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
June 4, 2015
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-032
UC Hastings Research Paper No. 84
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.
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: June 5, 2015
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