Does Green Supply Chain Partnership Governance Pay Off? An Investigation of the Impact on Corporate Financial Performance

ABSTRACT This study examines whether governance of green supply chain partnerships (GSCPs) using environmental criteria for supplier selection and termination is positively associated with corporate financial performance of focal firms. Drawing on the social capital theory, this study highlights the dichotomous nature of social capital in GSCPs, showing whether firms can gain corporate reputation and then financial benefits while proactively managing GSCPs. This study analysed the panel data of 994 firm‐year observations from UK FTSE All‐Share firms obtained from the Thomson Reuters Eikon's ESG (Environmental, Social, and Governance) database. Analysis result shows that although there is evidence that GSCP governance is positively related to corporate reputation, no evidence shows that corporate reputation will be a mediator between GSCP governance and corporate finance performance. Instead, GSCP governance variables have shown positive direct relationship with financial performance. Findings provide practical guidance for managers seeking to strengthen financial performance through GSCP governance approaches.