Supplier Slip-Ups: How Malpractices Can Bite Into Restaurant Market Value

Abstract

Ethical, environmental, and human rights standards are critical issues in the tourism and hospitality industry. In this context, restaurants must choose third-party members—such as suppliers—that align with their quality and sustainability standards, especially because these third-party members may encounter challenges related to food safety, ethical misconduct, environmental matters, and human rights violations. This study analyzes whether the market holds restaurants accountable for the shortcomings of their suppliers, even when the restaurant has not directly participated in or caused these problems. Based on signaling theory and the associative network memory paradigm, this study finds that supplier issues negatively affect the market value of restaurants, with indirect linkage exerting a greater impact than direct linkage, which informs these theories by underscoring the importance of memory and associations dynamics.

Keywords

supplier issues restaurant market value signaling theory hospitality industry

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