Contractual Deterrence and the Ethical Supply Chain
59 Pages Posted: 27 Aug 2021 Last revised: 25 Oct 2021
Date Written: August 24, 2021
A harmful byproduct of the global economy is the proliferation of abuses in global supply chains. Too often lead firms and suppliers do not effectively collaborate. Lead firms require human rights and sustainability standards while also demanding extremely low cost goods and fast production deadlines. Suppliers faced with the impossible choice of financial survival or compliance with ethical standards, attempt to evade lead firm demands. The result is an illusion of governance that prioritizes investigations over actual changes and perpetuates “slow violence” against local environments and vulnerable populations.
To respond to this problem, this manuscript proposes a new paradigm I call ‘contractual deterrence.’ Contractual deterrence leverages a centuries-old theory of criminal deterrence, reinterprets it to incorporate a modern understanding of sanctions and rewards, and applies the theory to the contractual context of the modern global supply chain. Contractual deterrence is based upon three prongs: that enforcement of ethical supply chain standards must be predictably certain, equitably significant, and swiftly implementable. This manuscript explores these prongs and shows how the theory advances sustainability and human rights literatures. This manuscript also argues for a new multistakeholder theory of social responsibility that challenges western-dominated thinking and encourages a joint and equal partnership between lead firm and supplier in order to address pressing problems facing supply chains today.
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