Governing Interfirm Relationships for Social Sustainability: The Relationship between Governance Mechanisms, Sustainable Collaboration, and Cultural Intelligence

Abstract

The concept of social sustainability is gaining attention within the field of supply chain relationships and international business. There are conflicting arguments regarding the effectiveness of contract governance and collaboration in an interfirm relationship. Previous studies have investigated the effect of a national culture on contract governance and opportunism. This study examines the effects of contract governance on collaboration, incorporating the moderating influence of cultural intelligence. Survey data were collected from 239 export manufacturing firms in different industries. The current authors suggest that contract governance might be more effective under conditions of a greater level of firm cultural intelligence capabilities. Cultural intelligence plays an important role in the shaping and implementation of collaboration and is the key to manage cross-culture relationship management in a supply chain. Cultural intelligence constitutes one potential way for the export industry to manage intercultural differences and profitably achieve an increase in collaboration. Collaboration with a socially responsible partner brings about improved social performance. The social dimensions of sustainability, such as fair labor practices and decent worker conditions, health and safety, no child labor, and employee empowerment must be addressed to accomplish the most sustainable growth. Managers also need to take advantage of cultural intelligence to adapt, collaborate, and share cultural knowledge.