Monitoring Global Supply Chains
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
March 2, 2015
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-032
UC Hastings Research Paper No. 84
Outsourcing firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories increasingly rely on private social auditors to provide strategic information about the conduct of their suppliers. But little is known about what influences auditors’ ability to identify and report poor supplier conduct. We find that individual supply chain auditors’ monitoring practices are shaped by social factors including their experience, gender, and professional training; their ongoing relationships with suppliers; and the gender diversity of their audit teams. Providing the first comprehensive and systematic findings on supply chain monitoring, our study identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational spillover risks by reducing information asymmetries between themselves and their suppliers.
Number of Pages in PDF File: 49
Keywords: monitoring, transaction cost economics, industry self-regulation, auditing, codes of conduct, supply chains, corporate social responsibility, globalization
Date posted: October 25, 2013 ; Last revised: March 4, 2015
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