Supply management ethical responsibility: reputation and performance impacts

Corporate social responsibility in supply chains

Edited by Adam Lindgreen, Valérie Swaen and François Maon

Introduction

Ethical responsibility was once a nebulous concept that only occupied theoretical discussions about the role of business in society. Recently, the theoretical discussions of ethical responsibility spawned an activism that resulted in both negative publicity and earnings impact for firms such as Nike and Conoco for overseas production problems and litigation processes ([11] Carter and Jennings, 2002). The entire business world has also been shocked by the recent events at Enron, World Com, Adelphia Communications and other corporations. The passage of Sarbanes-Oxley places the responsibility directly on CEOs for the organization's legal and ethical actions. Thus, accountability to key stakeholders is an important issue facing executives today and ethical behavior is becoming more important to both buyers and suppliers.

All of this activity has lead to a great deal of concern about ethics in the minds of today's supply management (SM) executives. Supply managers, more than any other group within a firm, encounter daily situations that put ethics to the test. SM can be viewed as "organizing the optimal flow of high-quality, value-for-money materials or components from a suitable set of innovative suppliers" ([32] Goffin et al. , 1997; [59] Wagner, 2003).

The subject of supply management, and more specifically supply management ethics, has received insufficient coverage in the past ([12] Carter and Jennings, 2004), despite the key role that purchasing plays in a firm's overall processes including product design and selection, procurement of transportation and third-party logistics services, supplier selection, and the management of inventory and supplier relationships ([5] Bowersox et al. , 1992; [16] Cavinato, 1992; [26] Gentry and Farris, 1992; [42] Lambert and Stock, 1993). Supply managers span the boundary between the firm's internal functions and its external stakeholders, including suppliers ([16] Cavinato, 1992). Hence, these managers affect a firm's ethically related interactions within its supply chain and, likely, its performance.

A recent study of SM practices rated ethics to be the number one issue facing supply managers ([29] Giunipero and Handfield, 2004). Given the increasingly complex web of suppliers' and customers' alliances, mergers and acquisitions, trends toward consolidation in many industries, as well as sensitive data transference, supply management ethical responsibility (SMER) is becoming increasingly...