What Shapes the Gatekeepers? Evidence from Global Supply Chain Auditors
Jodi L. Short
UC Hastings College of Law
Michael W. Toffel
Harvard Business School (HBS) - Technology & Operations Management Unit
Harvard Business School
October 22, 2013
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-032
Private gatekeeping institutions, from credit rating agencies to supply-chain auditors, are important players in contemporary regulatory regimes. Yet little is known about what influences the decisions of the individual accountants, auditors, analysts, and attorneys who interpret and apply the rules embodied in the regulatory schemes they help to implement. Drawing on insights from the literatures on street-level bureaucracy and on regulatory and audit design, we theorize and investigate the economic incentives and social institutions that shape the gatekeeping decisions of private supply-chain auditors. We find evidence to support the argument that auditors’ decisions are influenced by financial conflicts of interest. But we also find evidence that their decisions are shaped by social factors, including an auditor’s experience, gender, and professional training; ongoing relationships between auditors and audited factories; and gender diversity on audit teams. By demonstrating the contributions of both economic incentives and social institutions to gatekeeping decisions, our research significantly extends the gatekeeping literature’s narrow focus on economic incentives. By providing the first comprehensive and systematic findings on supply-chain auditing practices, our study also suggests strategies for designing private regulatory regimes that will more effectively detect and prevent corporate wrongdoing.
Number of Pages in PDF File: 52
Keywords: gatekeepers, industry self-regulation, auditing, codes of conduct, supply chains, corporate social responsibility, globalizationworking papers series
Date posted: October 25, 2013
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