The Impact of Corporate Responsibility in the Context of Global Supply Chains - Research Proposal Example

The Impact of Corporate Responsibility in the Context of Global Supply Chains Research Paper Course Code Student’s Name Date of Submission Executive Summary This paper theoretically analyzes the influence of corporate social responsibility on sustainable global supply chains. This research is narrowed to the review of the literature on the topic. The paper made use of academic journals and peer reviewed articles to study the concepts of sustainable supply chains and highlight the impacts of CSR on the supply chain and to the companies. The increasing pressure to gain competitiveness in the market calls for organizations to turn to global markets where they can apply prices that are competitive and acquire materials with better quality. As a result, the supply chain has become complex, particularly regarding the pressures for the firms to be more socially and environmentally responsible. The concept of CSR has a main idea of creating business resolutions in a way that organizations effectively meets the demand of the global population without necessarily endangering the environment needed by the future generation. Table of Contents Executive Summary 2 Introduction 4 Plan of the Research 4 Literature Review 5 Sustainability in Supply Chains 5 Corporate Social Responsibility 6 CSR in global supply chains 7 Benefits of CSR Supply Chain Networks 10 Conclusions and Suggestion for Future Research 11 Introduction Currently, supply chain management is becoming a significant strategic area for every organization operating in the global market. It is argued that outsourcing non-significant business operations to other countries, reduction of products’ life and reduced time in suppy chain management are also becoming important (Cruz, 2013). The attention of the management has shifted from competition between firms to the competition that exists in the supply chains (Mzembe, et al. 2016). A firm’s ability to establish a lasting relationship with the suppliers and other strategic partners is crucial in the creation of competitive advantage. Simultaneously, stakeholders such as end users, stockholders, NGO’s, government departments, and global organizations increasingly show interest in the social matters that are associated with the operations of firms. Concepts such as supply chain sustainability (Asgari & Li, 2013), triple bottom line (Varsei, 2016), environmental management (Werther & Chandler, 2011), corporate greening (Kolk & Tuddler, 2002), green supply (Urbaniak, 2015), and corporate social responsibility (CSR) in supply chains (Boyd, Spekman & Werhane, 2004) are areas that receive attention from the media, researchers, and the corporate world. Companies, particularly the large and well-known multinational corporations employed the annual environmental statements, sustainability plans, and the use of voluntary codes of conduct. However, a gap still exists in the theory of supply chain sustainability in and the application of sustainability in supply chains in the operation of the companies. There exists a problem that is limited to multinationals who ‘walk the talk’ in corporate social responsibility. This research aims to theoretically analyze the impact of corporate responsibility in the context of global supply chains. Also, the research purposes to analyze the relationship that exists between supply chain and CSR. Therefore, this research aims at analyzing the CSR in the supply chain in the context of global supply chains. Plan of the Research This research will present the area of study and current situation around the problem using relevant theory. The research would provide a complete review of the literature of sustainability in the supply chain, CSR and then CSR in the supply chain in a global context. The research would then make a conclusion from the findings derived from the reviewed literature. Lastly, the research would provide future directions for future research. Literature Review Sustainability in Supply Chains Scholars direct the theory and practice of supply chain management towards issues such as process integration across business partners with the supply chain, cost efficiency in the supply chains, and effective customer relationship. Most MNC’s have been found to outsource various business processes to third world or developing countries and countries where production activities have a low cost. Therefore there is a growing concern on the production and consumption impact to the society and the environment. Moreover, there are concerns that frequently emerge on the sustainability of the supply chain, management of the environment, reverse logistics, and green-supply-chain. Various scholars have discussed the reverse logistics (Ameashi, Osuji & Nnodium, 2008 and Varsei, 2016). According to Ameashi et al. (2008) reverse logistics deals with the function of logistics in production proceeds, minimization of the source, reusing, materials’ substitutes, material recycling, disposal of wastes, and renovating. Most of these activities, excluding source reduction, are carried out after the end user consume and dispose the products. The closed-loop supply chain or the reverse supply chain emphasizes that the management or returns are limited to a particular entity within the supply chain network and includes all the consumers and end users of the products and back to the raw material supplier in a reverse manner. Figure 1: Closed-loop Supply Chain Network (Amaeshi, et al. 2008) As Short, Toffel and Hugill (2016) posit, various management reviews are dedicated to reversed supply chains. The concepts of sustainable and green supply chains are theories with holistic system perspectives on the aggregate impact on the environment from resources and supply chain ecological footprints (Klasen & Vachon, 2003). Moreover, a green supply chain implies that manufacturers, suppliers and MNCs are saving resources, eliminate, and reduce of waste and improvement in the productivity and competitive advantage of the firms (Harwood & Frost, 2006). Some of the greening schemes are plan for remanufacturing and design for disassembly, utilization of recoverable energy sources, use of environmentally friendly transport systems and focus on the utilization of production facilities and transport modes. Corporate Social Responsibility CSR is a wider concept that is not only narrowed to supply chains. CSR includes how firm’s handles the environment and the people living in the environment. This research paper will focus on CSR in global supply chains. Despite the fact that CSR is an established concept Falk and Heblich (2007) and Schwartz and Carroll (2003) argue that there is no general agreement on how CSR is defined. Schwartz and Carroll (2003) claims that CSR is vague since the attitudes and beliefs about the existence of the correlation between the society and the firm frequently change with the current issues. Moreover Falk and Heblich (2007) claim that the difficulty of appropriately defining corporate social responsibility is due to the challenges in the determination of the managerial inference of the definition. Considering the varying sizes of companies, products, revenue generation, and social impact create some difficulties. In a broader perspective, there are two major features of CSR. First, it gives a description of the correlation that exists between the firms’ external community and the firm itself. Second, CSR is the activities voluntarily undertaken that has social and environmental impacts (van Marrewijk, 2003; Anderson & Skjoett-Larsen, 2009). However, a better definition of CSR can be derived from the theory of CSR. That is, a view of the corporation and its roles that assumes a responsibility among firm in the pursuit of goals in addition to maximization of profit and responsibility among the firm’s stakeholders to hold the firm responsible for its action. Therefore, every firm has to account for its actions and categorize the stakeholders when creating its working environment and then arrange them in order of strategic importance. CSR in global supply chains Currently, realtions within business is drifting from firms that particularly undertake manufacturing activities within a specific national operation to firms that play key roles in the supply chain manufacturing companies that are supplier-based across national boundaries. In a similar way, CSR is going through transformation from being an individual’s firm’s domain to encompass the entire supply chain. Currently, NGO’s, governments, and other stakeholders not only expect the MNCs to behave in a manner that is socially responsible within their jurisdictions but are also held accountable for the policies regarding labor and environmental practices with the international trading partners ( Kolk & Tudder, 2002 ; Harwood & Humby, 2008). The need for CSR within global supply chain network plays a significant role in global trade. Therefore, CSR is carried out through governance systems that connect companies in different business arrangements (Welford & Frost, 2006). Governance means that some of the fundamental actors in the supply chain, in most cases the large MNCs, take the accountability for labor division within the inter-firm activities and particular participants’ capacities to enhance their operations Cruz, 2013). These firms have the ability to regulate production over long distances without necessarily using the power of ownership (Cruz, 2013). As Ameashi et al. (2008) argue, organizations have their headquarters in the developed countries. They include the international manufacturing companies, big retailers and firms with known brand names. The power exercised by these firms originates from their market power. Moreover, this firm control the major resources that are vital in the sustainability of the supply chains. The actors have important roles indication the products and services to be produced, the best way to produce, and which firms to produce. Also, these corporations may offer the suppliers with technical support to obtain a better performance. Urbaniak (2015) asserts that the growth of the global value chains is leading to a call for the firms to be accountable for delivery dates and quantity, employees’ working conditions and the impact of the firm’s activity to the environment. Internal and external shareholders such as unions, governments, workers, customers, NGOs and media exerts pressure on the MNCs and show a growing interest on the social and environmental conditions of the offshore production locations, especially in the developing countries (Asgari & Li, 2016). The concern is majorly due to the intensification of technology of multimedia communication. The firms find it difficult to hide unethical business processes from the stakeholders. The increasing transfer of information beyond cultural and national borders has resulted in the creation of stories about the MNCs unethical practices such as violations of human rights. Popular examples of well-known MNCs include WalMart, Coca Cola, and Coles (Anderson & Skjoett-Larsen, 2009). Currently, many MNCs have reacted to the complement and stakeholder expectation by expressing, creating, and applying systems that make certain that the suppliers observe the environmental and social standards. Even though firms select their approach in systemizing the efforts of CSR in supply chains, various studies finds out that the popular evident applied by most MNCs in is the corporate codes of conduct. According to Kolk and Tuddler (2002), the list of the code of conducts has been lengthening since 1990’s. A code of conduct is a document that states some environmental and social standards that a company’s suppliers have to fulfill (Boyd, Spekman & Wehane, 2004). The code of conducts is introduced during a contact between a company and suppliers. As Kolk et al. (2002) posit, code of conducts bases on the individual firm’s values regarding the kind of activities it wishes to be linked with. The fundamentals of the code of conduct are developed from the local legislation and international conventions, principles, and standards. Some of the international conventions and standards include UN’s Global Compact, ISO14001, Global Sullivan Principles, and the Rights at Work. Most MNCs have codes that are supplemented by an elaborative managerial process that formulate, enforce and review the criterions outlined in the codes. However, there is empirical evidence that shows that most MNCs struggle with the issue on the implementation the codes of conduct with the supply chains in a global context (Mzembe, et al. 2016). Despite the fact that codes of conduct are widely used by MNCs, not all of these the corporations show a positive attitude towards the codes. Kolk and Tuddler (2002) observe that many MNCs find it difficult to comply with the codes. This is because the codes are not obligatory like the legal requirements. Moreover, firms do not simply draft the codes to cater for the employees’ needs. Boyd, et al. (2004) also criticizes the code of conduct by arguing that it is mostly presented as a public statement of an aloof intention and purpose without a particular content. On the contrary, Welford and Frost (2006) argue the implementation of codes of conduct in not something that is voluntarily applied in the supply chains. It is a significant accompaniment to the national employment and labor laws. Most MNCs adopt the codes of conduct to minimize the stakeholder pressures and the growing demand for investments that are socially responsible. Various scholars have undertaken empirical investigations to analyse how firms operate with issues related to CSR within their supply chains.Most of these studies do not only focus on MNCs but also Small and Medium-sized Enterprises (SMEs). For instance, Mzembe, et al. (2016) analyzed the sources, impediments, and the impact os social responsibility of large UK firms and how to reduce the hindrances. Also, the ILO performed an examination of the implementation of the code of conducts by primarily focusing on the provision of an in-depth understanding of systems that MNCs use to manage their processes as well as the suppliers in regards to the attainment of the codes of conduct. Moreover, Urbaniak (2015) studies the written CSR policies of 20 countries in North America, Asia, and Europe. Nonetheless, despite the fact that most companies put the effort in activities related to CSR, there exists a gap between the actual conditions and the suppliers expressed ethical standards. We can, therefore, maintain that only a limited number of MNCs are exercising CSR in their global supply chains. Benefits of CSR Supply Chain Networks Varsei (2016) show that effecyive and efficient sharing of knowledge and having collaborative processes assists MNCs to reduces the risk of uncertainties, become willing to changes, reduces resistance that are connected to insufficient investment of socially responsible operations. Varser (2016) also indicates that when firms collaborate, it would lead to minimal packaging, collaborative reuse of various components, and implement the changes that would minimize the utilization of harmful materials. Moreover, various researches show that effective inter-firm collaboration results to minimal transaction costs and improvement of performance of the suppliers (Crus, 2013). Research conducted by Urbaniak (2015) found out that companies that undertake collaborative CSR arrangement have an enhanced competitive advantage and profitability. In the same way, Varsei (2016) argue that CSR assists MNCs to reduce production inefficiencies, minimize costs and risks while also allowing firms to multiply their sales. The low costs, lower risks, and increased sales enable the firms to become more profitable. Furthermore, Boyd, et al. (2004) noted that various studies show a probable gain in performance from CSR activities. These include reputable risk mitigation and increased market penetration. Although the study carried out by Mzembe, et al. (2016) found no significant correlation between investor decisions and CSR activities, the study revealed that recall on products impacts the decisions of the investors and the share prices of the company. Contrary to these observations, Schwartz and Carroll (2003) views CSR as a way of damaging the control as companies increasingly realize that CSR creates value. Schwartz and Carroll (2003) goes on to argue that the CSR practice is simply an investment that a firm places on its future and have to be strategized, monitored, and reviewed. Kolk and Tuddler (2002) also concur to this argument by indicating that the issues relating to sustainability leads to a change in the company’s focus from the major operations to the performance of the supply chain. While these arguments may be popular to some scholars, in reality, CSR results in the improvement in productivity and innovation (Cruz, 2013; Asgari & Li, 2016; Varsei, 2016). These benefits can be acquired by studying the supply chain processes within the to heighten the conversion, maximize the efficiency and identify means of converting wastes into useful by-products. Conclusions and Suggestion for Future Research In conclusion, parallel to the increased outsourcing by MNC to developing countries, the management of supply chain has shifted from the functional view to more strategic perspective. SCM has shifted from being commonly associated with purchase price and quality issues to become a strategy that enhances the sustainable relationship of the firm with the suppliers. This research proactively investigates the increasing concern in the management of CSR within global supply chains. Particularly, this research paper investigated CSR in relation to MNC’s global supply chains. There is also an increasing pressure on the performance of the suppliers regarding their social and environmental responsiveness and eventually the entities involved in the supply chain network. To practice efficient CSR within the supply chains, it is necessary that the corporate social responsibility is grounded on the principles of the firm. CSR is not a corporate function. It should be disseminated to all relevant functional areas with the firm, including international suppliers and affiliates. As a result, there is need for knowledge enhancing mechanism that should be in place to achieve this objective. The internal aspects include issues such as training of employees and experience sharing. On the other hand, external aspects include the training of key employees and using effective spurs for the suppliers to promote long-term contracts if codes of conduct are applied. Moreover, the size of the company, reputation and image in addition to brand recognition and protection are factors that influence the chances of the firm successfully implementing the codes. Lastly, corporate history is very important. A firm that has a history regarding effective corporate processes and culture of participating in social and environmental initiative has the likelihood of adopting and managing CSR in its supply chains. This research paper intensively aim at CSR practices that are supply chain related in global perspective. The activities have been analyzed from the view of MNCs in a global context. However, the successful implementation of codes of conduct depends on the supplier willingness to employ the CSR conditions within their firms. Hence, a research on the capacity of a supplier to obtain and make interpretation of the requirement form a single firm can provide an in-depth examination of the complexities in employing CSR within the supply chains. Another concern for future researchers is the broadening of the CSR practices that are related to the supply chain. Future research should include an in-depth analysis as to whether suppliers have the ability to pass conditions to their vendors if they can be mechanized to perform the task. In close relation to having a prodder study on the CSR conditions, future research should consider various practices by small and medium sized enterprises in CSR. Currently most research on CSR in supply chains are carried out with regards to MNCs. Because most of the suppliers to the MNCs are SMEs, it could be therefore claimed that the creation of sustainable supply chains highly depend on the firm’s ability to operate within the CSR requirements while at the same time, extending the factory walls. As a result, future researchers covering topics concerning CSR and supply chains should focus on studying the probability of SMEs to pose and follow up on the CSR requirements aimed at the suppliers. References Amaeshi, K, Osuji, O, & Nnodim, P 2008, 'Corporate Social Responsibility in Supply Chains of Global Brands: A Boundaryless Responsibility? Clarifications, Exceptions and Implications', Journal Of Business Ethics, 81, 1, pp. 223-234 Andersen, M. & T. 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