Publication Type

Working Paper

Version

publishedVersion

Publication Date

8-2025

Abstract

Many firms are attempting to reduce greenhouse gas emissions across their value chain. However, this requires convincing suppliers to adopt relevant decarbonization practices, which is challenging when the suppliers perceive such practices as risky or detrimental for their economic well-being. We employ a field experiment to examine relational investments (i.e., investments intended to promote mutual benefit for the exchange partners) as a tool for overcoming this challenge. In a research collaboration with a global firm pursuing decarbonization of its agricultural supply chain in India, we investigated the effectiveness of complementing training their supplier farmers on climate-friendly agricultural practices with also providing them customized agricultural services intended to demonstrate the firm’s commitment to their economic well-being. We examined two interventions that differed in the nature and extent of this support: one in which the firm’s field officers provided such services specific to the crop the firm sourced from the farmers, and another in which the firm’s agronomists were also involved in providing additional services on broader agricultural matters not restricted to the specific crop sourced. Relative to a control group only involving training on the climate-friendly practices, both interventions improved farmers’ adoption of the firm-recommended practices. The second intervention was more impactful as well as cost effective in achieving this outcome, while also better at meeting the business objective of farmer retention. Exploratory mediation analysis and post-experiment field interviews suggest that our findings were at least partly driven by the farmers’ positive perception of the relational investment made by the firm.

Keywords

Sustainability, Decarbonization Strategy, Climate Change, New Stakeholder Theory, Field Experiment, Relational Investment, Nonmarket Strategy, Emerging Markets

Discipline

Agribusiness | Environmental Sciences | Operations and Supply Chain Management

Research Areas

Operations Management

First Page

1

Last Page

48

Identifier

10.2139/ssrn.4802656

Publisher

INSEAD Working Paper No. 2025/40/STR

City or Country

Singapore

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2139/ssrn.4802656

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