From Sustainability Outcomes to Firm Value: Outcome Verifiability in Multi‐Tier Sustainable Supply Chains

Abstract

Sustainability investments in supply chains are positively associated with firm value on average, yet their effects remain heterogeneous. This paper argues that a critical and undertheorized source of this heterogeneity arises after environmental and social (E/S) outcomes are produced: namely, whether claims about those outcomes can be credibly corroborated through evidence available to the stakeholders whose responses shape firm value. We term this condition outcome verifiability. The problem is especially acute in multi‐tier supply chains, where long causal distances, fragmented data custody, and first‐tier double agency make upstream outcomes difficult to observe and substantiate. To locate where this problem emerges, we develop an integrative Conversion–Implementation–Value Creation (CIV) architecture that assigns distinct explanatory roles to institutional theory, dynamic capabilities, multi‐tier governance, signaling theory, and decoupling research. From this architecture, we derive six propositions. Two are especially distinctive. First, verifiability is valence‐amplifying rather than uniformly value‐enhancing: it strengthens favorable stakeholder responses to strong outcomes but intensifies adverse responses to weak outcomes and discrepancies between claimed and realized performance. Second, its effects are stronger for social than environmental outcome claims to the extent that social claims exhibit lower measurement standardization, greater attribution ambiguity, longer causal horizons, and less mature verification infrastructure. By developing stage‐specific diagnostic checkpoints informed by decoupling research, the framework helps identify whether disappointing firm‐value consequences originate in capability formation, multi‐tier enactment and outcome production, or substantiation and value translation. It thereby explains why disclosure mandates alone cannot substitute for credible verification infrastructure or substantive sustainability performance.