The impact of supplier corporate social irresponsibility on MNEs sales performances: a consumer approach

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School of Business | Master's thesis
Degree programme
Management and International Business (MIB)
In the early 1990s, MNEs came under public scrutiny for their irresponsible sourcing practices, after revelations that their supplier’s workers in developing countries were working under exploitative conditions. Nevertheless, irresponsible behaviour and poor working conditions in global supply chains remain contemporary issues in developing countries. Managing corporate social responsibility issues in global supply chain is an important area of research. However, research has mainly focused on the business case for CSR: determining the positive impact CSR initiatives may have on corporate performances. Contrary to the business case for CSR, this master’s thesis assumes that there is a negative relationship between supplier CSI and MNEs sales performances. The literature review of this thesis is mainly built around the corporate social responsibility literature and the attribution theory literature. The research model and related hypothesis are derived from previous research in those fields. The empirical data was collected in spring 2017 through an online self-administered vignette-based experiment survey. Walloon consumers were set as the studied population. The data collection resulted in 202 observations for each vignette. The empirical data was analysed with descriptive statistics and factor analysis and the examination of the relationships derived from the research model is done by means of structural equation modeling. In studying how consumers react to supply chain incidents and how supply chain incidents impact sales of MNEs, I find that consumers negatively react to supply chain incidents caused by irresponsible suppliers and consumers negative reactions deteriorate sales of MNEs through boycott. Those findings contribute to existing international business research by demonstrating that contrary to the business case for CSR there is a negative relationship between supplier CSI and MNEs sales performances because understanding what factors impact sales performances of MNEs and whether consumers can affect MNEs sales is key to incite MNEs to address their suppliers’ irresponsible behaviour and to eliminate CSI behaviour from supply chains. This would therefore resolve supply chain social issues and improve working conditions in supply chains. Additionally, those findings have managerial implications. Indeed, supplier CSI negative impact on MNEs sales suggest a fundamental revision of offshoring advantages and disadvantages. This paper suggest that captive offshoring is most fitted to address consumer negative reaction to supply chain incidents and related sales decrease while maintaining most of the advantages derived from offshoring
Thesis advisor
Riikkinen, Rilana
Truyens, Vincent
supply chain, CSR, CSI, MNE, fast fashion, responsibility, attribution, offshoring
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