Equal Employment Opportunity in Supply Chains

Abstract

The equal employment opportunity (EEO) policy is an essential component of workplace diversity, equity, and inclusion (DEI) practices. Using a novel workplace EEO measure based on the textual analysis of online job postings, we show a lead-lag pattern of EEO practice between principal customers and their dependent suppliers. The lead-lag effect is more pronounced when principal customers enjoy a stronger bargaining power, consistent with the view that dependent suppliers adjust EEO policies catering to the preferences of their customers. We use the Big Three's Diversity Campaign in 2017 as our main identification strategy to support a causal interpretation. We show that the diffusion of EEO policies along supply chains generates real economic outcomes in terms of improving the likelihood of sales growth and female employee retention, implying the presence of social benefits besides economic advantages associated with the diffusion of workplace EEO practices along supply chains.

Keywords: supply chain management, equal employment opportunity (EEO)