Management Action and Productivity
Businesses in developed countries tend to think of Corporate Social Responsibility (CSR) as a characteristic that is centered in their own businesses or, failing that, situated in the industries of wealthier nations. The CSR movement is substantively skewed in the direction of the developed world where the motivation for adopting a CSR initiative is driven more by altruism -- or "enlightened self-interest" (Vogel 2006: 18) -- than profit margins. It is unusual to find a perspective that considers CSR from the perspective of a sourcing company. In the centrically-oriented corporate arena of the developed world, CSR is seen as originating with the company that establishes a supply chain with a multinational company -- not the other way around. In order to manage and control ethical issues arising from doing business with overseas markets, many corporations rely on a social compliance model (PricewaterhouseCoopers 2007).
The social compliance model requires first an assessment of local laws and the supplier's own standards or codes of conduct, and second, compliance monitoring of the supplier against those foundations. Typically, the monitoring functions are carried out by the suppliers' own specially trained staff or by external agencies. That this system is not entirely effective does not come as much of a surprise. A number of factors contribute to the poor outcomes and lack of rectification. Auditors (PricewaterhouseCoopers 2007) have identified several relevant factors, of which one is pivotal to this research: A lack of leadership from senior management.
2. Research objectives/questions
A working relationship with suppliers that facilitates the development of an implementable plan to address the scope and depth of supply chain issues, and to manage associated business risks, is a requirement of successful supply chain management. The following research questions will inform the process of model development that will help achieve these objectives with a Chinese supplier of high-end outerwear garments.
1. What model can be used to engage the supplier in a rectification program?
2. How can management be encouraged to take ownership in the model?
3. What training is available to inform management philosophy and practice?
4. What systems and controls can be used to monitor supplier performance?
3. Significance of the research
The ethical implications of sourcing from overseas markets extend to a broad set of supply chain issues and a range of corporate social responsibility issues, including the following: Impact on brand, consumer attribution, intellectual property, financial security, sustainability, and product quality / safety / traceability (PricewaterhouseCoopers 2007). Consumers are able to communicate -- about brands, products, services, and the companies responsible for these market components -- in extraordinarily efficient and diverse ways. Consumers are less passive in their role than they have ever been in the modern market. Positive consumer attribution of brand and company are imperative to corporate success. Managers have a keen and demanding responsibility to address any and all issues that have the capacity to undermine positive consumer brand attribution and stockholder value. Information about corporate social responsibility issues can quickly move to the center stage of the market and remain top-of-mind with consumers long after any problems have been resolved. A management and supplier relations model that promotes performance and quality improvement is requisite for sourcing partnerships with multinational companies.
4. Literature review
Certainly, the goals of CSR are to move industries toward achieving greater ethical, social, and environmental performance. It is questionable whether these objectives are sufficient to change the practices -- or the philosophies -- of sourcing partners in overseas markets. The dearth of management goals unrelated to profit margins, as communicated by sourcing partners, indicates that the strongest motivation is inextricably linked to the financial success of suppliers.
The current literature on CSR can be summarized by this phrase: "Doing good to do well" (Vogel 2006: 19). A 2002 survey of CEOs by PricewaterhouseCoopers revealed that, "70% of global chief executives believe that CSR is vital to their company's profitability" (Vogel 2006: 20). If there are clear links between profitability and social responsibility, they have not been sufficient established to drive CSR consciousness to the top of supplier agendas. However, the occasional case study does demonstrate that business success, and particularly business sustainability, can be linked to the social, ethical, and environmental performance of an industry (Luce 2004, Patagonia 2011). How, then, might the profitability and sustainability aspects of CSR be used to improve management practices in a manufacturing facility in a developing country? Specifically, what model provides a guide to developing an understanding of the relationship between socially responsible management practices and manufacturing quality and productivity in a Chinese factory?
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