Global Supply Chain Sustainability: the Role of Non-governmental Enforcement Mechanisms

Limardi, Michela; Battista, Francesca

Document type :

Partie d'ouvrage

Title :

Global Supply Chain Sustainability: the Role of Non-governmental Enforcement Mechanisms

Author(s) :

Limardi, Michela [Auteur]

Recherche Interdisciplinaire en Management et Économie Lab - ULR 7396 [RIME-Lab]
Centre d'économie de la Sorbonne [CES]
Battista, Francesca [Auteur]

Scientific editor(s) :

Centre d'Economie de la Sorbonne (CES UMR 8174)

Publisher :

Centre d'Économie de la Sorbonne (CES - UMR8174)

Publication date :

2022-06-17

ISSN :

1955-611X

HAL domain(s) :

Sciences de l'Homme et Société/Economies et finances

English abstract : [en]

Non-governmental organizations (NGOs) exert pressure on multinational enterprises (MNE) to force the application of social and environmental standards for subcontractors in developing countries. Non-governmental regulation ...
Show more >Non-governmental organizations (NGOs) exert pressure on multinational enterprises (MNE) to force the application of social and environmental standards for subcontractors in developing countries. Non-governmental regulation relies on voluntary standards defined by the NGOs,or by the MNE themselves. This leads to an uncertainty and social regulation. In this respect, external pressure from NGOs constitutes a reputational risk for the company. MNEs, in turn, try to manage those risks by increasingly monitoring the environmental and social impact of their global suppliers. Two forms of non-governmental enforcement currently prevail: warning (i.e.disclosing information of a violation to the company) versus immediate punishment (i.e. penalizing a company without disclosing information). A theoretical model is developed to determine whether disclosing (or not) information to the MNE about reputational risk is more effective. The results demonstrate that MNEs with a low reputation (or a high degree of out-sourcing) will have a higher incentive to conduct inspections of its global suppliers in a warning regime. Conversely, when MNE visibility is high, disclosing information in advance does not provide additional incentives.Show less >

Language :

Anglais

Popular science :

Non

Comment :

URL des Documents de travail : https://centredeconomiesorbonne.cnrs.fr/publications/

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