The Global Diffusion of Supply Chain Codes of Conduct: Market, Nonmarket, and Time-Dependent Effects

Why and how have supply chain codes of conduct diffused among lead firms around the globe? Prior research has drawn on both institutional and stakeholder theories to explain the adoption of codes, but no study has modeled adoption as a temporally dynamic process of diffusion. We propose that the dri...

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Bibliographic Details
Published in:Business & society 2021-04, Vol.60 (4), p.909-942
Main Authors: Altura, Thomas G., Lawrence, Anne T., Roman, Ronald M.
Format: Article
Language:English
Subjects:
Codes of conduct
Companies
Diffusion
Markets
NGOs
Nongovernmental organizations
Social responsibility
Supply chains
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Summary:Why and how have supply chain codes of conduct diffused among lead firms around the globe? Prior research has drawn on both institutional and stakeholder theories to explain the adoption of codes, but no study has modeled adoption as a temporally dynamic process of diffusion. We propose that the drivers of adoption shift over time, from exclusively nonmarket to eventually market-based mechanisms as well. In an analysis of an original data set of more than 1,800 firms between the years 2006 and 2015, we find that strong nonmarket labor institutions in a firm’s home country are critical to initiating and sustaining the diffusion process. Market mechanisms, such as investor scrutiny and brand risk, emerge as important later. Contrary to prior research, we did not find a significant effect from nongovernmental organization (NGO) pressure. We conclude that markets for corporate social responsibility can and do arise, but only after they are effectuated by nonmarket institutions.
ISSN:0007-6503
1552-4205
DOI:10.1177/0007650319873654