Social compliance audits and multinational corporation supply chain: evidence from a study of the rituals of social audits

Islam, MA., Deegan, C. & Gray, R. (2018). 'Social compliance audits and multinational corporation supply chain: evidence from a study of the rituals of social audits'. Accounting and Business Research, vol 48, no. 2, pp. 190-224. [Online] DOI: 10.1080/00014788.2017.1362330

Posted: 16 Jul 2014 Last revised: 13 May 2018

See all articles by Muhammad Azizul Islam

Muhammad Azizul Islam

Business School, University of Aberdeen ; Business School, University of Aberdeen

Craig Deegan

RMIT University

Rob Gray

University of St. Andrews - School of Management

Date Written: January 14, 2018

Abstract

This study investigates the use of social compliance audits in the supply chain of multinational corporations (MNCs). Particularly, we explore the use of such audits in assessing and managing the working conditions of factory workers in the garment industry in a developing nation. Through a range of interviews with MNCs’ internal auditors, with commissioned external auditors and with representatives of the suppliers in Bangladesh, this study finds that social compliance audits become ritual strategies and are not a primary means of advancing workers’ rights. Drawing on the concept of surrogate accountability, the study suggests that to create real change in workers’ conditions and in order to hold MNCs and their suppliers accountable, some form of surrogate (government, non-governmental organisations or media) intervention is necessary. This is, we argue, preferable to leaving it in the hands of ‘markets’ and simply waiting for another major incident such as Rana Plaza to stir public concern. This study contributes to the literature by investigating how social compliance audits are undertaken by MNCs sourcing products from a developing nation, what motivations drive the adoption of such audits, and what, if anything, are the likely outcomes from the process.

Keywords: Social Audit, Legitimacy, Supply chains, Garment industry, Developing nations, Accountability

Suggested Citation

Islam, Muhammad and Islam, Muhammad and Deegan, Craig and Gray, Robert, Social compliance audits and multinational corporation supply chain: evidence from a study of the rituals of social audits (January 14, 2018). Islam, MA., Deegan, C. & Gray, R. (2018). 'Social compliance audits and multinational corporation supply chain: evidence from a study of the rituals of social audits'. Accounting and Business Research, vol 48, no. 2, pp. 190-224. [Online] DOI: 10.1080/00014788.2017.1362330, Available at SSRN: https://ssrn.com/abstract=2466129

Muhammad Islam (Contact Author)

Business School, University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Business School, University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Craig Deegan

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Robert Gray

University of St. Andrews - School of Management ( email )

The Gateway
Fife, KY16 9RJ.
St Andrews, Scotland Scotland U
United Kingdom

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