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Keywords:

  • contracting;
  • design for environment (DfE);
  • environmental management systems (EMS);
  • greening the supply chain;
  • original equipment manufacturers (OEM);
  • semiconductors manufacturers

Summary

Our article uses the theory of transaction cost economics as a conceptual basis for examining the contracting mechanisms by which firms in the computer industry structure programs to encourage their suppliers to improve their environmental management systems and/or the environmental quality of their products. We explore the economic transactions hazards associated with asking suppliers to invest in the specialized technologies required to improve environmental performance of products and management practices and the relational contracting mechanisms computer industry firms are using to protect themselves against these hazards. We also describe the importance the managers we interviewed attributed to various transactions hazards and their perceptions of how well their firms were coping with them. We conclude by discussing questions for future research. By using TCE to frame our analysis of how computer manufacturers are structuring their relationships with their suppliers in the environmental area, we hope to show how social science theory can be used to enrich and increase the practicality of the work done by engineers and others in the mainstream areas of the industrial ecology field.