infonet-economy

The ongoing revelations on social and environmental misconducts in the global supply chains of well-known brands including Apple, Nike and others have put brands under pressure to ensure socially responsible operations at their suppliers' facilities. In order to respond to the growing pressure, an increasing number of Western brands participate in voluntary sustainability initiatives to augment the compliance level of their suppliers. Yet, few studies have investigated whether such corporate practice leads to actual improvements of suppliers' compliance - particularly in emerging markets. In this explorative work-in-progress paper, we investigate how corporate participation in a voluntary sustainability initiative impacts on supplier compliance. For this purpose, we rely on social audit reports of the Business Social Compliance Initiative focusing on 105 suppliers of the textiles, shoes, leather and hard goods industries based in Bangladesh and India. We find that the lower the level of supplier social compliance in the first full audit the greater is the improvement over time. Surprisingly, very high levels of supplier social compliance are associated with deterioration. Thus, corporate participation in the Business Social Compliance Initiative is appropriate to improve supplier social compliance but not to ensure suppliers' full compliance with the requirements.