Voluntary Governance Mechanisms in Global Supply Chains: Beyond CSR to a Stakeholder Utility Perspective

Abstract

Poor working conditions remain a serious problem in supplier facilities in developing countries. While previous research has explored this from the developed buyers' side, we examine this phenomenon from the perspective of developing countries' suppliers and subcontractors. Utilizing qualitative data from a major knitwear exporting cluster in India and a stakeholder management lens, we develop a framework that shows how the assumptions of conventional, buyer-driven voluntary governance break down in the dilution of buyer power and in the web of factors rooted in suppliers' traditions, beliefs, local demands and resource dependency. We reveal out how success in governing collaborative global supply chains often falls short within the subcontracting stage, where a stakeholder management mindset is elusive to most participants. We suggest that success in governing collaborative global supply chains is dependent on concepts of stakeholder utility and the presence of shared value that is often at odds with the realities of power, information asymmetry and compliance/reward systems inherent in the non-market coordination of global supply chains. Our findings offer important insights for delineating the concepts of value creation from CSR concepts and practices, and for modifying the basic assumptions of conventional supply chain governance.

Beyond brokering: Sourcing agents, boundary work and working conditions in global supply chains

“…Scholars are increasingly acknowledging the important contributions by firm and non-firm actors to GSC governance. Research in labour governance in GSCs has explored the roles of numerous actors, including transnational corporations (Nadvi, 2008), suppliers (Soundararajan and Brown, 2016;Plank and Staritz, 2015), labour contractors (Barrientos, 2013), unions (Fichter et al, 2011), and NGOs and third-party organisations (Khan et al, 2010). We add to this strand of literature by focussing on one important but neglected actor, the sourcing agent.…”

“…Sourcing agents, who are located in developing economies, act as brokers between suppliers and buyers within the GSCs; they span the boundaries between lead firms and suppliers, balancing the institutional, cultural, and physical boundaries created by the LOF of lead firms. It is through these actors that buyers communicate their expectations regarding working conditions to most suppliers in developing economies (Soundararajan and Brown, 2016).…”

“…But scholars have questioned the contributions of such practices and have criticised them for making supply chains socially unsustainable rather than the opposite (Pagell and Shevchenko, 2014;Soundararajan and Brown, 2016;, pointing out the fact that such programmes did not stop incidents such as the one at the Rana Plaza factory in Bangladesh.…”

Shared Value Literature Review: Implications for Future Research from Stakeholder and Social Perspective

“…Global investors and buyers have gradually realised the contextual embeddedness of stakeholders (and fulfilling their needs) in the supply chain (Pedersen et al, 2013;Soundararajan & Brown, 2016). Tantalo & Priem (2016) have emphasized on the integrative and collaborative principles of CSV as a way for managers to "entrepreneurially create new value for two or more essential stakeholder groups simultaneously, thereby increasing the size of the utility pie for those system members" (p. 315).…”

Improving Social Responsibility in RMG Industries Through a New Governance Approach in Laws

“…As such, this article assesses the social responsibility practices of the supply firms of the RMG industry in developing countries, using the Bangladesh RMG industry as an example. While in theory social responsibility performances may provide a potential instrument for firms (buyers and suppliers) to demonstrate the legitimacy of their operations to stakeholders (Dupire and M'Zali 2016;Perry et al 2015;Soundararajan and Brown 2014), however, in practice, these performances may be more of a tool for securing competitive advantage and gaining market share. With this in mind, the focus of this article is to present an analysis of how and to what extent a new governance (NG) approach in laws matters to the development of these practices, particularly in the RMG industry within developing countries.…”