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Investigating the Fair Treatment of Suppliers and its Trust Fostering Role and Performance Benefits

Son, B.G. ORCID: 0000-0002-7395-0598, Lee, C-H, Ha, B-C and Nam, H. (2019). Investigating the Fair Treatment of Suppliers and its Trust Fostering Role and Performance Benefits. International Journal of Production Economics, doi: 10.1016/j.ijpe.2019.04.009

Abstract

An increasing number of companies have begun to make efforts to treat their suppliers fairly as a part of wider corporate social responsibility (CSR) initiatives. Few studies, however, have investigated the performance implications of such efforts for buying firms. This paper uses both organisational climate theory and social exchange theory to investigate (1) if buying firms' efforts in the form of a code of conduct for its procurement practitioners pay off, and (2) its mechanisms from the perspectives of procurement practitioners. We use a multi-method approach, combining analysis of survey data complemented by results from a behavioural experiment. First, survey data were gathered from 327 Korean manufacturing companies and analysed using structural equation modelling. Second, the findings were complemented by a behavioural experiment involving 120 subjects. The results support the positive performance implications of fair supplier treatment in the form of codes of conduct for procurement practitioners. The paper also offers insights into how such efforts benefit buying firms, which is due to the trust in the buyer-supplier relationship fostered by the resulting ethical behaviours of procurement practitioners.

Publication Type: Article
Publisher Keywords: Procurement, Buyer–supplier relationship, Code of conduct Organisational climate, Multi-method study, Social exchange theory
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
Departments: Cass Business School > Management
URI: http://openaccess.city.ac.uk/id/eprint/22044
[img] Text - Accepted Version
This document is not freely accessible until 22 October 2020 due to copyright restrictions.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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