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

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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.

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Notes

  1. Further evidence includes various video documentaries published by numerous organizations across the globe. In 2008, Channel 4 UK aired a documentary (which was later blocked from being distributed)—titled “The Devil Wears XYZ”—exposing employment of child labour, existence of unsafe working conditions and low wages in the small supplier factories of the UK’s low-cost clothing retailer, situated in Tirupur, India. In 2013, a documentary aired by AlJazzera—titled “Made in Bangladesh”—exposed the substandard working conditions and usage of child labour in the supplier facilities of famous high-end US garment brands located in Bangladesh.

  2. Participants were labelled as follows: Workers: W1–W26; Subcontractors: SA–SK; Buying agents: BA1–BA6; Trade union leaders: TU1 and TU2; CSR officers/auditors: CSR1–CSR7; NGO representatives NGO1–NGO3.

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  1. Birmingham Business School, University of Birmingham, Birmingham, West Midlands, B15 2TY, UK

    Vivek Soundararajan

  2. Department of Management, Bentley University, 175 Forest Street, Waltham, MA, 02452, USA

    Jill A. Brown

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Soundararajan, V., Brown, J.A. Voluntary Governance Mechanisms in Global Supply Chains: Beyond CSR to a Stakeholder Utility Perspective. J Bus Ethics 134, 83–102 (2016). https://doi.org/10.1007/s10551-014-2418-y

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