49 Pages Posted: 25 Oct 2013 Last revised: 5 Jun 2015
Date Written: June 4, 2015
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.
Keywords: monitoring, transaction cost economics, industry self-regulation, auditing, codes of conduct, supply chains, corporate social responsibility, globalization
Suggested Citation: Suggested Citation
Short, Jodi L. and Toffel, Michael W. and Hugill, Andrea, Monitoring Global Supply Chains (June 4, 2015). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-032; UC Hastings Research Paper No. 84. Available at SSRN: https://ssrn.com/abstract=2343802 or http://dx.doi.org/10.2139/ssrn.2343802