Sustainable Supplier Selection under Financial Hardships: The Conflicting Impact of Spatial and Temporal Psychological Distances

Economic crises stress trade-offs between costs and sustainability for environmentally orientated firms impacting supply-chain management decisions. Inspired by the disruption to supply caused by the COVID-19 pandemic, we explore supplier selection during a financial crisis, studying the impact of psychological distance on the cost-environmental performance trade-off. Across three experiments (N = 420), we examine the choice between a low-cost and an environmental supplier at close and far psychological distances. Study 1 and Study 2 demonstrate that closer spatial and social distances, respectively, increase the preference for the environmental supplier. Study 3 extends these studies by showing that distance influences perceptions of the firm's objectives, mediating supplier preference. In contrast, Study 4 shows that a far temporal distance increases the preference for selecting the environmental supplier, differing from spatial distance, due to a reversal in the appraisal of the firm's objectives. Taken together, our results provide a greater understanding of the cognitive influences on sustainable procurement decision-making during the COVID-19 crisis.