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Extending Social Sustainability to Suppliers: The Role of GVC Governance Strategies and Supplier Country Institutions

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Abstract

The disaggregation and geographic dispersion of global value chains (GVCs) have expanded the responsibility of international buyers from firm-level corporate social responsibility (CSR) towards social sustainability of their emerging country suppliers. We theorize, in this paper, that the effectiveness of lead firms’ GVC governance strategies for social sustainability—which can be audit-based or cooperation-based—depends on the local institutional context of the supplier. Supplier country institutions exert legal and civil society pressures for social sustainability, which shape suppliers’ attitude and receptiveness towards lead firm requests. Using unique primary data from 356 garment and footwear suppliers in 11 emerging countries, which supply to Western European or North American buyers, we show that GVC governance strategies are particularly effective for suppliers’ social sustainability implementation when there is ‘contextual fit’ with local institutional pressures for social sustainability in the supplier country. Our study identifies the boundary conditions of GVC governance modes, and demonstrates a complementary relationship between organizational arrangements and their institutional-level counterparts in the context of social sustainability.

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Notes

  1. In this paper, we use international buyer and lead firm interchangeably (Humphrey & Schmitz, 2001).

  2. Official development assistance (ODA) is defined by the OECD Development Assistance Committee (DAC) as government aid that promotes and specifically targets the economic development and welfare of developing countries. The DAC adopted ODA as the “gold standard” of foreign aid in 1969, and it remains the main source of financing for development aid.

  3. Different from adoption, which can be merely ‘cosmetic,’ we consider policy implementation as an indicator of organizational commitment to social sustainability, as it leads to changes in existing organizational practices and daily routines within supplier operations (Chandler, 2014).

  4. The EHPEA Code of Practice is available at https://edepot.wur.nl/5301.

  5. To check whether the differences between garment and footwear suppliers affected our results, we included a dummy variable as a control variable in our main models, which takes the value of 1 if the supplier was active in garment production, and 0 otherwise. The dummy variable is not significant, and its inclusion does not affect our results.

  6. Using 2018 data from the International Trade Centre (ITC), we summarized the following product sectors to estimate the total volume of clothing exports: 4203 and 4205 (fashion accessories), and 54–64 (clothing, textiles, and footwear).

  7. From the 356 respondents, 81 did not specify the exact number of years employed by the firms. Among these 81 respondents, 61 mentioned that they have been employed within the organization for more than 4 consecutive years, which we subsequently coded as 4 years; 15 respondents indicated that they have been employed by the company for 1 to 3 years, which we averaged and coded as 2 years; and 4 respondents specified employment within the organization for 3 months to 12 months (which we averaged and coded as 0.75 years).

  8. To check whether the differences in data collection method affected our results, we included a dummy variable as a control variable in both full regression models, which takes the value of 1 if the data were collected by third parties, and 0 if the data were collected by one of the authors. The dummy variable is not significant, and its inclusion does not affect our results.

  9. We follow Peng and Beamish (2008) and consider countries on the OECD Development Assistance Committee (DAC) list as developing, while those not on the list are treated as developed countries.

  10. Due to few supplier-level observations in Sri Lanka, Peru, and India, we have checked whether the exclusion of these countries affects our results. Our results are qualitatively similar when excluding Sri Lanka, Peru, and/or India.

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Authors and Affiliations

  1. Department of Management, Society, and Communication, Copenhagen Business School, Frederiksberg, Denmark

    Sarah Castaldi

  2. Department of Global Economics and Management, University of Groningen, Groningen, Netherlands

    Miriam M. Wilhelm & Sjoerd Beugelsdijk

  3. Department of Operations Management, University of Groningen, Groningen, Netherlands

    Taco van der Vaart

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  1. Sarah Castaldi
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  2. Miriam M. Wilhelm
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  3. Sjoerd Beugelsdijk
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  4. Taco van der Vaart
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Correspondence to Sarah Castaldi.

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Appendix

Appendix

See Table 6.

Table 6 List of all variables, theoretical descriptions, and operationalizations
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Castaldi, S., Wilhelm, M.M., Beugelsdijk, S. et al. Extending Social Sustainability to Suppliers: The Role of GVC Governance Strategies and Supplier Country Institutions. J Bus Ethics 183, 123–146 (2023). https://doi.org/10.1007/s10551-022-05083-4

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