The effects of interorganizational governance on supplier's compliance with SCC: An empirical examination of compliant and non‐compliant suppliers

Abstract

Often, there is a huge gap between the requirements of the Supplier Codes of Conduct (SCC) imposed by buyers from advanced economies and actual compliance with SCC in developing countries. It is difficult for reseachers to reach suppliers who have violated SCC, especially within a large sample, because few disclose SCC violations to the public. In this paper, however, we identified 108 non‐compliant Chinese apparel and textile suppliers. Through the investigation of these non‐compliant suppliers and their compliant peers, this paper tests the impacts of antecedent factors (price pressure, production complexity, and contract duration) and buyer's governance mechanisms (peer‐to‐peer and buyer‐to‐supplier) on the likelihood of a supplier's compliance with SCC. While the buyer‐to‐supplier governance does not show significant effects, the peer‐to‐peer governance demonstrates the likelihood of supplier's commitment to SCC. This research reveals that if buyer's governance efforts move away from threat and toward cooperation, supplier's compliance with SCC could be more sustainable.

Sustainable Global Sourcing: A Systematic Literature Review and Bibliometric Analysis

“…External pressures are believed to be the major drivers of ethical sourcing e.g., public pressure [65], external stakeholder pressure [24,[108][109][110], coercive and normative pressures [111], and legal pressure [112,113]. Trusting relationship/cooperation with supplier is also suggested as an important factor fostering ethical sourcing behaviour [67,108,111,114]. In addition, Frenkel (2001) [115] and van Tulder and Kolk (2001) [116] highlight the importance of institutional supports in improving employment relations and labour standards.…”

“…Other studies propose that the collaborative way is more effective in increasing supplier compliance and improving social sustainability performance [67,125,126]. However, Locke et al (2009) [127] note that monitoring and collaboration approaches are complementary instead of alternatives to improving social performance.…”

Ethical Sourcing: An Analysis of the Literature and Implications for Future Research

“…In particular, it can provide a buyer with capabilities that a competitor would be unable to copy quickly Reuter et al 2010), while preventing their brand image tarnished by suppliers' misconduct (Awaysheh and Klassen 2010;Klassen and Vereecke 2012). However, such monitoring does not lead to greater supplier compliance (Boyd et al 2007;Baden et al 2009;Lim and Phillips 2008;Jiang 2009). Monitoring has been seen as a beneficial tool for inducing improvement in supplier management; yet, most researchers seem to agree that its arms-length approach cannot fully control supplier compliance.…”

“…On the other hand, this result clearly supports our earlier statement that ethical sourcing studies are still in the early stage focusing more on developing new theory. In fact, some of the prior studies are focused on the consequences of corporate ethical sourcing, including buyer satisfaction (Akamp and Müller 2013;Carter 2000;Kaynak and Sert 2012), supplier performance like capabilities (Carter and Jennings 2002;Ehrgott et al 2011), buyer reputation (Eltantawy et al 2009), relationship performance (Gonzalez-Padron et al 2008;Leonidou et al 2013), and supplier compliance (Jiang 2009). However, it is only lately that authors have begun to direct attention towards the financial effects of ethical sourcing.…”

Sustainable Supply Chain Management Integration: A Qualitative Analysis of the German Manufacturing Industry

“…The expectations of stakeholders are those of downstream supply chain partners. They should be integrated into SSCM strategy formulation and then be transferred to the upstream supply chain in the stages of supply chain partner selection (Jiang, 2009), relationship management and performance management (de Brito et al, 2008). The underlying assumption is that increased integration leads to better performance (Narasimhan and Wook, 2001).…”