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The Dark Side of Buyer Power: Supplier Exploitation and the Role of Ethical Climates

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Abstract

Media increasingly accuse firms of exploiting suppliers, and these allegations often result in lurid headlines that threaten the reputations and therefore business successes of these firms. Neither has the phenomenon of supplier exploitation been investigated from a rigorous, ethical standpoint, nor have answers been provided regarding why some firms pursue exploitative approaches. By systemically contrasting economic liberalism and just prices as two divergent perspectives on supplier exploitation, we introduce a distinction of common business practice and unethical supplier exploitation. Since supplier exploitation is based on power, we elucidate several levels of power as antecedents and investigate the role of ethical climate as a moderator. This study extends Victor and Cullen’s (1988) ethical climate matrix according to a supply chain dimension and is summarized in an integrated, conceptual model of five propositions for future theory testing. Results provide a frame of reference for executives and scholars, who can now delineate unethical exploitation and understand important antecedents of the phenomenon better.

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Notes

  1. Based on the idea that exploitation has semantically always the same particular meaning and that moral opinions matter in identifying unethical exploitation, some authors describe both practices as exploitation (Feinberg, 1988; Wood, 1995). Wood (1995) distinguishes innocent exploitation and non-innocent exploitation, and Mayer (2007) adds a wrongful element to distinguish unethical exploitation. Due to its often pejorative connotation, we favor “exploitation” in cases in which unethical exploitation occurs. Hence, we discuss common business practice in ethically neutral cases, and refer to the opposite as unethical exploitation.

  2. The terms justice and fairness are used interchangeably throughout this manuscript, following scholars such as Andre and Velasquez (1990).

  3. Classic agency theory, which shares many assumptions with neoclassical economics, advocates the view that despite maximization of their own utilities (or happiness), actors are not inclined to apply additional morality, and even act immorally, if opportunism is perceived (Bøhren 1998; Fontrodona and Sison 2006).

  4. Ethical egoism is often perceived as a sub-category of consequentialism, promoting the best consequences for the moral agent.

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Authors and Affiliations

  1. Institute for Supply Chain Management – Procurement and Logistics (ISCM), EBS University for Business and Law, Burgstraße 5, 65375, Oestrich-Winkel, Germany

    Martin C. Schleper & David A. Wuttke

  2. School of Business, Management and Economics, University of Sussex, Jubilee Building 302, Falmer, Brighton, BN1 9SL, UK

    Constantin Blome

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  1. Martin C. Schleper
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  2. Constantin Blome
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  3. David A. Wuttke
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Correspondence to Constantin Blome.

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Schleper, M.C., Blome, C. & Wuttke, D.A. The Dark Side of Buyer Power: Supplier Exploitation and the Role of Ethical Climates. J Bus Ethics 140, 97–114 (2017). https://doi.org/10.1007/s10551-015-2681-6

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  • DOI: https://doi.org/10.1007/s10551-015-2681-6

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