Anthony Goerzen, Simon Peter Iskander, Joerg Hofstetter · 2020
Journal of International Business Policy · Springer Science and Business Media LLC

The effect of institutional pressures on business-led interventions to improve social compliance among emerging market suppliers in global value chains

Emerging market governments are incented to attract global value chain (GVC) activities to fuel economic growth. At the same time, in light of real and perceived workplace-related injustices within emerging markets, GVC lead firms are under pressure to improve social standard compliance within their upstream supply chain. Among the most common approaches to achieve these outcomes is to impose standards of conduct that are vetted by on-site audits. Research has shown, however, that improvement in GVC performance using this approach has been slow and sometimes leads to negative consequences, leading us to our research question: under what conditions do interventions by GVC lead firms yield significant improvements in social standards among upstream supplier workplaces? We hypothesize that a country’s institutions not only have direct effects on social upgrading but also indirectly affect the ability of third parties to bring about social compliance. Our findings, based on two longitudinal datasets, suggest that GVC lead firms must account for the unique country-level institutional pressures that either propel or hamper improvement over time in private social standard compliance among upstream suppliers. In addition, governments must develop new policy responses to target the prevailing institutional pressures that dampen social upgrading if they are to attract and retain GVC investment.

Full publication is available on: DOI 10.1057/s42214-020-00064-8

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Joerg Hofstetter

Joerg Hofstetter
KEDGE Business School, France

Dr. Joerg S. Hofstetter, an expert in sustainability, procurement and multinational multi-tier value chains with over 20 years of experience, is Associate Professor in Supply Chain Management at KEDGE Business School Bordeaux, President of the International Forum on Sustainable Value Chains (ISVC), Lecturer at the University of St. Gallen, and Fellow of the Center for Organization Research & Design (CORD) at Arizona State University. He consulted various national government and intergovernmental organizations (including the OECD, the World Bank Group) as well as over 100 private and public companies across different industries, and is non-executive board member in the private sector. He is a founding member of the GRONEN Foundation, a member of Future Earth’s Working Groups on Circular Economy and Global Value Chains, a member of the Green Growth Knowledge Platform’s Trade & Competitiveness Research Committee, and involved in several UNIDO working groups. Previously, he served at the University of St. Gallen as Vice Director of its Chair of Logistics Management and Assistant Professor of Management. Dr. Hofstetter, a German national, has extensive knowledge in sustainability, circular economy, sustainability in multinational multi-tier supply chains, sustainability in procurement, global value chains, value chain mapping, sub-supplier management, supplier development, distribution management, and corporate supply chain management. He received several substantial public and private research grants, works internationally with both the public and the private sector, and published in leading academic journals, expert journals and books. Under Dr. Hofstetter’s leadership, the International Forum on Sustainable Value Chains (ISVC), a Switzerland based non-profit association, has become a recognized academia-led platform with members from different parts of the world and sectors developing and implementing scientifically proven, hands-on solutions to master the many sustainability challenges in global value chains. He holds a M.Sc. in Mechanical Engineering from University of Stuttgart, Germany, and a Ph.D. in Management from the University of St. Gallen, Switzerland. He lives in Zürich, Switzerland with his wife, an international IPR lawyer and senior manager, and their daughter.

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