Codes to coordinate supply chains: SMEs' experiences with SA8000

Abstract

PurposeContracts and trust are mechanisms to coordinate processes in supply chains. However, contracts are incomplete and trust takes time to develop. The aim of this paper is to show how Social Accountability 8000 (SA8000) can help to manage supply chains (in particular small and medium‐sized companies as its partners) by solving the problem of incomplete contracts as well as replacing trust in new partnerships, especially with respect to intangible performance indicators.Design/methodology/approachSupply chain management (with an emphasis on coordination) and corporate social responsibility (with an emphasis on codes, especially SA8000) are briefly described, based on a literature review. These descriptions led to three research propositions. In the second part, four cases describe the practice of SA8000. The richness of the cases provides both literal and theoretical replication. Finally, the theoretical and empirical results are compared, with specific regard to the research propositions.FindingsCodes facilitate coordination between immediate partners in a supply chain, especially when the most powerful one enforces the code. However, indirect coordination with second‐ or third‐tier partners is hardly influenced. Chain directors can impose SA8000 certification in the supply chain and the latter can benefit from reduced information asymmetry. Transaction costs are reduced without a loss in flexibility.Research limitations/implicationsThe three propositions introduced are supported. Further research could further strengthen the validity of the propositions or show the need for refinements in them. The results show managers that certification can facilitate coordination of intangible aspects of performance to reduce information asymmetry with at least no negative results.Practical implicationsFirms that use SA8000 should take more advantage of it because it reduces information asymmetry and transaction costs, not only between direct partners but also further up‐ and downstream in the chain. Chain directors can use codes to complement incomplete contracts. Third‐party monitoring should be strengthened, especially with respect to second‐ and third‐tier partners.Originality/valueThe originality of the paper is in the analysis of the position of the second‐ and third‐tier participants in the chain, questioning whether codes like SA8000 are a sufficient instrument to make them real partners in the chain. SA8000 increases traceability of proper processes by customers and partners in the chain, which facilitates the coordination and the management of the chain.

Piggy in the Middle: How Direct Customer Power Affects First-Tier Suppliers’ Adoption of Socially Responsible Procurement Practices and Performance

“…These studies point to the dyadic relationship as the key relationship that impacts the adoption of sustainability practices, as a firm may not have influence further than its first tier of suppliers (Awaysheh and Klassen 2010;Ayuso et al 2013;Ciliberti et al 2009;Pedersen 2009;Touboulic et al 2014). Touboulic et al (2014) highlight the central role of the first-tier supplier in ensuring engagement with second-tier suppliers.…”

“…Few studies examine the impact of power use on socially responsible procurement practices (with the exception of Ayuso et al 2013;Boyd et al 2007;Ciliberti et al 2009), and even fewer examine the effect of power on first-tier suppliers adopting socially responsible procurement practices with their suppliers. An exception here is the work of Touboulic et al (2014), which explores a single case with multiple dependent relationships to understand how dependence impacts the adoption of sustainable supply chain management practices.…”

“…Companies then work with suppliers and non-traditional partners, including secondary stakeholder groups such as NGOs or community groups, to create a more socially responsible supply chain. This also means creating more transparent supply chains, where governance structures and data relating to ethical and social standards are communicated publicly (Ciliberti et al 2009;Mueller et al 2009;Pedersen 2009). For example, after intense pressure from stakeholders including NGOs, the media, unions and academics, Nike and LeviStrauss now publish lists of their factories, giving data on the labor practices of their suppliers to the public (Doorey 2011).…”

“…This is also known as 'socially responsible purchasing' (Leire and Mont 2010;Maignan et al 2002) and requires the purchasing manager of the buyer company to ensure that the supplier has the correct social certification or uses a socially responsible management system such as SA8000, OHSAS 18001 or a bespoke system (Ciliberti et al 2009;Lee and Kim 2009). …”

“…Process-based socially responsible procurement practices, such as monitoring and assessment, are shown to combine with collaborative approaches, such as socially responsible training and awareness building, in order to encourage the adoption of socially responsible initiatives (Ciliberti et al 2008). Additionally, nonmediated power, in the form of assistance to suppliers, leads to the implementation of SA8000 with suppliers (Ciliberti et al 2009). Following from this, we hypothesize that non-mediated power use will drive process-based socially responsible procurement practice adoption.…”