Monitoring the Monitors: How Social Factors Influence Supply Chain Auditors
Jodi L. Short
University of California Hastings College of the Law
Michael W. Toffel
Harvard Business School (HBS) - Technology & Operations Management Unit
Harvard Business School
September 4, 2014
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-032
UC Hastings Research Paper No. 84
Outsourcing firms increasingly rely on social auditors to provide strategic information about the conduct of their suppliers to manage the reputational risks that can arise from dangerous, illegal, and unethical behavior at supply chain factories. But little is known about what influences auditors’ ability to identify and report poor supplier conduct. We find evidence that private supply chain auditors’ reporting practices are shaped by several social factors including their experience, gender, and professional training; their ongoing relationships with suppliers; and the gender diversity of their audit teams. By providing the first comprehensive and systematic findings on supply chain auditing practices, our study suggests strategies companies can pursue to develop more credible monitoring regimes to reduce information asymmetries between themselves and their suppliers.
Number of Pages in PDF File: 52
Keywords: monitoring, transaction cost economics, industry self-regulation, auditing, codes of conduct, supply chains, corporate social responsibility, globalizationworking papers series
Date posted: October 25, 2013 ; Last revised: September 6, 2014
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