Socially responsible governance mechanisms for manufacturers in global apparel supply chains
Creators: name: Yadlapalli, Aswini
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350903
subject: Logistics

description: The emergence of global apparel supply chains has raised concerns relating to unethical practices at the suppliers’ manufacturing facilities located in low-cost producing economies. This research addresses the question of how social responsibility can be implemented at the facilities of apparel manufacturers in the context of global apparel supply chains. Bangladesh, the world’s second largest apparel exporter, is known to employ unethical practices in its manufacturing facilities. Thus, the present study examines the implementation of social responsibility in the Bangladeshi context. Through a literature review of supply chains, supplier selection and supplier development underlined by transaction cost economics (TCE) and resource-based view (RBV) theories are identified as key governance mechanisms for implementing social responsibility at supplier facilities. The proposed conceptual model identifies supplier selection and supplier development as the second-order constructs formed by operational selection criteria, environmentally sustainable criteria, and socially sustainable criteria, in addition to supplier assessment and supplier collaboration constructs. The conceptual model investigates the relationship between socially responsible governance mechanisms and firm performance. Further, based on agency theory, role of agency problems as a moderator on the relationship between supplier development and economic performance is examined.<br><br>Based on 267 responses from Bangladeshi apparel manufacturers, and employing the partial least squares structural equation modelling (PLS-SEM) method, this study tests the hypothesised relationship between socially responsible governance mechanisms and firm performance. The results show that both supplier selection and supplier development governance mechanisms have a positive impact on a firm’s social and environmental performance. However, supplier selection has no effect on a firm’s economic performance, whereas supplier development has a positive impact on economic performance. The results also demonstrate that the supplier development mechanism mediates the relationship between supplier selection and a firm’s environmental and social performance. In addition, the results also illustrate that agency problems have a moderating effect on the relationship between supplier development and economic performance.<br><br>This thesis makes significant theoretical, practical, and methodological contributions in relation to developing a model for the implementation of social responsibility in supply chains by integrating supplier selection with the supplier development governance mechanism. Through investigating the role of agency problems in the relationship, this study has also provided a new theoretical perspective on agency theory. The research findings can help managers and policy makers to identify practices for the implementation of social responsibility in supply chains.