Benchmarking Global Supply Chains: The Power of the 'Ethical Audit' Regime (original) (raw)
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Governing Global Supply Chain Sustainability through the Ethical Audit Regime
Globalizations
Over the past two decades multinational corporations have been expanding ‘ethical’ audit programs with the stated aim of reducing the risk of sourcing from suppliers with poor practices. A wave of government regulation—such as the California Transparency in Supply Chains Act (2012) and the UK Modern Slavery Act (2015)—has enhanced the legitimacy of auditing as a tool to govern labor and environmental standards in global supply chains, backed by a broad range of civil society actors championing audits as a way of promoting corporate accountability. The growing adoption of auditing as a governance tool is a puzzling trend, given two decades of evidence that audit programs generally fail to detect or correct labor and environmental problems in global supply chains. Drawing on original field research, this article shows that in spite of its growing legitimacy and traction among government and civil society actors, the audit regime continues to respond to and protect industry commercial interests. Conceptually, the article challenges prevailing characterizations of the audit regime as a technical, neutral, and benign tool of supply chain governance, and highlights its embeddedness in struggles over the legitimacy and effectiveness of the industry-led privatization of global governance.
What Shapes the Gatekeepers? Evidence from Global Supply Chain Auditors
SSRN Electronic Journal, 2013
Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers' conduct. But little is known about what influences auditors' ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains. Managerial Summary Firms reliant on supply chains to manufacture their goods risk reputational harm if the working conditions in those factories are revealed to be dangerous, illegal, or otherwise problematic. While firms are increasingly relying on private-sector "social auditors" to assess factory conditions, little had been known about the accuracy of those assessments. We analyzed nearly 17,000 code-of-conduct audits conducted at nearly 6,000 suppliers around the world. We found that audits yield fewer violations when the audit team had been at that particular supplier before, when audit teams are less experienced or less trained, when audit teams are all-male, and when the audits were paid for by the supplier instead of by the buyer. We describe implications for firms relying on social auditors and for auditing firms.
Collaborative Approach for Sustainable Auditing of Global Supply Chains
Symphonya. Emerging Issues in Management, 2013
Over the last years, Corporate Social Responsibility (CSR) has become an important component of business activities for many companies in the world. Much attention has been devoted considering also supply chain perspective. Multinational corporations are not only responsible for sound environmental and social practices within their own premises, but increasingly also for sustainable performance of their suppliers, and ultimately for the entire supply chain which they lead as channel leaders. That is why, large buyers have recently come under pressure to increase monitoring of suppliers' behaviours to bolster CSR compliance. This paper aims to present a conceptual framework for analyzing the Sustainable Procurement practices in global supply chains. An important aspect of implementing such supply chain CSR initiatives involves achieving supplier compliance. It also seeks to demonstrate how a specific consortium of Large European Telecommunications Companies, implements and man...
Ethical Issues in Global Supply Chains
Symphonya. Emerging Issues in Management, 2007
Despite all technological advances, global supply chains are always based on the interaction of people. And wherever people interact, a kaleidoscope of ethical issues emerges.
Social auditing in the supply chain: business legitimisation strategy rather than a change agent
Meditari Accountancy Research, 2022
Purpose-This paper aims to examine the role of social auditing in legitimising the relationship between the buyer and supplier firms rather than strengthening corporate accountability in the global supply chain. Design/methodology/approach-Applying case study methodology and drawing on Suchman's theory on societal legitimacy, it is argued that social audits are artefacts of legitimacy, and global firms dominate the buyer-supplier relationship across the supply chain. The analysis is based on data collected from different secondary sources, including Walmart's corporate sustainability reports. Findings-Using Walmart's relationship with Tazreen Fashions Limited around the Tazreen factory fire incident as a case study, it explains that the practices which attempt to symbolically demonstrate accountability from social audits need to shift to a more continuous and sincere demonstration of accountability through the social audit process. For this to occur, the cognitive and pragmatic approaches that international buyers have previously used in auditing their supply firms' social responsibility are no longer sufficient to achieve societal legitimacy. Instead, a moral turn needs to underpin the intentions and actions of these buyers to maintain legitimacy and demonstrate accountability across the supply industry in developing economies. Originality/value-The findings of the study answer the questions raised in the extant literature about the expectation from social auditing and whether social auditing serves to ensure corporate accountability. The paper contributes to the policymaking discussion of how social auditing can be configured to include a legal provision to ensure that social auditing is not a parroting tool for corporations.
Ethical supply chains: analysis, practices and performance measures
International Journal of Logistics Systems and Management, 2014
Ethics has been studied in numerous disciplines and its application to various practices has been investigated over the years such as in medicine and law. This has been relatively recently extended into the business arena, and has become a matter of growing interest for many companies. It has led to questions concerning what constitutes ethical behaviour, to what extent ethical practices should be adopted and what benefits a company may derive from its adoption. There are numerous processes involved in the transformation of a product from source to consumer, and these must be managed to produce an optimal balance of business requirements, specifically profitability, and a consideration of the wider impacts they may have or make. The supply chain has become vital to organisational success that companies now compete as supply chains rather than as individual entities. Therefore the ethical conduct of the supply chains has also begun to be scrutinised, both from an internal business performance perspective, and from the increasing concerns held by the numerous stakeholders of the organisation. In light of these developments, this paper explores the notion of ethics as it applies to supply chains. It also examines supply chain ethical practices and demonstrates that there is an empirical relationship between ethical practices and performance. The results show that ethical practices have positive impacts on the performance of the supply chain.
Monitoring global supply chains
Strategic Management Journal, 2015
Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers' conduct. But little is known about what influences auditors' ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains.
Ethical Issues in Global Supply Chain
Despite all technological advances, global supply chains are always based on the interaction of people. And wherever people interact, a kaleidoscope of ethical issues emerges.
Ouverture de ‘Ethics in Global Supply Chains’
Symphonya. Emerging Issues in Management, 2007
In global markets, a 'competitive' corporate culture tends to develop communications and information flows, manufacturing decentralisation, decisionmaking autonomy, operating accountability and ethical conduct. In this context, the global corporate culture highlights the central role of 'ethical cross cultural management'.
Social Auditing and Responsible Outsourcing:Improving a Sustainable Global Supply Chain
Outsourcing is increasingly considered as a value creation that can provide companies with a long-lasting competitive advantage. Regrettably, many social and environmental impacts continue to plague the global supply chain, creating scandals for the buying companies. Failure to manage these impacts has increased the risk of non-compliance, which in turn harms the company’s reputation. Given the absence of a global enforcement mechanism and the regulation deficit of many developing countries, pressures have led many companies to develop CSR initiatives and a variety of monitoring mechanisms. Realising the difficulties in managing external relationships with independent suppliers operating in different contexts, the question is how a company can held their suppliers responsible and whether the social auditing, embraced as a monitoring mechanism, is efficient in improving a sustainable outsourcing. The present contribution tries to address many of the issues raised. Firstly, a short description of the different underlying causes of ‘unsustainable’ outsourcing is provided. Secondly, the scope and typology of social auditing and the quality of auditors are reviewed, and different aspects of the social auditing process are highlighted. Finally, the paper evaluates the credibility and effectiveness of the social auditing and outlines what this mechanism has to offer in relation to the core question of promoting a sustainable global supply chain. Key words: Global Supply Chain, Sustainability, Social Auditing, compliance.