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Supply chain screening without certification: The critical role of stakeholder pressure

Susan A. Kayser, John Maxwell and Michael Toffel
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Susan A. Kayser: Department of Business Economics and Public Policy, Indiana University Kelley School of Business

No 2014-08, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: To assess and manage reputational risks associated with supply chains, buyers are increasingly seeking information about their suppliers’ labor and environmental performance. Several voluntary programs have arisen to encourage suppliers to report this information in a standardized manner, but the information companies report might misrepresent their performance and can thus mislead rather than inform buyers. We hypothesize particular circumstances in which buyers can screen suppliers based on their participation in voluntary programs requiring public commitments and public reporting. In particular, we theorize that stakeholder scrutiny can effectively deter companies with misrepresentative disclosures from participating in such programs, and that this deterrence effect is stronger for smaller companies and in institutional contexts featuring stronger activist pressures and stronger norms of corporate transparency. Examining the decisions of 2,043 firms headquartered in 42 countries of whether to participate in the UN Global Compact, we find support for these hypotheses.

Keywords: supply chain; certification; global compact (search for similar items in EconPapers)
JEL-codes: L96 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-cta
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Citations: View citations in EconPapers (1)

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