Monitoring the Monitors: How Social Factors Influence Supply Chain Auditors
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-032
51 Pages Posted: 22 Jul 2014 Last revised: 26 Sep 2014
Date Written: September 4, 2014
Outsourcing firms increasingly rely on social auditors to provide strategic information about the conduct of their suppliers to manage the reputational risks that can arise from dangerous, illegal, and unethical behavior at supply chain factories. But little is known about what influences auditors’ ability to identify and report poor supplier conduct. We find evidence that private supply chain auditors’ reporting practices are shaped by several social factors including their experience, gender, and professional training; their ongoing relationships with suppliers; and the gender diversity of their audit teams. By providing the first comprehensive and systematic findings on supply chain auditing practices, our study suggests strategies companies can pursue to develop more credible monitoring regimes to reduce information asymmetries between themselves and their suppliers.
Keywords: industry self-regulation, auditing, codes of conduct, supply chains, corporate social responsibility, globalization
JEL Classification: F23, K20, K31, K32, K42
Suggested Citation: Suggested Citation