Springer

Stakeholder Forces of Socially Responsible Supply Chain Management Orientation

Author(s): Haesun Park-Poaps and Kathleen Rees
Source: Journal of Business Ethics, Vol. 92, No. 2 (Mar., 2010), pp. 305-322
Published by: Springer
Stable URL: http://www.jstor.org/stable/25621563
Accessed: 29-10-2015 01:42 UTC
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Journal of Business Ethics (2010) 92:305-322

DOI
10.1007A10551-009-0156-3

Forces

of Socially Responsible
Orientation
Supply Chain Management
Stakeholder

ABSTRACT.
This project investigates salient stakeholder
forces of socially responsible supply chain orientation
(SRSCO) in the apparel and footwear sector focusing on
fair labormanagement issues. SRSCO was conceptualized
as

of

composite

external

partnership

internal

direction
and
organizational
for a creation
of fair
and continuation

labor conditions throughout the supply chain. Primary

stakeholders

were

identified

consumers,

regulation,

industry,and media. A total of 209 mail survey responses

from

of U.S.

managers

sourcing

companies were analyzed. Two

were

confirmed:

and

industry

and

footwear

peer

and

external

pressures

partner

were

found

significantlyrelated to internal direction, while industry

peers and media were significantlyrelated to the external
partnership.
either

Regulation

internal

regulation

direction

forces

was

not

or external

to govern

labor

significantly

related

to

Lack

of

partnerships.
issues

and

roles

of con

sumers, industrypeers, and media in promoting fair labor

management

are discussed

in this article.

KEY WORDS:

supply chain, clothing, sweatshop,

social responsibility

Abbreviation:
Chain

SRSCO:

Socially Responsible

Supply

Orientation

Introduction

and retailers, however, have

labor and human rights standards by oper
1996;
ating sweatshops (e.g., CBS Evening News,
The New York Times, 2001) in theUnited States and
thirdworld countries. Unfair employment practices
are more
the apparel and
likely to occur within
footwear sector than in other industries because (1)
production is labor intensive and automation limited,
neglected

(2) competitive pressures to lower production costs

has intensified due to increasing imports by domestic
manufacturers and retailers, and (3) the apparel and

footwear supply chain consists of a complex pro

duction network with multiple layers of subcontrac
tors,which results in control at the bottom level of the

production chain to often become ineffective.

In response to consumers, industry, and govern
ment concerns regarding media exposure of unfair

in the apparel and footwear industry,

President Clinton
initiated the Apparel
Industry
a
in
which
introduced
1997,
Partnership
workplace
code of conduct and principles of monitoring. Since
then, corporations have adopted voluntary codes and
engaged in various social initiatives such asmonitoring

systems and/or vendor certification requirements

such as Social Accountability
(SA) 8000. Studies,
have
that
initiatives to
however,
many
reported
control labor issues are inefficient and ineffective be
cause

one-way

communication

and

top-down

ap

to governing
the issues are common
proaches
et
the
al., 2003; Neef, 2004). Recognizing
(Jorgensen
intense competition and multilayer supply channel
structure of the industry, Sethi (2003) and Mamie
(2005) suggested that change and corresponding ac

tions should consider the context of the entire supply

scholars have suggested that further
of
social initiatives requires incorporat
development
chain. Other

to the growing social demands on busi

Responding
ness operations is a primary
challenge confronting
businesses today. Many well-known
apparel and
footwear manufacturers

Haesun Park_Poaps
KathleenRees

labor conditions

dimensions of SRSCO

direction

internal

ship. Consumer

apparel

Springer 2009

ing values of fair labor into the organizational core

2009; Donaldson,
(Andersen and Skjoett-Larsen,
et al., 2003) and develop
2001; Howard-Grenville

ment

of partnership that facilitates internal and

external communication, mutual understanding, and
cooperation among parties involved (Jorgensen et al.,

2003; Lim andPhillips,2008;Neef, 2004).That is,the

partnership approach tomanaging fair labor issues is

expected to eventually affect bottom-level
suppliers
by influencing all levels of chain participants.

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Haesun
306

Park-Poaps

to the stakeholder theory, businesses

According
are responsible for various stakeholders and firms
an attempt to
respond to claims of the stakeholders as
its
existence
1984). Stake
(Freeman,
legitimize

holders, in nature, differ not only by their impor

tance and relative power but also by situation
In
and Thomas,
1984; Hill
1992).
(Freeman,
to
to
firms
tend
stakeholders'
claims,
responding
are powerful
who
of
stakeholders
claims
prioritize
and important to them because they have limited
resources (Buysse and Verbeke, 2003; Mitchell et al.,
is a vast amount of literature recog
1997). There

nizing customers, competitors, regulators, agencies,

media,
organiza
suppliers, and non-governmental
as primary stakeholders of socially
tions (NGOs)
and
(e.g., Buysse
responsible corporate behavior
2003; Freeman and Reed,
Verbeke,
1983). How
no
to
date there has been
ever,
empirical examina

stakeholders specifically yield such

tion in which
in the apparel and
influence on labor management
footwear sector. The purpose of this study, there
fore, was
socially

to identify salient stakeholder forces of

orientation
chain
supply
responsible

hereafter) within the apparel and footwear

(SRSCO
in this study, was defined as an
sector. SRSCO,
that directs responsible
commitment
organizational
and cooperative behavior for the creation and con
tinuation of fair labor conditions throughout the

the concept of SRSCO

supply chain. Especially,
the partnership concept suggested by
encompasses
many scholars and policymakers for themanagement
of labor conditions in the supply chain (Jorgensen
et al., 2003; Mohr and Spekman, 1994; Neef, 2004).
The partnership indicates strategic relationships be
tween the buyer and seller firms to share goals and

and to acknowledge mutual

interdepen
for success (Mohr and Spekman, 1994). The
orientation toward socially responsible supply chain
addresses firms' proactive values and actions in
their supply chain partners to
conjunction with
promote fair labor practices throughout the chain.

benefits
dence

Literature

review

Labor problems in the apparel andfootwear sector

were
In El Monte,
California,
Illegal immigrants
found living behind barbed wire and spiked fences

and Kathleen Rees

$2 an hour and being forced to work
making
excessive hours (Noble, 1995). This is an example of
labor practices by large apparel and footwear com
panies exposed by the media in 1990s. These com
panies

have

scrutiny

borne

the brunt

and

public
a
are
violation
practices

of

criticism.

intense media

Sweatshop

labor

of human

rights principles
international
organi
universally accepted through
zations such as the United Nations'
(UN) Declara
and International Labor
Rights
core
conventions
(Hartman
(ILO)
are fre
conditions
The
sweatshop

tion of Human

Organization's
et al., 2003).
quently linked to the apparel and footwear sector
because the sector is characterized as having a dis
persed, fragmented, vertical, shifting chain structure
that involves many levels and networks of partici

pants (Jorgensen et al., 2003; Neef, 2004). It is not

out of the ordinary to see a U.S.
company to have
one or more
multiple suppliers that also subcontract
of the raw materials, production, assembly, finishing,
and/or transportation processes to complete a supply
chain. In this type of supply chain structure, risks
related to supplier performance

nance

are

and supplier gover

magnified.

Negative publicity has led to government-public

alliances to improve these conditions such as the
White House Apparel Industry Partnership, a forum
of major corporations, labor unions, and NGOs,
by
the Clinton Administration and other human rights
a result of
groups (e.g., Fair Labor Association). As
as
forces
such
the pressures from various
NGOs,
international

organizations,

and

activists,

companies

have started to remedy and implement proper labor

conditions at factory levels. This has been accom
plished by adopting codes of conduct and monitoring
systems addressing issues such as use of child, prison,
and forced labor, wages, hours of work, discrimina
tion, harassment, and general working conditions.

issues are consistent to the basic principles found

and Social Account
in the UN Global Compact

The

ability International SA8000 standards today.

Since the intense public criticisms and corporate
reactions to them, it has been reported that a great
deal of remedies has been made (Arnold and Hart
man,
2004; Jorgensen et al., 2003). However,

current social ini

Jorgensen et al. (2003) argue that
tiatives and strategies taken by companies may have
their limitations in terms of their ability to deliver
further improvement. Many criticize that contents of

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Socially Responsible Supply Chain Management

the codes used by companies are not uniform and
contents of the codes are not communicated with
affected parties such as subcontractors and production

(Emmelhainz and Adams, 1999; Jorgensen

et al., 2003). Another significant problem found in
the study by Jorgensen et al. (2003) was that top
down approaches employed by the customer firms

workers

turned out

to be

limited and

inefficient without

cooperative development and implementation of the

voluntary initiativeswith their suppliers. Neef (2004)
noted that the vendor relation functions have not
improved over the years due to a lack of collaborative
relationships, especially since their global expansion

supply bases, unlike other functions such as

numerous
and distribution in which
production
of

in technologies and processes have

developments
taken place (e.g., vendor-managed
inventory, lean
Mamie
interviewed
repre
(2005)
manufacturing).

sentatives of clothing and footwear companies and

that achieving effective implementation of

found

codes of conduct

requires mutual understanding of

the codes' principles and implications across parties
involved. Lim and Phillips (2008) also noted that
in the market-based
economic
criteria dominant
chain

have

created

disassociation

global
supply
between the buyer and supplier, lacking partnerships
in the supply
and ignorance of labor compliances
chain. Thus, scholars suggest that further strategies

need
wide

to encompass a collaborative,
supply chain
customers
the
who source
between
approach

product and/or production and their suppliers (and

is based on mutual
their subcontractors). This
understanding of the principles of the codes and
commitment to change the dynamics of the industry
(Andersen and Skjoett-Larsen, 2009; Jorgensen et al.,
2003; Mamie,

2005; Neef,

2004;

Sethi, 2003).

Socially responsible supply chain management

This

study

orientation
toward
conceptualizes
chain
management
supply
(SRSCO).

as the environment, ethics,

labor
and
human
diversity,
rights, fair trade, health
and safety, and corporate philanthropy have been
investigated in relation to procurement and logistics
functions

issues such

(e.g., Andersen

and Skjoett-Larsen,

and Brown,
and Jennings, 2004; Maloni
issues addressed across the
2006; Park, 2005). While
studies have been diverse, all focus on critical issues

Carter

to the specific industry were examined.

and
examined
labor, environment,
(2005)
consumer safety issues in apparel and footwear pur
relevant

Park

chasing, while Carter and Jennings (2004) covered

more diverse issues (i.e., the environment, diversity,
human rights, philanthropy, and safety) in studying

purchasing decisions involving a broader range of

consumer products including apparel and footwear,
and other consumer
food,
goods.
appliances,
Andersen and Skjoett-Larsen
(2009) examined the

implementation of codes of conduct and knowledge

bases in terms of environmental and labor issues in
and
the furniture global sourcing context. Maloni
con
reviewed
social
(2006)
responsibilities,
cerns relevant to supply chains in the food industry

Brown
and

included

concerns
mentioned

animal welfare

in addition

and biotechnology
to the common social issues

above. Given

attention to the labor issues

within

the apparel and footwear sector,many studies

of responsible supply chain management
have fo
cused on

labor and human rights issues, primarily

cases
and qualitative studies (Emmelhainz
through
et al.,
and Adams,
1999; Frenkel, 2001; Hartman
2003; Lim and Phillips, 2008; Mamie,
2005; Neef,

2004).

In this study, SRSCO

is a proactive labor man
that
encompasses normative and
agement concept
behavioral cores of organizational culture and buy

er-seller working partnership toward collaborative

labor management
throughout the entire supply
chain. Scholars have indicated that there are two

primary components
ment: organizational

of ethical

sourcing manage
and
alignment
supply chain
and
2009;
partnership (Andersen
Skjoett-Larsen,
to
Warhurst
Warhurst, 2005). According
(2005), the
internal and external boundaries

responsible
Studies in corporate social responsibility include a
broad spectrum of social issues. In the supply chain
context,

307

2009;

of corporate social
to include changing

responsibility have expanded

pictures of international labor and human

rights
is, corporations are now facing needs to
form internal forces to incorporate a higher standard
in codes of conduct and voluntary actions to con
laws. That

form to the intrinsic values of the laws. At the same

and
time, aligned with the internal philosophies
to
increase the capacities
actions, corporations need
of supply chain partners through mutual under
standings and

supports

to ensure meaningful

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and

308
Haesun

Park-Poaps

to
long-term impacts of their actions. Consistent
this, through literature reviews, we found that the
have a twofold implication:
concept of SRSCO
internal direction

direction

and external partnership. Internal

a firm's intra-organizational

characterizes

orientation

toward commitment

to fair labor con

ditions

throughout the supply chain. External part

as
and
nership
conceptualized
cooperative
collaborative
of
inter-organizational management
labor issues in the supply chain. The following dis
cusses the concepts further.
First, the essence of internal direction is organi

zational

commitment

responsible
been found

and

alignment

labor management

toward
It has

(Neef, 2004).
that contractors frequently see buyers'
even
contradicting actions to fair labor maintenance,
when the buyer company has set code of conducts

and participates in monitoring programs and other

initiatives to ensure fair labor conditions.
For

example, buyers frequently request unrealistic pro

duction deadlines and lead time, which
results in
forced overtime
2003).

(Dhanarajan, 2004; Jorgensen et al.,

study of socially responsible corporate
also reported that many buyers were not

buying
aware of the contents of monitoring
reports (Park,
It appears that the values embedded
in the
2005).
social initiatives may have not been properly com
to the employees throughout the orga
municated
In this regard,Mamie
an initial step of responsible

nization.

(2005) suggested that

is
labor management

incorporating corporate values into internal policies,

strategies, and operational processes.
A firm's internal structure and alignment have a

in its supply chain and contractor

(Gereffi et al., 1999). The fact that most
social initiatives are instigated by buyer firms from

powerful
relations

role

countries signifies the importance of

developed
internal orientation toward responsible labor man
500
agement. A study that surveyed the world's

that success of corporate

largest companies
strategies in dealing with global human rights issues
depended on internal commitment and communi
showed

cation

the

firm

throughout
to Howard-Grenville
According

(Wilson,
et al.

2001).

(2003),
to
the
bringing
organizational
core, or the so-called "cultural framing," is essential
for a social initiative to be successful. Organizational
social

issues closer

culture has long been considered a powerful means

of successful organizational
strategy and the values

and Kathleen Rees

in the culture affect organization
in the
run
culture,
long
(Mintzberg, 1994). Organizational
which is collective, enables all
employees shape the
same
of
the
issues
and guide their
understanding
actions and decisions
et al.,
(Howard-Grenville
not
It
to be
2003).
provides
only ideas of what
prioritized but also what to be acceptable.
embedded

Cases

reported by Sethi (2003) indicate that cor

porations that initiated and carried out proactive
were
labor management
in
frequently involved

high-profile organizing efforts to enhance internal

communication
was
labor management
by which
prioritized. Carter

and Jennings

(2004)

studied so

cially responsible purchasing practices focusing on

buyer firms and reported that top-management's
leadership and individual purchasing managers' val
ues were
critical in achieving purchasing
social

(2005) reported that successful

responsibility. Mamie
a
code of conduct not only is
implementation of
imperative in establishing corporate values, but also
requires the management's
interpretation of corpo
rate values and development
of a consistent view
across all functions within the organization. Thus,

as organiza
is conceptualized
tional culture in which the organizational core val
ues address principles of fair labor management
and
the values are reflected on the company's
internal
the internal direction

alignments and actions. The prioritization of, com

mitment
of the values
to, and communication
within the company are essential indicators of the
internal direction of SRSCO.
as
external partnership is conceptualized
a
with
management
supplier
along
working part
nership approach. As discussed earlier, a lack of
Second,

communication,

mutual

understanding,

and

coop

eration have been ubiquitous inmanaging the social

initiatives (Dhanarajan,
Emmelhainz
and
2004;
Adams, 1999; Jorgensen et al., 2003; Sethi, 2003). In
the apparel and footwear sector, buyer firms have
dominant power. Control
of the supply chain is
and
mainly driven by name brand manufacturers
retailers who

organize most

of the functions of the

procurement, manufacturing, and marketing (Fren

kel, 2001). Arrangement of social initiatives is also
is fre
driven by the buyer companies. Contract
as
a
held
for
therefore,
quently
hostage
compliance;
contractors are vulnerable

to such enforcement. A

problem that arises with this type of arrangement is

that social initiatives are enforced without cooperative

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Socially Responsible Supply Chain Management

planning and implementation. In
the apparel and footwear industry,most contractors,
either domestic or foreign, are quite small in their
and collaborative

limited capacities to accommodate

to Sethi
requirements of social initiatives. According
(2003), falsifications by the contractors, which are

309

suppliers. Another isMarks and Spencer's partner

ship with its suppliers in developing social compli
ance
"local
and
programs. Marks
Spencer's

in dealing with
groups" approach
was
on
a
based
global suppliers
long-term partner
ship and trust shared with its suppliers. It frequently

sizes and have

benchmarking

to
frequently found, in terms of their compliance
codes of conducts often resulted from buyer com

with suppliers regarding problems

and
had
suppliers
possible initiatives, which ulti
facilitated
mately
implementation of its social pro

of contractors' capacities
panies' misunderstanding
for codes implementation. This imbalanced structure
of labor management
system

and

improvement

be

is likely to result in an unstable

of further
primary obstacle

of labor conditions

(Jorgensen et al.,

2003).

As suggested by scholars, labor management of the

apparel/footwear supply chains requires a proactive

approach which involves collaborative development

and interactions involving all parties of transactions.
Mohr
and Spekman
(1994) defined partnership as
"purposive strategic relationships between
dent firms who
share compatible goals,

mutual

benefits, and acknowledge

a high

indepen
strive for
level of

(p. 135). Partnership re

interdependence"
trust and long-term relationships
sults in mutual
based on the sense of interdependence in buyer and

mutual

seller relationship
(Anderson and Narus,
1990).
that engage in partnerships exhibit high
Companies
levels of internal communication

communication

with

across functions,
collaborative

and

partners,
conflict resolution behaviors (Ellam and Hendrick,
et al.,
and Spekman,
1995; Mohr
1994; Wong
1999). Partnership has been found to bring a supe

rior channel performance and continuous improve

et al., 1999) and satisfaction of the
(e.g.,Wong
and Narus,
(e.g., Anderson
1990).
relationship
Similarly, Neef
(2004) suggests that strategic, col
to manage
laborative approach
dispersed supplier

ment

base
well

is essential to improve economic efficiency as

as labor conditions in the
supply chain world

wide.

case is Nike's
global value chain
Lim
and
restructuring.
Phillips (2008) reported po
sitive influences of Nike's new close working part
nership with fewer but more
capable
suppliers,
A

notable

rearranging the communication network by setting

exemplary "best" cases, and identifying and fol
lowing up with problem areas. Such information

sharing and close ties with Nike have created ad

vanced labor compliance and further initiatives by its

communicated

cited in Neef,
grams (Ethical Performance Online,
2004). For example, its literacy program for factory
was accompanied by contrac
workers inMorocco

tors' arrangement of work schedules and facilities for

the program, which resulted in the improvement in
efficient communication
with workers
regarding

health

and safety notices. Arnold

and Hartman
success
also
that
of
social
(2004)
reported
practices,
such as an on-site, paid educational program for
contractor fac
children found at Adidas-Solomon's
tories was attributed to corporations by its contrac
tors.

Such partnership can result in effective, consistent

labor management
through sharing information and
joint problem solving, along with setting a common

goal (Lim and Phillips,2008; Mamie, 2005; Sethi,

be
2003). This requires constant communication
tween buyers and sellers for
and
development
implementation of codes addressing responsible la
bor management
and identification of further rem
edies

(Mamie, 2005). Therefore,

improvement in
labor management
is more likely to be developed
two parties are committed to a
when
partnership
where mutual trust and interdependence are built.
The
external partnership connotes a buyer-seller
the roles of buyer
partnership where
not
include
companies
only
bringing the seller firms
and
but
also engage in col
knowledge
disciplines

working

laborative planning and implementation. Mutual and

collaborative goal setting
frequent communications,
and actions, and cooperation are essential indicators

of partnership.

Stakeholderforces
organizations are responsible for satisfying
various stakeholders (Freeman, 1984), and therefore,
they can be the forces that can change business
behavior on labor management. A narrow definition

Business

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310
Haesun
of

Park-Poaps

the
includes parties "on which
is
for
survival"
(Freeman
organization
dependent
and Reed,
1983, p. 92). The parties that directly
affect a firm's activities with implicit and explicit
contract such as customers, stockholders, competi
tors, and regulators, fall into the narrow definition of
stakeholders

the stakeholders. A

definition expands its

of a firm include "any group
can affect or is affected by the
broader

Stakeholders

boundary.
or individual who

of the organization's objective"

(Free
1984, p. 46). Such view of a corporation sur
passes the traditional views of corporate economic
obligations prevalent a few decades ago. Stakeholder
achievement

man,

theory values reflect not only financial returns for

businesses but also other values such as respect for
others.

an accelerated

and
pace of globalization
social expectations,
companies
confront a different set of stakeholders that they need
With

increased

level of

to be responsive to,which include suppliers' workers

and their families that have not been recognized as
(Arnold and Hartman, 2004). That is,
expectation of businesses' responsibility for
in contractors' sites pushes the
what is happening
businesses to expand their obligation boundary to a
are
broader range of stakeholders. Corporations
stakeholders
social

increasingly addressing principles of the stakeholder

in their codes in addition to organiza
management
tional

core

values

and

conduct-related

content

are
(Kaptein, 2004). As an adjustment process, they
social
themselves
internally by enhancing
changing
(e.g., initiatives) and exter
justice and governance

nally by expanding their responsibilities to involved

parties around the world (e.g., suppliers) (Warhurst,
2005). That is, in today's norm, suppliers' workers
and their families are considered stakeholders of the
corporation,

and

therefore, need

to be

properly

(Donaldson, 2001; Warhurst, 2005).

alerts and guides
stakeholder concept
to recognize affected parties including
businesses
a framework of
suppliers' workers, it also provides
whose
businesses should attend to in regards to

managed
While

Some argue that in

responsible labor management.
firm's key stake
their
reality, managers prioritize
resources
holders due to their limited
(Buysse and

et al, 1997). Stakeholder

2003; Mitchell
Verbeke,
theorists suggest that stakeholders differ in terms of
their importance and relative power, which vary by
situation (Freeman, 1984; Hill and Thomas,
1992).

and Kathleen Rees

Some

stakeholders are more

because

influential than others

of the nature of the contractual form exist

ing between the firm and thismay also change along

with
interactions with various externalities and
institutional supports
the managerial

From

and Miles,
standpoint, Mitchell

(Friedman

2002).
et al.

stakeholder salience as "the

conceptualized
to
which
managers give priority to compet
degree
ing stakeholder claims" (p. 854). According to them,
stakeholders are identified by three attributes: (1)
(1997)

power of influence, (2) legitimacy of relationship,

and (3) urgency of claim. The cumulative number of
these three attributes determines stakeholder salience
stakeholders can be classified into three
by which
categories: latent, expectant, and definitive stake
holders. The salience of a stakeholder may be ele
vated by acquiring missing attribute(s).

Important stakeholders vary over time and de

pend on issues and industry (Buysse and Verbeke,
2003;
Freeman,
1984; Jawahar and McLauglin,
to
2001). Thus,
identify influential stakeholders for
researchers need to empirically
a specific issue. Although
approach companies with
researchers have indicated that defining stakeholders
and their salience are important tasks formanagers, a
limited number of empirical works have assessed

business

behavior,

stakeholders and their impact on

socially responsible actions and performance. For
salient stakeholder forces in corporate
example,
and environmental strategies in
environmentalism
salience of various

clude regulation, public concern, customer pressure,

(Banerjee et al., 2003;
industry pressure, and media
In
this study, consumer
and
Verbeke, 2003).
Buysse

pressure, industry peer pressure, labor regulation,

identified as primary
interest were
and media
stakeholder forces of SRSCO.
They are stakeholders

interest
that affect the firm's survival and economic
et
Mitchell
and
1983;
al., 1997).
Reed,
(Freeman
et al. (1997),
there are
to Mitchell
According
"claimants,"

have legitimate or
those who
and
claims,
"influences,"
to actually influence the businesses. This
stakeholders who

illegitimate
have power
was
study's interest
affect a

to discover

orientation

the influences

that

toward

socially
company's
of
responsible supply chain management. The forces
forces
of
were
The
in
not
this study.
included
NGOs
NGOs
primarily have been directed toward large

are highly visible and struggle to

corporations that
and
their social
maintain
(Arnold
legitimacy

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Socially Responsible Supply Chain Management

Hartman,
2006),

2004; Jorgensen et al, 2003; O'Rourke,

and standards seem
and their operations

2006). Thus, although the

confusing (O'Rourke,
in setting global labor
roles of recently risingNGOs
to
be recognized, the influence of
standards need
at this time seem inapplicable to all companies
in the clothing and footwear sector. This isbecause of

NGOs

the fact that the sector tends to be highly fragmented

and comprised a large number of companies which

are small in size. Regardless,

scholars believe that the
influence and are influenced by
voices of NGOs
corporations, regulation, consumers, and the media

311

a variety of voluntary social initiatives and engage in

and trade
partnerships with other companies, NGOs,
associations to build corporate strategies to ensure
that fair labor conditions
level.

tory
behavioral

Scholars

are maintained

have

at the fac

attributed

corporate
change to consumer concerns and inter
ests resulting from intense public criticism since mid
1990s (Arnold and Hartman, 2004; Emmelhainz and

Adams,
HI:

1999; Neef,

Consumers

2004; Rock,

2003; Weil,

2005).

and public

nificant positive

pressures have
on
SRSCO
impact

a sig

2006). The
(Lloyd, 2005; Neef, 2004; O'Rourke,
following section discusses each of the stakeholder

influences included in the present analysis and ad

dresses the relevant hypothesis associated with each.
Consumer

to Donaldson

inclusion of con

(2001),
According
sumers, beyond international legal and management
force of labor relation
standards, is a basic
of the advantages a company
improvement. One
expects from responsible labor practices is a better
consumers

by building corporate
(Arnold and Hartman,
2004). Many
reputation
studies have reported that American consumers are
socially conscious, and when making purchasing

decisions, they consider working conditions under

which products are made
(e.g., Lach, 1999; Prasad
et al., 2004). With
intense public disclosure of

sweatshop conditions and activists' claims, consum

ers are better informed and
increasingly interested in
conditions.

working
panies,

consumers

are

For

the

consumer
essence

product
of

com

corporation's

existence and influence their decisions. Consumers,

affect businesses' financial performance, are

who

identified as key stakeholders who bear immediate

stakes and significant power.
to the influence consumers possess, the
Due
public sectors' frequent strategies are to influence
corporations by informing consumers about business

practices. For example, the trendsetter list published

by the Apparel
Industry Partnership during the
Clinton Administration
recognized companies that
labor management
behaviors to
displayed "good"
inform consumers. Similarly, social labeling strategies
are designed
such as "No
to influence
Sweat"
consumers

into

the narrow

definition

of

its direct and formal interactions

with

pressure

relationship with

Regulatory force
falls
Regulation
stakeholders with

and their purchasing

decisions. An
are
number
of
increasing
companies
participating in

the corporations (Freeman and Reed,

1983).
as
are
to
entities
follow
Corporations
legal
obligated
the laws; otherwise the existence or well-being
of

the corporations is at stake. U.S. Labor laws address

issues such as
regulations related to employment

minimum

wages,

overtime

pay,

and

child

labor

labor standard is

prohibitions. Increasingly, global

sues appear in international trade policy
agendas as a
consideration. The governance
of interna
major
tional labor management
UN

Universal

Declaration

is based on principles of the

of Human Rights. Uni

versally accepted labor standards are covered by ILO

conventions to which member countries and their
multinational
corporations are obligated, at least in
principle, to comply. Core standards cover collective
bargaining and freedom of association, elimination

of forced or compulsory labor, freedom from child

labor, and equality of opportunity (ILO, 1998).
has been a primary, traditional force
Regulation
to govern
social responsibility. One
corporate
to
related
the
labor exploitation issue is
argument
that regulation should govern corporations' behav
iors, because

system does not

when
effectively function, especially
large multi
national corporations are involved (Gray and Dawn,
1998). Earlier discoveries of sweatshops were fre
quently found to be in violation of both ILO labor
the free market

standards and local host country's labor laws (Arnold

and Bowie, 2003). This has been a basis of sweat
shop criticism and a legitimacy claim for workers'
have acted immediately and
rights. Corporations
responsively against such accusations. Most

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codes of

312Haesun

Park-Poaps

conduct developed are created to comply with ILO

core conventions, UN
principles, and local laws
the legal
(Emmelhainz and Adams, 1999). However,
boundaries
tend to remain minimal,
especially in
international labor laws because of the limited ability

to govern international corporations and differences

in labor standards among countries. Increasingly, the
pressure to increase the standard is being raised. For
human rights activists (e.g.,
example, in the US,
of Sweatshops and Child Labor) demand
extra regulations to govern corporations that out
source production
such as restricting imports and

Abolition

of factory conditions
forcing factory disclosure
(Business Week,
2002). Such growing legal pressure
is communicated
for responsible labor management

this will affect how

community;
in their supply
issues
labor
manage

in the business

corporations

and Kathleen Rees

in sweatshop scandals have worked
together, along
to create system-wide voluntary ini
with NGOs,
tiatives to ensure fairworking condition and edu
cation

for child workers, which

opportunities
exceeds what is required by international or local
labor laws (Arnold and Hartman, 2003; Neef, 2004).
Along with the implication that the industry peers
or
provide an industry norm of "good
enough"

practice, such exceptional practices can

"acceptable"
norm
in an upward fashion. Environ
change the
studies have found that com
mental management

petitors and industry peers have a strong influence

on
and
orientations
environmental
strategies
et
al., 2003; Buysse and Verbeke, 2003).
(Banerjee

H3:

Industry trend and peer pressure have

nificant positive impact on SRSCO

a sig

chain.

H2:

force has
Regulatory
on
SRSCO
impact

significant positive

Industrypeer pressure
Creation of the Apparel

mid-1990s

was

Industry Partnership in the

the beginning of companies' volun

tary actions in collaboration with industry peers in

response to sweatshop allegations. A notable recent
a
industry partnership is Fair Labor Association,

consumers, unions, and

companies,
NGOs,
through which companies support supplier
monitoring and disclose the progress. Through such
coalition

of

industry-wide interactions, companies in the apparel

and footwear sector have been forced to change their
norms and practices in dealing with workers at the
sites. Studies report that standards and
the extent of voluntary initiatives in the apparel and
footwear sector have been based on what other
contractors'

have
(Jorgensen et al.,
implemented
companies
2003; Neef, 2004). The negative consequence of this
to surpass
tendency is that companies do not wish
the industry standards regarding what is acceptable in
Elevated
(Jorgensen et al., 2003).
seem to have
expectations of industry peers also
to
Arnold
and Hartman
effects.
According
positive
the

industry

labor management
"above-expectation"
practices that address working conditions and child
labor regulations were found among major corpo
rations. Large corporations that once were involved
(2004),

interest

Media
The

media

performance

played a powerful
of businesses. Numerous

have

role

in social

news

stories

exposing sweatshop conditions, victims, and disclo

sure of responsible parties have appeared
in the
New
CBS
The
media
1996;
Evening News,
(e.g.,
and
footwear
York Times, 2001). Apparel
compa
frequent targets of media exposure
their products are labor intensive, employ
less-skilled workers, and are public image sensitive.
stories and programs depicting labor condi
News
nies have been
because

tions in 1996 in the factories producing Kathie Lee

Gilford's line of clothing were among initial stories
attention to sweatshop
the media
of sweatshop conditions or child
issues. Exposure
labor practices has led to numerous boycotts and

that stimulated

campaigns, thus negative publicity,

the reputations of major apparel and
shoe companies. Brammer and Pavelin (2004) dis
covered that a firm's voluntary social disclosure is

anti-sweatshop
which harmed

significantly related to the intensity of its media

a
exposure. Rock
(2003) and Sethi (2003) reported
con
negative impact of public disclosure of labor
ditions in the media on the involved companies'
stock prices and following good labor practices dis
It has also been reported that corporations
to media coverage in an effort to build
attention
pay
of corporations' voluntary social ini
standards
the
closed.

the
tiatives (Frenkel, 2001; Wilson,
2001). Thus,
drive the companies to react to social issues,

media

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Socially Responsible Supply Chain Management

Socially responsible supply

chain orientation (SRSCO)
Internal direction
External partnership

Figure 1. Forces of SRSCO.

and this influence seem to be driven by both public
con
image and the company's financial well-being
cerns (Figure 1).

H4:

Media

sourcing %, and sales volume), and major variables

showed no significant differences between early and
late

interests of labor practices have

impact on SRSCO

a sig

nificant positive

responses.

Measurements

items included in the questionnaire used 7-point

Likert scales (e.g., 1 = strongly disagree; 7 = strongly
from instruments
agree). Measures were developed
in the partnership and corporate
found
social

All
Method
Research design
subject exemption request was approved
Review
the
Institutional
Board. A survey was
by
conducted in 2005. A mail survey was employed (1)

A human

to effectively reach nationally distributed companies

and (2) to provide anonymity requisite for the sen
sitivematter of the subject covered in the survey. A

total of 2,400 companies were identified from D&B

Million Dollar database directories along with SIC

codes 56, 23, 513, and 314. Individual phone calls

were made to identify companies that source prod
ucts/production and their sourcing managers or the
responsible for sourcing. A total of 967
companies were identified and sent questionnaires.
A multi-stage design was used according to Dill
individual

man's

survey design (firstmailing of the

a postcard reminder after 2 weeks,
questionnaire,
and second copy of the questionnaire after 2 weeks).
(1978)

In order tomaximize

to non-respondents

return rate, telephone contacts

were made after the three-stage

mailing. The total number of responses received was

215. Seven of them were deemed as unusable due to
significant number of missing values. This resulted
in a final sample of 208 usable responses (21.5%
t tests were
response rate). The
performed on
demographic

variables

(i.e., age, education,

foreign

responsibility literature (e.g., Banerjee et al., 2003;

to fit
Mohr
and Spekman, 1994) with modification
in the
the specific context of labor management
SRSCO
apparel and footwear industries. Nineteen
were
measure
to
items
scale
both internal
developed
Items
direction and external partnership of SRSCO.

measuring internal direction were designed to assess

the extent to which
the firm is committed to the
welfare of suppliers and theirworkers and the extent
to which
issues
they integrate labor management
into the firm's internal communication

and activi

by items
partnership was measured
to
to
indicate
what
asking sourcing managers
degree
the firm continues to develop and engage in part
ties. External

nership (i.e., exchanges information and participates

in joint activities and problem
its
solving) with
suppliers.
Consumer
designed

pressure was measured by four items

to assess the degree to which
sourcing
perceived consumers are concerned with

managers
workers' welfare

at production
sites and demand
are
made in fair working conditions.
products that
was measured
force
Regulation
by three items
which assessed the intensity of regulatory forces that
in the industry. Industry
govern labor management
was operationalized
in four items which were de
to
measure
the
signed
degree to which
sourcing

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314
Haesun

Park-Poaps

managers perceive their industry peers behave and

the pressure they feel from the peers. Media was
by the degree of firm's sensitivity tomedia
interests in labor conditions and the extent towhich

measured

they are concerned with its image portrayed in the

media
for the item
(four items). See Appendix
was
0.68 for
The
Cronbach's
descriptions.
Alpha
consumers, 0.59 for regulation,
and 0.68 formedia.

0.60

for industry,

Results
SRSCO

and Kathleen Rees

to assess discriminant validity of
(0.76). Therefore,
a
the scale,
chi-square difference test between two
factorial models, one with a freely estimated inter
factor correlation

and the other with

a constrained

inter-factor correlation to 1,was performed. The test

indicated that the unconstrained model had a sig
nificantly lower chi-square value than the con

strained model, rejecting the hypothesis of perfectly

correlated factors (A/2 = 541.64
106.04 = 435.60;
= 54 ? 53 =
Adf
1). In this manner, discriminant
two
of
dimensions was achieved.
the
validity

scale
Relationships between stakeholder forcesand SRSCO

A principal components analysis with varimax rota

tion was used to examine the dimensionality of the
SRSCO
scale. Along with an observation of its scree
plot, the analysis suggested a two-factor solution. Six
out of the original 19 items were dropped due to
or cross loadings on two
their low-loadings (<0.50)

to examine the significance and relative

of
the relationships between
stakeholder
strength
a
set
of regres
forces and SRSCO
(hypothesis tests),
on
was
run
sion models
each dependent variable.
was
deemed
the best-suited ana
Regression
analysis
In order

factors. The

to test the hypotheses because

the
lytical method
was
to
salient
of
stake
this
purpose
study
identify
holder forces and the forces identifiedwere correlated

partnership (seven items). The two-factor structure

explained 64.9% of total variance and achieved fairly
a confirmatory
high internal reliabilities. However,

with one another. Dependent

variables were internal
and external partnership of
direction of SRSCO
in the
included
SRSCO.
Independent variables

theoretically unknown, ithas been suggested that the

source of misfit be examined and themodel be re

holder interests (Buysse and Verbeke, 2003) and are

more likely to be engaged in partnerships (Bruce and

resulting two factors were consistent

with dimensions considered in development of these
items: (1) internal direction (six items) and external

factor analysis of the two- factor structure along with

exam
13 items did not show acceptable fit.When
structure
is exploratory and
ination of the factor

analyses were consumers, regulation, industry, and

media. Because previous research has indicated that
large companies tend to be more sensitive to stake

of modification
1998). Examination
indices suggested an item as a source of the misfit.
The item was "We frequently talk to our suppliers

Moger,
volume

vised

(Byrne,

regarding the labor conditions we expect". This

item may not fit the concept of partnership, as it
form of communication.
represented a one-way

Thus, the revised model was built by removing the

item. The t statistics of all the factor loadings were
was
(#2) value
significant (see Table I): Chi-square
=
<
AGIF
GFI
106.04 (df 53, p
0.88,
0.92,
0.001),
0.071. Thus, the two
RMSR
0.11, and RMSEA

along with 12 items was acceptable

and
1993; Byrne, 1998). Table I
Cudeck,
(Browne
presents the items included in the final confirmatory
factor analysis, factor loadings, and internal validity
factor model

showed a high
two factors
of
the
correlation
inter-factor
of
degree
coefficients of the factors. The model

1999), company
in millions was

size in terms of annual sales

included as a covariate. In

addition, because it has been found that sweatshop

and ethical sourcing issueswere more prevalent in the
global sourcing context than domestic (Sethi, 2003),

source ofmerchandise was also included in themodel

as a dummy variable (one for "50% or more foreign
source" and zero for "less than 50%) foreign source").
This model strategywas employed to determine the
extent to which

the effects of variables of interest

could be explained, in full or in part, by the covariates,

the company size and the source of merchandise.

II presents themeans, standard deviations, and

correlations of the dependent and independent vari
ables and the covariate, sales volume.
analyses revealed that internal direc
Regression

Table

tion was

significantly

related

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to consumer

and

315

Socially Responsible Supply Chain Management

TABLE
SRSCO

item factor loadings of the final confirmatory factor analysis

SRSCOitems Internal direction

Pursuing worker's welfare in themanufacturing facilour

ities where

in our

value

is a central

are made

products

our

corporate

firm

firm, we

a concerted

make

understand

employee

Scale reliability

0.92
0.80

Ensuring good worker treatments through the entire

distribution chain is vital to our firm's existence
At

External partnership

the

effort to make

importance

0.77
0.79

every

of maintaining

fair labor status in the entire supply chain

We promote maintaining fair labor conditions 0.81
throughout the entire supply channel as a major goal
across
Our
of

all departments
a clear

firm has
labor

statement

policy
area

in every

issues

awareness

urging

0.80

of operations

Our firm continuously looks for voluntary initiatives 0.84

to ensure

fair labor

in our

suppliers'

factories

The fair labor issues do not currently affectour firm's 0.52 0.91
suppliermanagement activity*
We

labor

gather

practices

information

from manage-

0.88

ment of our present supplierswith consultation from

the workers

We

participate in settinggoals and strategies to im- 0.93

prove and maintain fair labor conditions with our
suppliers

We
have

When
lated

inform
changes

our

in advance
whenever
suppliers
in our labor requirements

we

0.86

our firm and our suppliers have a conflict re-

to fair labor management,

we

peacefully

0.78

coor

dinate to resolve the issue

We help supplierswhen we find they are lacking the 0.83
resources

to carry out

initiatives

to maintain

fair labor

Factorial modelfit

53

df

RMSR
RMSEA
GFI
AGFI
are
Note:
Loadings
*
Indicates
reversed

T 106.04

0.11
0.07
0.92
0.88
standardized.
questions.

The

scores

on

the

item were

industry variables and that external partnership was

significandy related to industry and media variables.
The
internal direction as
regression model with
dependent variable explained 33% of the variance
and the external partnership model
explained 42%
of the variance. There were no signs of multicol

reverse

coded

for data

analysis.

linearity threat since variance inflation factors were

less than 2 for all variables. Thus, hypotheses 1 and
3 were
supported, and hypothesis 4 was partially
supported. In contrast, regulation was interpedently
correlated

partnership;

with

internal

direction

regulation was

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not

and

external

significant in the

316

Haesun

Park-Poaps

and Kathleen Rees

TABLE II
statistics

Descriptive

Variable

Mean

Internal direction
External partnership
Consumers

SD

Sales volume

correlations

ID

29.371

7.916

25.837
15.827

8.696
4.220
3.231

15.585
13.544
Media
17.129
424.791

Regulation
Industry

and

3.430
4.506
1689.490

of

EP

0.713**
0.382**
0.230**
0.500**
0.286**

Consum

0.322**
0.268**

0.318**
0.348**
0.196**

0.573**
0.340**
0.210*

0.139

the variables

0.050

Regul

Indust

0.376**
0.339**
0.017

0.356**
0.168*

Media

0.104

Note: N varies from 162 to 207 mainly due tomissing values in sales volume.
*Correlation is significantat the 0.05 level, **Correlation is significantat the 0.01 level.
ID:

internal

EP:

direction,

external

partnership.

TABLE III
Results ofmultiple regression analyses on SRSCO
Variables

Dependent

variables

Internal direction (n = 155)

B
Independent

0.438

Consumers

Regulation
Industry
Media

Standard

error

0.918

0.125
0.194
0.192

0.248

0.138

0.000

0.000
1.280

-0.104

External partnership (n =
Standard

0.256**
-0.040
0.378**

0.134

0.138
0.105
1.075
0.306

154)

error

0.125
0.197
0.195
0.138

0.100

0.000
1.290

0.089

0.038
0.412**
0.153*

Control
Sales

-0.248

Source
R2

Adjusted R2
F
Source:

source

0.333
0.306
12.376

0.189**

0.401

of merchandise,

dummy

variable.

independent variables
sales
covariate,
volume, did not have
the
significant effects in either model. However,
source of merchandise
for
effect was
significant
where

0.000
3.647
0.424
18.179

*p < 0.05, **p < 0.01.

both models

0.052
-0.014

other

Discussion

existed. The

(on external partnership). The data re

50% or more
for which
that companies
merchandise
being obtained from foreign sources
had a higher external partnership score than com

model

vealed

panies with less than 50% foreign sourced mer

tests and
chandise. Table III summarizes model
coefficients.

purpose of this study was to examine salient

within the apparel and
stakeholder forces of SRSCO
footwear industry. Consumers,
regulations, industry
examined. This
pressures were
peers, and media

The

toward socially
orientation
study conceptualized
as a composite
chain
management
responsible supply
of internal direction and external partnership. Con
sistent to this conceptualization,
the analysis revealed
two
of
the SRSCO:
the
dimensions
internal direction

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Socially Responsible Supply Chain Management

and

external

partnership.

The

internal direction

values

that address sup

encompassed organizational
as
stakeholders in business
pliers and their workers

In this study, the external partnership

the traditional idea of chain
expanded

management.
concept

governance by encompassing compa

management
nies' partnership approach with their suppliers in
dealing with labor issues.
In this study, regulation force was not found to be
significantly related to internal or external orienta

tion toward socially responsible supply chain man

agement. It appears that the effect of regulation

and industry peers are

considered. Regulation
force has long been one of
the primary stakeholders, which
affects a firm's

diminishes when

consumers

existence and bears financial risks for the firm (e.g.,

fines). The coverage of regulation is limited typically

prohibitions
providing only minimum
regarding
what is not to be done in business conduct, rather
than being proactive setting standards forwhat to be
some studies have found
(Lantos, 2001). While
a significant relationship between
regulation and
orientation
environmental
and
strategies (e.g.,

done

Banerjee et al., 2003), others have found no signif

icant impact of regulation on socially responsible

purchasing when considering various social causes

(e.g., Carter and Jennings, 2004). The
impact of
on
regulation
"proactive" corporate social behaviors

beyond the legal framework may be quite different

from compliance with a limited set of regulations. In
this study, regulation failed to emerge as a significant
variable. The result is similar to the result of Buysse
and Verbeke's

(2003) study reporting that proactive

environmental
associated
with
leadership was
norms
and
of
various
stake
changing
expectations

holders, but not with

As
stated earlier,

those of regulation force.

traditionally
minimal
standards.

regulation only
The
emerging

encompasses
encom
concept of responsible labor management
welfare
of
contractors
and
their
passes
supplier's
workers and tends to be proactive beyond the legal

framework, especially for firms engaging in inter

national sourcing. Ratification of ILO conventions is

not forced, and influence of ratifiedmember coun

tries over multinational
is limited.
corporations
seems to be no "absolute"
There
legal force to
standardize and enforce international labor standards
even

if they do exist. Moreover,

there has been a
great deal of disagreement
among countries in

317

legalizing labor standards. Inclusion of the labor

standards in trade regulation has not only faced an
intense debate, but also resulted in disputes and

among countries due to different

disagreements
economic
conditions and trade competition. Sethi
(2003) noted that implementation of legally binding
to

codes

is
govern multinational
corporations
at the present time.
and undesirable

impossible
Structural weaknesses
with
were

in the stakeholder

relation

the firm and a lack of supportive mechanism

the stakeholder influ
pointed out to weaken

ence over the firm (Friedman and Miles, 2002). The

results of this study may reflect the current lack of
control, coverage, and uniformity of labor regula
tions designed to promote ethical labor manage

ment. As Friedman

and Miles
(2002) pointed out,
the structure of labor relation should be necessity
based rather than contingency based. Perhaps, the
domestic

labor and human

rights regulatory force

the firm the necessity of the
stakeholder management
in the international con

does

not

provide

text.

to the lack of regulations in the context of

are on the rise and
global labor management, NGOs
thrive to uphold and raise labor management
stan
Due

dards. Although
there is a lack of empirical investi
to
prove whether NGOs
gations
actually increase
standards, some believe that theymay not have suf

ficient power to drive change within the private

sectors and only serve governments and higher order
corporations rather than small suppliers and con
sumers (Lloyd, 2005). There is also a criticism that
the
self-regulation led by NGOs
actually weakens
of
multinational
governance
corporations (O'Rourke,
2006). Given weak regulatory power and legitimacy
ofNGOs

in international politics to govern the labor

issues, scholars have led discussions of ethics values
incorporated in business practices, as opposed to the
legal compliance, as a critical basis of global ethics

improvement (Arnold and Hartman, 2003; Donald

son, 2001; Jorgensen et al, 2003; O'Rourke,
2006).
use
and
Verbeke
of
Buysse
(2003) suggested
voluntary

initiatives, rather than legal forces, in governing

Sethi (2003) criticized
corporate behaviors. While

that the industry's voluntary and multi-party

agreed
codes have limited impact on actual labor conditions,
they still remain primary forces of change within the

industry.This is especially truewhen government and

international agencies'
control over businesses
is

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318
Haesun

Park-Poaps

limited. A number of studies have indicated thatnon

such as
regulatory, voluntary forms of governance
not
have
been
in
effective
monitoring
improving
only
labor standards but also managers' concern over labor
(e.g., Jorgensen et al., 2003; Weil, 2005).
In addition, voluntary initiatives need to be value
based. Donaldson
(2001) pointed out the importance
conditions

of identifying ethical content rather than legal content

of the issue as a precondition for improving labor
relations.

It is interesting to note the media's

relationship
with external partnership, rather than with internal

of socially responsible supply chain man

attention to corporate
agement. Increasing media
its
ethics and social responsibility, coupled with

direction

impact on consumers and public, may have caused

corporations to be externally conscious, instead of
committing to the concept of ethical sourcing and
internal coordination. Mitchell et al. (1997) made an
interesting claim that stakeholders that have power

but lack legitimacy of their claim can disturb busi

nesses' survival. The media
obviously has power
in the
and
deliver
over,
urgency to, businesses
the media do not
twenty-first century. However,
experience any harms or benefits from the actions by
the corporations. The media may not be morally or
physically legitimate in its stakeholder claim. While

the scope of this article to discuss the

the
legitimacy of stakeholder claim of the media,
media is certainly considered a stakeholder that holds
it is beyond

power
tractual

over business

even without

transactions with

formal or con

(Buysse and
it seems that, rather than
businesses

2003). However,
interacting which in theory is a condition of being
stakeholder of a firm, the role of themedia has been

Verbeke,

to such
a one-way threat to the business. Reacting
a
force, the companies may approach with
strategy
that resolves the conflict with the stakeholder origin
2001). We
question
(Jawahar and McLauglin,
is forcing the businesses to the
whether the media
on
edge with its power, which drives them to focus
what is seen, rather than providing or communi

cating with businesses justifications and ways to find

means
to developing
their
strategies to change
business values and beliefs.
Consumer
pressure was found to be related to
internal direction. Consumers, who are one of the
consumer product
primary stakeholders for the

and Kathleen Rees

seem

companies,

to

have

an

on

impact

organiza

tional direction. However,

the external partnership
did not show a significant relationship with con
sumer pressure. This may
indicate that growing
consumers'

concerns

and

in

interest

sweatshop

issues

may not have been amotivator for the companies to

behave proactively working with their suppliers to
improve labor conditions in the supply chain. Ra
ther, themedia and industry pressure may have been
themain sources of such partnership behavior.
As predicted, industry peer pressure had a con

sistently high impact on both internal and external

orientations. Buysse and Verbeke
(2003) found a

similar effect of competitors' environmental activi

ties on proactive environmental leadership. In their
discussion of positive deviancy of large footwear
companies, Arnold

and Hartman

(2004) argue that

a model
for further

big corporations may provide

and dissemination
development

of higher

labor

standards and initiatives. While

positive deviancy
may be seen as a mere reaction to negative public
and media criticism, the results in this study suggest
that itmay have a profound, positive impact on the
that the data
industry-wide improvement. Given
in this study are managerial
perceptions, the
results illustrate underlying motivators of proactive
socially responsible
supply chain management.

used

Findings imply that normative changes within the

public and industry seem to be related to the level of

in the
labor management
proactive, value-based
sector.
and
footwear
apparel
size of the company was not shown to be
While

source of merchan
significantly related to SRSCO,
dise was found to be related to external partnership.
This indicates that the partnership approach to labor
issues is more

apparent among companies dealing

studies investi
foreign suppliers. Most
are
directed toward large
gating sweatshop issues
their
behavioral
and
changes (Arnold
corporations

with more

and Hartman,

2003, 2004; Emmelhainz

2004; Sethi, 2003). The

and Adams,

1999; Neef,
influence of the firm size was

insignificant
also seen in previous
studies (Carter and Jennings, 2004). The insignificant
effect of company size found in this study, along with
the significant effect of consumers, industry peers,
and media
pressures, indicates that concerns for
not be amatter of
responsible labor management may
This
may be due to the
only large corporations today.

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Socially Responsible Supply Chain Management

increased
behaviors

level of expectations for corporate social

that became a norm for all businesses.

Stakeholder concepts have been examined in such

areas as environment, labor and human rights, and
fair trade. As an attempt to discover influencers of
labor management,

this study examined

responsible
four primary stakeholders on SRSCO
focusing on
the responsible labor management
in the clothing
and

footwear

sector. While,
stakeholder

the
theoretically,
should be weighted
equally, in reality the salience of each stakeholder is
contextual, depending on the issue and industry
being studied, to determine its influence on business
influence of each

decision

and actions
1984;
(Freeman,
making
et al., 1997). This study empirically showed
that salience of stakeholder forces related to proac

Mitchell

tive labor management

is unique to the situations
sector.
within
the
The results also suggest
existing
that the effects of

stakeholders

on

internal and

actions may be different, depending on

characteristics of the stakeholder influence, including

external
power,

legitimacy of relationship, and visibility and

urgency.

The

raise

to

the

findings
interesting insights
current literature of corporate social
responsibility
and the stakeholder theory. Crouch
(2006) argues
that the stakeholder

theory is too simple to depict

and
actions
of the firms in shaping the
exchanges
externalities (e.g., publicity, regulation) in addition
to their reactions to the externalities. Friedman and
Miles

(2002) also argue that current thinking of

stakeholder theory is confined to a view from an

organization neglecting the role of firms to revamp

themselves in response to the changing scenario of
the market and institutional structure. From this
perspective, the insignificant result of the regulatory
force implies that, although the institutional sup
ports are not sufficient, the firms are capable of
creating their own systems of fair labor manage

ment

through interacting with other externalities

such as peers. The
stakeholder relationship of the
firm with consumers
in the marketplace
is well
nature
one
in
and
with the media may
recognized
remain implicit without formal contracts (Friedman
and Miles,

we

found

2002), which might have impacted what

in this study. As the stakeholder
theory

posits, the firm's responsibilities have expanded to

cover social
and
obligations from the economic
While
workers
and
their
families
legal obligations.

do not have

319

formal contracts with

the firm, the

one. How
to
claims
them
be
theory
researchers
have
that
that
the idea of
ever,
reported
accepting them as a key stakeholder may not be
stakeholder

in the global supply chain (Lloyd, 2005;

widespread
O'Rourke,
2006). The results of this study revealed
that the proactive labor management
that considers
as
a
them
beneficiary of a firm's responsible prin

ciples and actions is driven by other stakeholders

who hold power and influence. This exemplifies
the complex
the firm,
interrelationships among
the firms
stakeholders, and the context in which
new
sets
of
stakeholders
and
interact
with
recognize
them.

Finally, the significance of this study also rests on

the fact that the data of this study come from mostly
small- and medium-sized
companies. The literature
on corporate
social responsibility and corporate
is heavily weighted
toward multi
governance
national corporations who may have created the
labor issues and actively responded to the criticism
voluntary initiatives at the same time. The

with

findings of this study reflect the stakeholder man

agement from the small- and medium-sized
apparel/

footwear firms that are prevalent in the industry.

concept of stakeholder continues to expand as
different social issues arise and social expectations
increase. As broader concepts of stakeholders are

The

other

types of stakeholders may be

on
investigated. Specifically, the impacts of NGOs
the manner
in which firms recognize consumer

developed,

pressure and peer effortswould merit future inves

tigation. In this study, firm size and the source of
merchandise were
examined as control variables.
Various

characteristics
also may
these relationships. Further
investigation of these characteristics, along with the
findings in this study, will provide more detailed
directions for corporations and policymakers. Fi
organizational
influence or moderate

the apparel and footwear

nally, while
industry
underwent an extraordinary path to remedies, other
industries are now facing diverse social
responsibility
concerns in their
and
supply chains (e.g., Maloni
Further
studies
should
Brown,
2006).
empirically
examine roles and weights of different stakeholders
in different industries and for different issues at hand.

The

findings of such studies will contribute to the

theory building for socially responsible supply chain

management.

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320
Haesun

Park-Poaps

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consumers

demanding products
working conditions

are

that are made

increasingly
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public ismore worried about the econ

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(d) The
anti-sweatshop movement
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customers prefer a cheaper price to a
(e) Our
(c) The

Regulation
(a) Labor
and

image built by worker

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E.

Anderson,

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Industry
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D.

Arnold,

in our industry

Media
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in the media

is interested in whether compa

(b) The media
ensure
fair labor in their production sites
nies

exposure related to labor conditions

(c) Media
sites immediately affects
at our production
our firm's production/sourcing
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