Does implementing social supplier development practices pay off?

Abstract

Purpose – The purpose of this paper is twofold. First is to investigate the impact of social supplier development practices on the suppliers’ social performance. Second is to analyze if the implementation of supplier development practices by Western buying firms pays off in terms of operational and economic results. Design/methodology/approach – Hypotheses are tested in a sample of 120 Spanish manufacturing firms using Path Analysis. Findings – The results suggest that while supplier development practices help to improve the suppliers’ social performance and the buying firm’s operational performance, they do not pay off in terms of economic performance. Research limitations/implications – The paper shows that supplier development practices help to improve the suppliers’ social performance while improving the operational performance of the buying firm. The study has two main limitations. First, because cross-sectional data are used, possible recursive relationships could not be accounted for. Second, the study is limited to the Spanish scope and, as such, results need to be interpreted in that context. Practical implications – The results of this study provide insights to managers with respect to the implementation of supplier development practices to make their suppliers more socially responsible. Furthermore, managers are shown the implications of implementing such practices in terms of operational and economic outcomes. Originality/value – This paper contributes to the existing literature on the effectiveness of sustainable supplier development practices by including the suppliers’ performance, which has been generally neglected. Objective measures for economic performance are also included.

Social Sustainable Supply Chain Management in the Textile and Apparel Industry—A Literature Review

“…The impetus to maximize profit leads to unfavorable buying practices, resulting in unfair wages for factory workers [72,80]. Sancha et al [13] nail it down in their conclusion, "managers may decide which cost is more important to bear: the cost of implementing these practices or the cost of their suppliers acting unethically". This can also be related to a company's resources, not only in monetary terms, but also in its capacities to handle complex and time-consuming tasks, such as code implementation, monitoring, certification, or even communication to all its suppliers [90,96].…”

“…Social risk management, as indicated by Freise & Seuring [3], includes responsible social risk managers, activity with NGOs, use of codes of conduct or similar standards, social audits, offering incentives for compliant suppliers, cooperation with business partners beyond first tier suppliers, and policies in place for taking action if social misconduct is documented. Thus, social risk management, which is a part of the broader concept of sustainable supply chain management [17], has been described under different terms, such as social supplier development [13] or corporate social responsibility [68,75,85,90,93,98]. It is important to note that all these different terms generally imply the same practices a company can conduct to be socially responsible.…”

“…In that regard, McCarthy and Jayarathne [91] indicate the potential of retailers to become more competitive in the market, not only to be a fashion leader but also to consider becoming an ethical leader. One further factor that initiates a focal company to implement social risk management practices throughout its supply chain is to improve its operational performance and productivity, such as quality, cost, labor turnover, and delivery issues, as employees feel more motivated to work for a socially responsible corporation [13].…”

“…These facts automatically lead to increased pressure on apparel retailers to achieve lower costs and shorter lead times, resulting in poor labor standards in the supply chain [4,42]. As a consequence, apparel supply chains are becoming increasingly global [1,43], and the rising level of outsourcing to developing countries [44] has emphasized the focus on sustainability [3][4][5][6]13,45].…”

“…Many years later, as the sustainability debate began to emerge, Carter and Rogers [9] concisely discussed sustainable supply chain management by building on the TBL concept and its integration of the three dimensions (environmental, social, and economic) into the supply chain. Based on this, when a company aims to achieve at least a minimum level of sustainability, it has been suggested that it extends all three components of the TBL to every link in its supply chain [8][9][10][11][12][13][14][15][16]. Seuring and • RQ1: How can socially related research in the textile/apparel industry be integrated to the dominant conceptualizations of SSCM and what are the striking drivers, enablers, and barriers for the implementation of social risk management practices?…”