Drivers of sub-supplier social sustainability compliance: an emerging economy perspective

Abstract

Purpose Tragic incidents such as the Rana Plaza building collapse call into question the value and effectiveness of supplier codes of conduct (SCC) used in multi-tier supply chains. This paper aims to investigate the barriers to sub-supplier compliance and the drivers from the perspective of suppliers that adopt a double agency role by complying with buyer-imposed SCC while managing sub-supplier compliance on behalf of the buyer. Design/methodology/approach This research adopts a sequential, mixed-methods approach. The qualitative phase develops a conceptual model with the aid of the extant the literature and semi-structured interviews with 24 senior manufacturing professionals. The quantitative phase then uses a hierarchical regression analysis to test the conceptual model using survey data from 159 apparel suppliers based in India. Findings The findings reveal that sub-supplier compliance is positively impacted by effective buyer–supplier governance and by the focal supplier having a strategic partnership with the sub-supplier. Conversely, price pressure on sub-suppliers adversely impacts their compliance, while institutional pressure on them to comply is generally ineffective. Research limitations/implications The context of the study is limited to the garment industry in India. Practical implications To improve SCC compliance rates, buyers and focal suppliers should actively develop strategic partnerships with selected upstream supply chain actors; should set a reasonable price across the supply chain; and, should include specific sub-supplier compliance requirements within the supply contract. The findings also suggest the need to develop social sustainability protocols that are cognisant of regional contexts. Originality/value The absence of prior research on SCC implementation by sub-suppliers, this study represents a pioneering empirical study into such multi-tier sourcing arrangements. It provides strong support that sub-supplier governance arrangements differ from those typically found in the focal supplier layer. It also provides empirical evidence of the critical factors that encourage sub-supplier compliance within the apparel industry of a regionally developing economy.