower-tier companies, LT Grain, benefitted from its supply chain position. They noted, “We do have some advantage when it comes to them [suppliers] because we are located near them”. Thus, their structural position in the supply chain and geographical location was found to be important in terms of having power over the next tier of the supply chain, which mainly consists of farmers. More often, however, lower-tier suppliers were in a disadvantageous situation regarding their supply chain position.

Furthermore, some of the clearest differences were found regarding the power source supply chain role. While all focal firms had this power source, first- and lower-tier suppliers rarely gained an advantage from their role in the supply chain. Focal firms were aware of their role in pushing their sustainability agendas further down the supply chain: “For the most part, we are the gatekeeper who ensures, can ensure, and has the responsibility to assure the consumer that the product is sustainable” (FF General retail). Moreover, FF Passenger Traffic described their role in the supply chain by highlighting the aspect of publicity: “We are the most visible piece in this (…) in that sense, we play a very critical role, and that visibility also brings the need to be responsible”. Related to the cascading effect, T1 Agri-food Production mentioned, “If we can work our thoughts into the first tier, so that they will push that [sustainability] issue forward as a whole, then we are enabling making a difference in the activities [within the supply chain]”. By contrast, many first- and lower-tier suppliers stated that they were strongly influenced by their customers' requirements and needs and did not see their role in the supply chain as significant compared to focal firms.

Interestingly, some first- and lower-tier suppliers found themselves in a situation in which they were unable to influence their suppliers due to their position and/or role in the supply chain, even though they considered themselves to have the power to influence their suppliers otherwise. This phenomenon was highlighted in a comment by T1 Agri-food Wholesale:

We are often only a messenger (…) We do have influence, but it is affected by what customers want to buy (…) It is also a driving force, so depending on what kind of claims and requests we receive from our customer companies, it will surely affect the message and demands that we then put forward in this supply chain as a wholesaler.

Thus, in some cases, a firm's role and position in the multi-tier supply chain weakened their ability to use power, even if they believed that they had an influence on their suppliers. This pattern was particularly evident among first- and lower-tier suppliers operating as wholesalers or intermediaries. In relation to this, the multi-tier supply chain source actions of third parties (e.g. customers, other companies, governments, NGOs) were often considered crucial for firms' ability to use power over their suppliers. Based on our analysis, companies gained an advantage from the actions of third parties only in a few cases in which industry-wide third-party collaboration occurred. The firms that lacked this power source often wished that other firms would start setting similar requirements: “If a larger supplier hears the same wish from ten customers, then maybe they will start doing something about it” (LT Chemical Products). Additionally, LT Grain Mill 2 mentioned how other stakeholders' demands affected whether their message went through to the next supplier in the supply chain. Demands from other firms thus contributed to their own ability to push requirements further. Overall, the case firms lacked this power source and did not seem to have much control over what other parties were demanding.

Actions of third parties were noted as valuable by companies with a relatively dominant power position as well. FF General Retail described: “If a supplier did not have BSCI, we could influence them to get the certificate. Of course, there are other customers too that are pushing the same thing, so how big is our role alone … but we could definitely influence this”. Furthermore, the absence of third parties' actions emerged as a barrier to pushing sustainability requirements further along supply chains—also for firms with a relatively dominant power position. The role of different stakeholders and legislation was highlighted, as some of the companies found their own influence somewhat limited:

If we talk about lower-tier suppliers—they might constantly change; how can you stay on top of things and know who is there all the time (…) it is nice to think that we as companies can make a difference, but there should also be more of UN and—other countries' legislation, and so on, included in this because the influence of the company or the real potential to make a difference can be very small in the end. (T1 Agri-food Production)

We can of course challenge [suppliers], but the consumer sector is so big that pressure to change things has to come from that direction as well. We can influence this in case we are able to take the message to our customers. They can then start demanding something as consumers so that we can influence larger ones [suppliers] or make some new developments. (FF Accommodation)

Particularly in cases in which a supplier offered tailored solutions or was otherwise highly dependent on the customers' choices, the buying company played a crucial role in determining the basis for sustainability requirements. This is reflected in comments by one of the lower-tier suppliers:

We offer sustainable options and products. We try to push them, but once again, it is up to the customer whether they take them or not (…). We want to serve everyone and be the number one supplier [in the industry] in this country, so we will not hesitate to deliver non-certified palm oil if the customer wants us to.

Interestingly, our findings showed that, in some cases, first- and lower-tier suppliers did not receive demands from focal firms, even though they saw them as desirable. This is reflected in a statement by first-tier supplier T1 Agri-food Wholesale:

Actually, I would like to receive demands so that there is more information about what kind of products would be more desirable [by focal firms] in terms of sustainability. I would rather have it come from their direction: “Now we want this and that, from this point of view and from that sustainability point of view”. We would then be able to offer solutions more accurately and specifically.

Correspondingly, requirements and encouragement, especially from buyers who are forerunners in sustainability, motivated suppliers to join sustainability initiatives, as in the case of LT Bakery Products: “It [pressure] comes from their direction—that they want this and that. We are happy to be part of it in this case. Others are not as aware regarding these issues”. To conclude, our results showed that if firms did not face demands and pressure from the customer side or other third parties in multi-tier supply chains, this might lead to a lack of motivation to push sustainability requirements further to lower-tier suppliers and vice versa. However, a challenge remains as to whether these suppliers can continue the cascading effect to the next supplier tiers when considering their power position, putting further emphasis on the importance of examining power sources and asymmetries in multi-tier supply chains.

5.1 Theoretical implications

We adopted RDT as a theoretical lens to examine how power in multi-tier supply chains is derived and how power sources affect the ability to cascade sustainability initiatives to lower-tier supply chain tiers. RDT suggests that firms are dependent on the resources of other firms and that power depends on the resource dependence relationships that exist between firms (Pfeffer and Salancik, 1978; Medcof, 2001). The dynamics and management of multi-tier sustainable supply chains are affected by the resource dependencies between firms (Chand and Tarei, 2021). Our results demonstrate that the basic logic of RDT also work in the multi-tier setting and that firms in different tiers are dependent on the resources and expertise of other firms and may be able to build dependencies based on critical resources and expertise. We applied RDT in a multi-tier context but also viewed it from the perspective of sustainability. Even though some existing studies have investigated sustainable supply chains from the perspective of RDT (e.g. Paulraj and Chen, 2007; Hollos et al., 2012; Touboulic et al., 2014), there have been calls for more research that combine power, SSCM and RDT (Touboulic and Walker, 2015; Dabhilkar et al., 2016; Sancha et al., 2019). We have answered this call by showing how power and dependence from the RDT perspective affect the dissemination of sustainability requirements along multi-tier supply chains. Our research also contributes by being one of the few studies that have applied RDT to MT-SSCM.

We also contribute to the literature stream discussing power in buyer–supplier relationships. We explored how traditional sources of power work in the context of sustainability and how those determine power and dependencies when the aim is to improve sustainability performance. We demonstrated how power sources define the dynamics in a multi-tier context and how power and dependence affect the ability to cascade sustainability and to build sustainable multi-tier supply chains. Thus, we expanded the analysis by studying what firms can do with their power even though they do not necessarily recognise that they have power and how their sustainability goals are supported by their power sources and relations. By using extensive empirical datasets, we were able to elaborate the results within various industries with a large dataset as has been recommended by previous MT-SSCM research.

5.2 Managerial implications

Our findings have several implications especially for purchasing and supply chain managers. The results can help companies understand from what kind of sources their own and suppliers' power may stem and how different sources of power may affect their efforts to push their sustainability agendas to lower supply chain tiers. We showed evidence of how crucial it is to take a multi-tier view and acknowledge the actors beyond the direct buyer–supplier relationship. If other actors and indirect relationships are not considered, the managers might be unable to use the right kind of relationship strategies for fostering sustainability in supply chains. By assessing partners' sources of power in the context of a multi-tier supply chain or multi-layered network, managers could consider power sources and their effects to understand how these can affect the ability to disseminate and cascade the sustainability requirements towards the other upstream or downstream supply chain actors. While MT-SSCM in companies is still rare, mainly due to its complexity and difficulty, this study underlines the importance of evaluating sustainability and power relations beyond dyadic relationships. The results can also be helpful in supplier selection because power should already be considered in supplier selection and in the overall development of supplier relationship management strategies for fostering sustainability.

6.1 Limitations and future research directions

Despite its contributions, certain limitations must be acknowledged. The study's scope is limited to the European context, and the results must be interpreted within this specific context. While our multiple case study with 24 companies offers a better basis for generalising compared to a single case study, it is important to note that, like most case study research, generalising is limited due to the small sample size. Additionally, it should be noted that the companies included in the study do not necessarily reflect the best-performing companies in sustainability, even though the focal firms can be considered sustainability leaders in the Finnish market.

Future studies could take a closer look at active, mediated and non-mediated power use in multi-tier supply chains and examine how different forms of use of power affect the dissemination and practices of sustainability. Additionally, it would be worthwhile to investigate strategies that can enable companies to drive their sustainability agendas in multi-tier supply chains and to examine in detail how transparency for sustainability may be affected by power asymmetries in multi-tier supply chains. Previous studies have recognised the riskiness of lower-tier suppliers (e.g. Meinlschmidt et al., 2018; Villena and Gioia, 2018; Wang-Mlynek and Foerstl, 2020), and thus, future research could address how lower-tier suppliers, especially in complex supply chains, could further push their sustainability agendas along supply chains. Although our analysis focused on multi-tier supply chains, the network effects were clear. We suggest conducting more extensive studies of how network relationships affect the dissemination of sustainability in complex supply networks, which would require a different methodological approach. While acknowledging the difficulties in data collection, we hope that our study encourages other researchers to include multiple supply chain tiers in their studies to extend the view to lower tiers that have been previously overlooked. We can only understand how to manage sustainability in multi-tier supply chains if the perceptions of lower-tier suppliers are also included. Lower-tier suppliers might need support in developing their sustainability practices and actions where collaboration between different supply chain tiers could help.