Monitoring Global Supply Chains

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Monitoring Global Supply Chains

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Title: Monitoring Global Supply Chains
Author: Short, Jodi; Toffel, Michael Wayne; Hugill, Andrea Read

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Citation: Short, Jodi L., Michael W. Toffel, and Andrea R. Hugill. "Monitoring Global Supply Chains." Strategic Management Journal 37, no. 9 (September 2016): 1878–1897. (Video abstract: https://www.youtube.com/watch?v=OLq4GixoVZ8, 4 minutes. Working Knowledge article for practitioners: http://hbswk.hbs.edu/item/what-brands-can-do-to-monitor-factory-conditions-in-a-global-supply-chain. Was Harvard Business School Working Paper, No. 14-032, October 2013. Revised June 2015. Previously titled "Monitoring the Monitors: How Social Factors Influence Supply Chain Auditors.")
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Abstract: Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers' conduct. But little is known about what influences auditors' ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains. Firms seeking to avoid reputational spillovers that can arise from dangerous, illegal, and unethical behavior at supply chain factories are increasingly relying on private social auditors to provide strategic information about suppliers’ conduct. But little is known about what influences auditors’ ability to identify and report problems. Our analysis of nearly 17,000 supplier audits reveals that auditors report fewer violations when individual auditors have audited the factory before, when audit teams are less experienced or less trained, when audit teams are all-male, and when audits are paid for by the audited supplier. This first comprehensive and systematic analysis of supply chain monitoring identifies previously overlooked transaction costs and suggests strategies to develop governance structures to mitigate reputational risks by reducing information asymmetries in supply chains.
Published Version: http://onlinelibrary.wiley.com/doi/10.1002/smj.2417/abstract
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:11591700
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