However, with the low-cost benefits of global sourcing comes theneed to answer to the social
and environmental concerns of the affluent and increasingly deman ding western consumer
(Lins et al., 2017; Shin et al.,2017;Sinkovicset al.,2016;Tateet al., 2010).
While enjoying (if not demanding) low costs of imported goods and services, a growing
percentage of western consumers have shown little tolerance for news regarding abusive
and exploitative working conditions in the countries of origin of their purchases. Many
western consumers may be oblivious to (or actively in denial of ) the logic that rock-bottom
prices are naturally connected to very low wages for labor-intensive products such as
apparel (Barnett, 2014). Yet, they react “allergically”to the cognitive dissonance created by
the documentation of child and forced labor, hazardous working conditions and (more
recently) gross environmental misconduct (Gardetti and Torres, 2017; McNeill and Moore,
2015; Schäufele and Hamm, 2017).
Table I depicts recent examples of obvious misconduct of apparel companies (or rather
their suppliers) in emerging economies and the companies’responses to the misconduct.
The data reveal that transnational companies face a conundrum. They must fulfill the
low-price expectations of consumers that they themselves have created –a fact that makes
reshoring production to high-cost consumer markets such as the USA or Western Europe
difficult (Tate and Bals, 2017). But they also need to purge obvious social and
environmental misconduct from their supply chains in order to protect brand image –a
potentiallydifficultandcostlyendeavor (Minor and Morgan, 2011; Odriozola and
Baraibar-Diez, 2017; Shamma, 2012).
Importantly,the proverbial corporate socialresponsibility (CSR) “buck”doesnot stop with
in-house operations but extends well into the supply chain of transnationals across multiple
tiers (Brockhaus et al., 2013; Fawcett et al., 2015; Mena et al., 2013; Seuring and Müller, 2008;
Tachizawaand Wong, 2014). In each instance depictedin Table I, the reported misconduct did
not occur at the companyin question but at the company’s suppliersor its supplier’ssupplier.
Even so, the transnational company incurred the brand damage. Notably, non-governmental
organizations(NGOs) have made it their goal to call out and documentcorporate misconduct,
making sure to attach the blame to the western brand. Their goal is to increase public
backlash and raise the cost of “irresponsible”corporate behavior (Graafland, 2018). Thus,
transnationalsneed a way to protect their operations–and brands –from reputational risks.
Codes of conduct (CoC) emerged as a tool to promote socially responsible supplier behavior
and provide immunization against potentially toxic press (Emmelhainz and Adams, 1999;
Magnan et al., 2011; Multaharju et al., 2017).
CoC are legal documents that companies use to communicate and enforce socially
responsible standards such as employee rights, working conditions, maximum hours and
the minimum age for workers. More recently, some companies have expanded their CoC to
include standards for environmental factors such as waste management, use of resources
and recycling throughout their upstream supply chain (Erwin, 2011; Seuring and Müller,
2008). In its CoC, a company establishes the “ground rules”suppliers need to abide by in
order to do business with the company. Importantly, CoC are a “one-way-street”: they
mandate the behavior of the supplier. This means that CoC are the tool of choice to extend
CSR programs of companies upstream into their supply chain (Carter and Easton, 2011;
Christensen et al., 2007; Multaharju et al., 2017; Seuring, 2011). Thus, an analysis of the
changes in CoC provisions over time provides insight into emerging trends in CSR.
Therefore, our goal is to explore the evolution of CoC and provide answers to the following
RQ1. How have CoC evolved over time?
RQ2. How rigorous are CoC and how have they been implemented by companies?
RQ3. What motivates firms to pursue and evolve their CoC?