I Will Not Deceive Friends: Social Connections as a Mechanism to Reduce CSR Decoupling in Supply Chains

ABSTRACT

Although supply chain sustainability has attracted growing attention, little research examines how customers can effectively constrain unethical behavior in suppliers. Hence, this study investigates how social connections between customers and suppliers might influence CSR decoupling on the part of suppliers. CSR decoupling refers to the phenomenon where companies create a misleadingly positive impression of overall environmental and social performance. Based on data from Chinese listed firms from 2010 to 2020, the results show that social connections significantly reduce CSR decoupling in suppliers. However, this effect weakens when customers have stronger bargaining power or when suppliers are located in more marketized regions. Conversely, social connections become more effective when customers are geographically more distant from suppliers, when suppliers are larger in size, when customers demonstrate stronger CSR engagement or operate in more environmentally sensitive industries. These findings highlight the role of social connections as an informal yet effective governance mechanism that enhances sustainable supply chain management.