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

Esben Rahbek Gjerdrum Pedersen, Mette Skovgaard Andersen

Journal of Public Affairs · 2006 · 286 citations · 29 references

Concepts

TL;DR

Globalization has made companies increasingly aware that profitability must be balanced with social and environmental responsibility, prompting the adoption of CSR codes to guide supply‑chain practices, yet enforcement is hampered by geographic, legal, and cultural distances that create agency problems and compliance risks. The article examines how to align supply‑chain actors’ interests with CSR code terms to mitigate non‑compliance risks for the initiator. Using IKEA as a best‑case example, the study illustrates effective management strategies for implementing codes of conduct across the supply chain. © 2006 John Wiley & Sons, Ltd.

Abstract

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.

References

29