Safeguarding corporate social responsibility (CSR) in global supply chains: how codes of conduct are managed in buyer‐supplier relationships

Abstract

In the wake of globalization, companies are becoming increasingly aware of the social and environmental aspects of international production. Companies of today not only have to be profitable, but they also have to be good corporate citizens. In response to the increasing societal pressure, many companies adopt the concept of corporate social responsibility (CSR) by introducing codes of conduct that are expected to ensure socially responsible business practises throughout the chain—from supplier of raw materials to final end‐users. However, there are several challenges to the management and control of codes of conduct in global supply chains. Active commitment is a precondition for the successful implementation of the codes, but the incentive to comply with the codes does not necessarily extend to all the actors in the chain. Moreover, it is difficult to enforce codes of conduct in global supply chains, because the involved companies are separated geographically, economically, legally, culturally and politically. In consequence, introducing codes of conduct in global supply chains raises a series of agency problems that may result in non‐compliance. Realizing that non‐compliance can have severe consequences for the initiator (due to consumer sanctions, negative press, capital loss, government interventions, damaged brand etc.), the article analyses how the interests of the actors in the supply chain can be aligned with the terms of the codes. IKEA is used as a ‘best case’ example to illustrate how codes of conduct can be effectively managed in the supply chain. Copyright © 2006 John Wiley & Sons, Ltd.

Conflict Minerals and Supply Chain Due Diligence: An Exploratory Study of Multi-tier Supply Chains

“…This is in line with many other studies that either show potentially negative effects on reputation due to deficits in suppliers' corporate social performance (e.g., Carter and Jennings, 2004) or that show positive effects due to actively governing CSR topics (e.g., Pedersen and Andersen, 2006). Taken together, market performance impacts of SCDD disseminate at both ends of the supply chain and tend to accrue for the whole supply chain instead of a single firm.…”

Collaborative Approach for Sustainable Auditing of Global Supply Chains

“…This implies additional costs related to the identification and use of references and procedures which are not shared by all actors in the chain (Pedersen, Andersen 2006;Risso 2012). Another element which can reduce the effect of Codes of Conduct in global supply chains, is related to the fact that the involved companies are separated geographically, economically, culturally and politically.…”

“…Collaborative efforts between buyers might reduce the risk of non-compliance and the resulting serious consequences for themselves. (e.g., consumer sanctions, negative press, capital loss, government interventions, damage to brand image) and lead to the development of collective CSR strategies and to the formulation of shared practices, resulting from the combination and integration of the individual (i.e., firm level) Code of Conduct (Pedersen, Andersen 2006).…”

“…Few studies (Pedersen, Andersen 2006;Eriksen, Jessen 2009) have addressed the question of how companies safeguard CSR in global supply chains using a firm-level perspective. Much less has been done in order to investigate how collaborative efforts between initiators (i.e., collective CSR strategies) might reduce the risk of noncompliance and the resulting serious consequences for the initiators (e.g., consumer sanctions, negative press, capital loss, government interventions, damage to brand image) (Eltantawy et al 2009).…”

“…In addition, suppliers entering into contractual relationships with diverse large companies may be confronted with multiple Codes of Conduct that incorporate different standards and requirements they need to comply with (Andersen, Skjøtt-Larsen 2009). Furthermore, a remarkable lack of efficient monitoring systems reduces the possibility of controlling their compliance by the suppliers (Pedersen, Andersen 2006;Emmelhainz, Adams 1999;Lee, Kim 2009). This entails additional costs for suppliers and increase opportunistic behavior in the supply chain.…”