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

Publication Date

4-1-2021

Document Type

Article

Publication Title

Business and Society

Volume

60

Issue

4

DOI

10.1177/0007650319873654

First Page

909

Last Page

942

Abstract

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.

Keywords

code of conduct, corporate social responsibility, diffusion, institutional theory, supply chain

Department

Management

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