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Supply chain
Stakeholders and socially management
responsible supply chain
management: the moderating role
of internationalization
Matthias Damert and Lisa Koep Received 4 March 2019
Revised 5 February 2020
Chair of Sustainability Management and Environmental Accounting, 21 April 2020
Technische Universitat Dresden, Dresden, Germany and 25 July 2020
Accepted 29 July 2020
PRISMA – Centre for Sustainability Assessment and Policy,
Technische Universitat Dresden, Dresden, Germany
Edeltraud Guenther
UNU Institute for Integrated Management of Material Fluxes and of Resources,
United Nations University UNU-FLORES, Dresden, Germany;
Chair of Sustainability Management and Environmental Accounting,
Technische Universitat Dresden, Dresden, Germany and
PRISMA – Centre for Sustainability Assessment and Policy,
Technische Universitat Dresden, Dresden, Germany, and
Jonathan Morris
Chair of Sustainability Management and Environmental Accounting,
Technische Universitat Dresden, Dresden, Germany and
PRISMA – Centre for Sustainability Assessment and Policy,
Technische Universitat Dresden, Dresden, Germany

Abstract
Purpose – The purpose of this study is to examine how the pressures from stakeholders located in
company's country of origin and level of internationalization of the company influence the implementation of
socially responsible supply chain management (SR-SCM) practices.
Design/methodology/approach – To assess this level of influence, an SR-SCM performance index is
developed by building on existing theoretical frameworks and using secondary data from ThomsonReuters’
WorldScope and ASSET4 databases to capture responsible supply chain actions categorized in
communication, compliance and supplier development strategies. The analysis is based on 1,252 international
companies from diverse countries and sectors between 2007 and 2016.
Findings – The effectiveness of stakeholder pressures in facilitating the adoption of socially responsible practices
varies greatly with regard to the strategic element of SR-SCM and the type stakeholders considered. Companies that
are more internationalized tend to adopt a greater number of SR-SCM practices, whereas home country
stakeholders are of diminishing relevance with the increasing internationalization of a company.

Sustainability Accounting,
Management and Policy Journal
The authors wish to acknowledge the suggestions and recommendations of the reviewers to help © Emerald Publishing Limited
2040-8021
finalize the paper. DOI 10.1108/SAMPJ-03-2019-0092
SAMPJ Practical implications – Governments in companies’ countries of origin should ensure that social issues
in supply chains are adequately covered by regulations. Ideally, laws should not only cover firms’ domestic
operations but also their global activities.
Social implications – Citizens should be given the opportunities to raise their voice and publicly express
their disagreement with business misconduct and non-compliance. Apart from that, the role of workers’
associations and investors in the social sustainability debate should be strengthened.
Originality/value – This study contributes to SR-SCM theory development by operationalizing existing
conceptual frameworks, showing how domestic stakeholders shape SR-SCM performance and analyzing
whether the influence of certain stakeholder groups diminishes or increases when a company is more
globally-oriented in its operations.
Keywords Internationalization, Social sustainability, Empirical study, Stakeholder pressure,
Country-of-origin effect, Socially responsible supply chain management
Paper type Research paper

Introduction
The experiences of the past decades of increased globalization and movement of capital has
resulted in complex global networks of production in many industries (Oelze, 2017). Within
this highly competitive global market, there is a sense of developing and emerging
economies trading off their long-term environmental and social well-being to improve the
short-term economic attractiveness of their regions for investment from multi-national
companies (MNCs) (Boström and Micheletti, 2016). This is evidenced through the reduction
in standards relating to working conditions or environmental standards (Djelic and Quack,
2018; Mani et al., 2018), for example, in poor labor conditions such as underpayment, low
workplace safety standards, long working hours and gender inequality (Perry and Towers,
2013; Pedersen and Gwozdz, 2014; Yawar and Seuring, 2017). With concepts relating to
social sustainability becoming more widespread around the world, increased research is
becoming directed at geographically dispersed stakeholders of MNCs and the flow and
diffusion of sustainability standards between MNC’s home countries and supplier regions.
The main driving influences of how companies respond to sustainability challenges has
been linked to the emergence of “chains of pressure” from different stakeholders in different
international contexts (Kauppi and Hannibal, 2017). The responses to these stakeholder
pressures is linked to how companies implement practices into their own operations and into
the demands of their suppliers. As a result of different cultural norms and values that exist
across different national settings, the demands from the same stakeholder types can vary
depending on the internationalized context in which they are situated (Lee et al., 2018). This,
in turn, impacts on the responses taken to address these demands. Therefore, it is important
to understand the extent to which this international context shaped the way these
institutional norms and pressures are experienced and responded to by MNCs. Using the
perspective of sustainable supply chain management (SSCM), which is defined by Seuring
and Müller (2008, p. 1700), as the:
[. . .] management of material and information and capital flows as well as cooperation between
the companies along the supply chain while taking life goals from all three dimensions of
sustainable development, i.e. economic, environmental and social into account which are derived
from customers and the stakeholder.
There is a need to quantify how these different stakeholder demands vary from each other and
vary according to the internationalization context. Previous SSCM research has highlighted how
external pressures are more effective than internal pressures in driving SSCM practices, and that
differences are observed between SSCM performance between MNCs and small- and medium-
sized enterprises (Ageron et al., 2012). Certain industries, such as those in the textile industry, are Supply chain
associated with providing goods to consumers in their home regions, rather than and are management
expected to develop improved sustainability performance in their supply chains and the regions
in which they operate (Macchion et al., 2018).
Previous research calls in the field of SSCM for greater empirical study on the
combination and interactions of pressures and internationalization on social sustainability
(Marshall et al., 2015; Kauppi and Hannibal, 2017; Yawar and Seuring, 2017). The
development and prevalence of social sustainability practices in the supply chain in an
international context can draw on the socially responsible supply chain management (SR-
SCM) framework of Yawar and Seuring (2017). The SR-SCM framework focuses on the
intersection between communication (through reporting and labeling); compliance (through
codes of conduct, auditing and monitoring) and supplier development (through collaborative
practices and resource sharing) approaches toward social responsibility and sustainability
in the supply chain. However, these studies do not yet fully consider the flow and diffusion
of practices in international contexts between MNCs and their supplier networks. Building
on this framework of SR-SCM, this research aims to examine the relationship between
different stakeholder demands and the impacts of internationalization on how these
demands are responded to in terms of sustainability practices. To do this, the paper
addresses the following research questions:

RQ1. What are the different demands of stakeholder groups driving the successful
implementation of SR-SCM?
RQ2. How does the international context influence the extent of the implication of SR-
SCM practices?
To address these questions, research hypotheses were derived based on the basis of
stakeholder theory, aligned with the categories of business strategies of SR-SCM. These
hypotheses were tested against a sample of 1,234 firms from 111 industries located in 25
countries. Data was taken for a 10-year period between 2007 and 2016. Section 2 provides
literature review on sustainable and SR-SCM. Section 3 discusses the theoretical perspective
of stakeholder theory. Section 4 outlines the methodological approach in terms of data
collection, variable measure and statistical analysis. Section 5 presents the findings, which
are then discussed subsequently in Section 6. Conclusions, limitations and recommendations
for future work then close out the article.

Literature review: sustainable and socially responsible supply chain

management
Sustainable and SR-SCM studies contain a number of different theories and approaches to
explore what drives socially responsible performance in MNCs. In terms of potential
impacts, Awaysheh and Klassen (2010) emphasize that from an SR-SCM viewpoint, the
action is limited to what can be controlled by supply chain managers, usually within the
internal operations of the firm. Motivation for SR-SCM actions are linked to both push and
pull factors: on the one hand, the effective management of social issues is linked to supply
chain performance improvements of the collective performance of the suppliers (Ashby
et al., 2012; Hoejmose et al., 2013), while on the other hand, stakeholder pressures are
increasingly forcing companies to take responsibilities for their entire supply chain (Meixell
and Luoma, 2015). Within the SR-SCM framework, there exist a number of potential
impacts, which vary between the country of origin and country of operation. Research
produced by scholars such as Zorzini et al. (2015) and Mont and Leire (2009) conclude that
SAMPJ SR-SCM should be approached by focusing on socially responsible sourcing and supplier-
buyer relationships yet research from Park-Poaps and Rees (2010) and Huq et al. (2016)
emphasize that the specific role and importance of individual stakeholders in promoting
social sustainability remains understudied. Yawar and Seuring (2017), furthermore, call for
a comprehensive analysis establishing the link between stakeholder pressures and
communication, compliance and supplier development strategies to better understand the
management of social issues in supply chains. Moreover, despite the focus on social issues in
supply chains is increasing, the difficulty of measuring social performance in supply chains
remains a major challenge (Marshall et al., 2015; Yawar and Seuring, 2017). Under the SR-
SCM framework, three different strategies are emphasized – communication, compliance
and supplier development (Yawar and Seuring, 2017), which are discussed in the context of
internationalization and stakeholder pressures.

Communication
According to Yawar and Seuring (2017) communication strategies are an important part of
SR-SCM, acting both inside and outside the supply chain. The types of communication are
geared toward responding to stakeholders in a proactive way, for example, through
corporate reporting. Customers and the public in general are increasingly informed on the
sustainability of company performance through the media, non-governmental organizations
(NGOs) and civil society (Castka and Balzarova, 2008; Kauppi and Hannibal, 2017).
Communication strategies can take the form corporate social responsibility (CSR) reporting
between firm senior management and the key stakeholders in the supply chain, for example,
in terms of health and safety, cooperation with contractors and engaging in socially
sustainable practices. Considering communication strategies in the supply chain is
appropriate, as firms are increasingly being held accountable for the activities of their
suppliers (Carter et al., 2015; Koh et al., 2017), and therefore, understanding the sustainability
impacts within the supply chain is of increasing importance. The ability to communicate the
sustainability challenges in the supply chain is critical for firms to fulfill their reporting
criteria and can provide a vital building block for sustainability accounting and value chain
management (Skaar and Fet, 2012; Koh et al., 2017). Companies, therefore, engage in
communication strategies through publishing relevant results through CSR and annual
reports to varying degrees of rigor to signal their sustainability performance to their
stakeholders. This can include external auditing and following the global reporting
initiative or engaging with third-party auditing to avoid accusations of greenwashing
(Garcia-Sanchez et al., 2015; Palazzo et al., 2016). Companies can also promote their
communication strategies through labeling and determining SR activities according to the
international context in which the activities take place.

Compliance
As compliance with regulation is seen as a minimum requirement for operation in consumer
jurisdiction, the increased pressure from regulators in a company’s country of operation should
also influence the practices and expectations in supply chain companies’ countries of operation
(Bremmers et al., 2007). Contemporary examples of how country of origin regulations can feed
into SR-SCM practices include the Modern Slavery Act in the UK, the French cross-sectoral
“Loi de Vigilance” (concerning due-diligence in the supply chain) and the German
Government’s proposed national action plan for business and human rights. Compliance can
also be conceptualized away from formal legislative demands toward complying with the
demands of key stakeholders. For example, employees can pressure firms to adopt SSCM
practices in a reactive manner (Carter and Jennings, 2004; Yawar and Seuring, 2017). Practical
definitions and application of SR-SCM vary globally but there are a set of common standards, Supply chain
which have been developed and used by organizations such as the International Labor management
Organizations (ILO) Guide to International Labour Standards (2008), as well as social
standards such as International Organization for Standardization (ISO) 45001, Occupational
Health and Safety Assessment Series (OHSAS)-18001 and Social Accountability (SA)8000
(Awaysheh and Klassen, 2010; Klassen and Vereecke, 2012). While numerous definitions of
socially responsible SR-SCM are discussed in the literature (Awaysheh and Klassen, 2010;
Hoejmose et al., 2013; Klassen and Vereecke, 2012), compliance is generally seen as bringing
about the social benefits for various actors in the supply chain (Spence and Bourlakis, 2009)
and the integration of social issues within the supply chain (Carter and Rogers, 2008) according
to these standards. Therefore, SR-SCM in the supply chain considers active regulations and
guidelines that strives to achieve sustainability characteristics. These include improving the
health and safety of employees working in its suppliers; relations with employees, integrating
suppliers as key business partners, applying human rights in the supply chain, avoid bribery
and corruption, as well as extending requirements for suppliers to complete documentation
regarding employee and human rights in the facilities of the suppliers.

Supplier development
Supplier development aims to assist suppliers in implementing requirements from the country of
origin to improve the capabilities and performance of SR-SCM of the supplier companies
(Akhavan and Beckmann, 2017). Cooperation with suppliers seeks to enhance SR-SCM
performance of the supplier through activities such as the development of corrective action plans,
guidelines and follow up activities (Mont and Leire, 2009), alongside supplier training,
cooperation on product design and shared development of sustainability innovations (Vachon
and Klassen, 2006; Akhavan and Beckmann, 2017). Supplier development can be achieved
through encouraging supplier diversity strategies (Carter and Jennings, 2004) and this diverse
partnering approach should provide suppliers with the capabilities and the incentives to manage
and implement sustainability practices and supply products with superior sustainability
performance (Akhavan and Beckmann, 2017). This process could see knowledge sharing across
the supply chain as the host country facilitates two-way knowledge flow with outsourced actors
to address the challenges raised in the communication and compliance.

Stakeholder theory, internationalization and hypothesis development

This paper theorizes the activities of firms in relation to SR-SCM practices. As large companies
tend to be more visible to external stakeholders, it is anticipated that the large MNCs studied in this
paper will face a higher degree of pressure to act socially responsible than smaller firms (Hoejmose
et al., 2013). The response that companies enact is in response to the stakeholder pressures that
they face in their supply chain, which can vary between the different countries that suppliers
operate in. This paper, therefore, draws on stakeholder theory, a widely recognized theory for
framing organizational responses to pressures raised by divergent institutions and actors (Fassin,
2008, 2009; Morris et al., 2015) and also considers the impact of different international settings.
Companies must respond and react to the expectations of their stakeholders, regardless of the level
of power exercised and the ability to influence business activity. In the following section, we
identify the key stakeholder pressures within the supply chain from the perspective of stakeholder
theory and identify a set of testable hypotheses to test the impacts of stakeholder pressures on SR-
SCM performance and consider the effects of internationalization.
SAMPJ Stakeholders and socially responsible supply chain management
We draw on the definition of Freeman (1984) of stakeholders as “any group or individual who can
affect or is affected by the achievement of the organization’s objective” (Freeman, 1984). Previous
research taking a stakeholder view on SCM (such as studies by Freeman, 1984; Gualandris et al.,
2015; Meixell and Luoma, 2015; Zorzini et al., 2015; Yawar and Seuring, 2017) assumes that
organizations ultimately aim to satisfy the needs of their stakeholders and adopt their strategies
to meet stakeholders’ demands (Wood and Jones, 1995). Therefore, stakeholders are seen as
agents of social change (Maignan and Ralston, 2002), who can exert their power and influence to
get firms to introduce responsible supply chain actions. Organizations tailor their practices
according to stakeholder pressures for responsible actions in their supply chains, with different
stakeholder groups invoking varying demands (Yawar and Seuring, 2017).
In general, stakeholder pressures create awareness of sustainability issues in supply
chains, which can result in the adoption of sustainability strategies and ultimately in the
achievement of sustainability in supply chains (Meixell and Luoma, 2015). While pressures
of secondary or external stakeholders, such as governments, NGOs and society in general,
are found to be able to mobilize public opinion regarding sustainability practices (Sarkis
et al., 2010), they cannot directly influence their implementation. Such influence is limited to
primary or internal stakeholders, such as customers, clients and employees (Clarkson, 1995;
Sarkis et al., 2010). These primary actors are defined as those that have a direct interest in
the company, while secondary stakeholders are social and political actors, which have an
indirect interest (e.g. NGOs, media and governments) (Clarkson, 1995). The specific influence
of individual stakeholders is dependent on its power over the firm, the legitimacy of its
relationship and the urgency of its claim (Mitchell et al., 1997; Helfaya and Moussa, 2017).
Due to competing demands by various stakeholder groups (e.g. consumer demands for
cheaper products versus NGO demands for sustainable actions), companies prioritize
stakeholders based on their stakeholder salience (Mitchell et al., 1997). Responding to the
needs of salient stakeholders is crucial for organizations, as their corporate performance
relies on them (Salancik and Pfeffer, 1978) yet identifying salient stakeholders is difficult.
This research builds on what Freeman identified as the key stakeholders for a company, its
customers, governments, employees, civil society, suppliers and shareholders and the
following paragraphs discuss the importance of each of these to SR-SCM strategies, in turn.
Customers are increasingly informed via the media, NGOs and civil society about social and
environmental issues in supply chains (Castka and Balzarova, 2008; Kauppi and Hannibal, 2017).
Higher awareness of SR-SCM issues and a greater public engagement should add to a higher
degree of scrutiny of supply chain management practices, and therefore, the firm response given
the risk of reputational damage from non-compliance. In this case, we consider that customers are
a subsection of Public opinion, in general, which can pressure companies to adopt more socially
responsible practices and lobby governments to impose stricter legislation (Sarkis et al., 2010).
Governmental organizations, therefore have the power to pressure companies into adopting
sustainable practices in the supply chain. Governments can mandate SSCM via legislation
(Bremmers et al., 2007). It is assumed that stricter regulations and more effective enforcement
implies increased pressure from the government to implement SR-SCM practices, which
formalize voluntary actions (Shrivastava and Hart, 1995) and increasing awareness of
sustainability actions in wider society (Saeed and Kersten, 2019), pressuring MNCs to adopt
various national regulatory mandated practices (Hörisch et al., 2017).
Internal pressures from within the firm to adopt SR-SCM practices can also be exhibited on
companies. Employees, who comprise the workforce not only pressure firms to adopt SSCM
(Carter and Jennings, 2004b) but are also shown to strongly influence SSCM decisions (Meixell
and Luoma, 2015). Employers are, therefore, important stakeholders to consider, specifically
because of their motivation for social sustainability regarding supplier selection (Ehrgott et al., Supply chain
2011). Further, labor unions can demand SSCM practices of buyers and suppliers via their management
collective bargaining power (Lipschutz, 2004). The role of investors is also critical for SR-SCM
practices as investors are able to exert pressure on companies through either their decisions of
whether to invest or not or through active engagement in their role as shareholders. It is
assumed that a higher level of shareholder protection increases the pressure on companies to
behave ethically where ethical behavior is considered to be a value-maximizing endeavor
(Sarkis et al., 2010). This is because business misconduct is more likely to be penalized in such
cases, which should increase managers’ motivation to implement socially responsible practices.
Pressures from non-government stakeholders also influence company SR-SCM actions.
For example, industry peer pressure and competition are shown to have a high impact on
SSCM orientation (Park-Poaps and Rees, 2010). One explanation for this is that competitive
dynamics in the industry will lead to accelerated developments of voluntary SSCM
standards, which are showcased by first movers with higher social standards (Arnold and
Hartman, 2003). It is argued that a combination of both higher competition and higher
general ethical orientation has a multiplicative effect. Therefore, the values of the two
indicators were multiplied instead of summing them to better capture the influence of
competitors. NGOs and civil society also exert pressure on companies to address social issues
as they act as a watchdog by monitoring and reporting on social issues in supply chains
(Mont and Leire, 2009). NGOs play an important role in evaluating MNC’s supply chains
(Gualandris et al., 2015) through detecting and, together with the media, reporting on
unsustainable practices, such as poor labor conditions in factories in developing countries
(Park-Poaps and Rees, 2010). It is argued that a higher density of NGOs in a country
increases scrutiny from activists and positively affects the likelihood of companies to
implement SR-SCM practices. To maintain their licenses to operate, organizations will
attend to the demands and pressures of the public, legislators, employees, investors,
competitors and civil society stakeholders. It is, therefore, hypothesized:

H1. The greater the pressure from stakeholders in the company’s home country, the
more a company will address social issues in its supply chain.
In supporting this over-arching hypothesis, we break this down according to the key
stakeholders identified. This gives us the following sub-hypotheses to test to assess the
overall support against H1:

H1a. The greater the pressure from the public in a company’s home country, the more a
company will address social issues in its supply chain.
H1b. The greater the pressure from regulators in a company’s country of origin, the
more a company will address social issues in its supply chain.
H1c. The greater the pressure from the workforce in a company’s country of origin, the
more a company will address social issues in its supply chain.
H1d. The greater the pressure from investors in a company’s country of origin, the more
a company will address social issues in its supply chain.
H1e. The greater the pressure from competitors in a company’s country of origin, the
more a company will address social issues in its supply chain.
H1f. The greater the pressure from civil society in a company’s country of origin, the
more a company will address social issues in its supply chain.
SAMPJ Internationalization and the effect of stakeholders
While there are examples of MNCs whose head offices are located in developing countries
(Burritt et al., 2018), this research is concerned with the relationship between MNCs in
developed countries and the diffusion of practices into the suppliers in developing countries
as a way of diffusing practices from regions with higher social sustainability standards into
regions with lower standards, practices and expectations. Companies operating across
different legislative environments must adopt to different regulations to operate (Saeed and
Kersten, 2019). Two approaches exist with regard to how SR practices are adopted in
international supply chains. On the one hand, MNCs are accused of using globally diverse
supply chains as a way to escape strict home country environmental and social legislation
but also as a mechanism to provide private regulations, which span national boundaries
(Bartley, 2018), reducing the country of origin effect for MNCs and result in an adjustment to
regulatory contexts in host countries (Grauel and Gotthardt, 2016). Alternately, MNCs are
thought to be agents of change, adopting corporate practices of their countries of origin
within their subsidiaries and applying them to the countries of operation (Sethi, 2015;
Bartley, 2018). However, companies, which operate across multiple geographical boundaries
must also address the divergent, heterogeneous stakeholder demands and the different
cultural and value norms, which may be evident and lead to significant differences between
country of production and country of consumption. Digital transparency and awareness of
potentially negative impacts in global supply chains have led to growing consumer and
community pressures (Marshall et al., 2015) and an intensified focus on SSCM. A trend
toward the integration of sustainability into SCM practice can be observed (Ahi and Searcy,
2013), with practitioners and researchers focusing on the integration of environmental
thinking into SCM (Srivastava, 2007), monitoring and improving environmental
performance (H’Mida and Lakhal, 2007).
The ethical and moral values of different stakeholders are strongly influenced by
national culture, which influences the management of the relations with different
stakeholders (Vitolla et al., 2019). These cultural differences explain some of the variation in
how managers, workers and stakeholder engagement behave and act (Hofstede, 2011) and
companies, which operate in multiple countries have to address heterogeneous stakeholder
demands. Here the different cultural norms and value requirements increase the
complexities, which companies face when engaging with stakeholder demands (Lee et al.,
2018). Codes of conduct and regulation developed in the host country – e.g. as regulation is
seen as a minimum requirement, increased pressure by regulators in a company’s home
country will demand higher social standards in the supply chain, which can be responded to
and implemented in different ways in supplier countries. With this in mind, we present the
following hypotheses:

H2. The more globalized the company, the more it will address social issues in its
supply chain.
However, given the possibility that companies may also pay less focus to the demands
of the stakeholders in their home countries, and use internationalization to “escape”
home country regulations (Hörisch et al., 2017), we also propose the additional
hypothesis:

H3. The more globalized the company, the lower will be the influence of home country
stakeholders on SR-SCM.
 Company’s degree of Supply chain
internationalization
management

Pressure from H3 H2
home country stakeholders (–) (+)

Public Socially responsible SCM

Government Communication
H1a-f
Workforce (+) Compliance
Figure 1.
Investors Supplier Development Conceptual model
Competitors and research
Civil Society hypotheses

To sum up, the conceptual model depicted in Figure 1 visualizes the hypothesized
relationships between stakeholder pressures, internationalization and SR-SCM practices,
which will be empirically tested in the remainder of this article.

Methodology
Data collection
The empirical analysis presented in this paper relies on secondary data obtained primarily
from Thomson Reuters’ ASSET4 and WorldScope databases, the leading sources for
corporate data on environmental, social and governance issues (Escrig-Olmedo et al., 2017;
Rekker et al., 2019). The annually published data from the World Governance Indicators
(WGI) from World Bank, which is presented in six dimensions and for 200 countries,
quantitatively evaluate:
[. . .] the process by which governments are selected, monitored and replaced; the capacity of the
government to effectively formulate and implement sound policies; and the respect of citizens and
the state for the institutions that govern economic and social interactions among them (Kaufmann
et al., 2011).
Additional data was obtained from the global competitiveness report (CGR) published
annually by the World Economic Forum. This includes around 100 indicators capturing
country-specific factors, such as institutions, the macroeconomic environment,
infrastructure and business sophistication (Schwab, 2017) and from the Yearbook of
international organizations (YIO) published by the Union of International Associations.

Sampling
Data sampling took place over three steps:
(1) Indicators relating to practices associated with the SR-SCM framework
(communication, compliance and sustainable development) were sourced from the
ASSET 4 database.
(2) The availability of data was assessed for all the companies listed in ASSET 4.
(3) The obtained data set was matched with firm-level data from WorldScope (e.g.
degree of internationalization and financial data).
SAMPJ ASSET4 code Related question

Communication
SOHSDP0033 Has there been a public commitment from a senior management or board member to the
employee health and safety in the supply chain?
SOCODP003B Has there been a public commitment from a senior management or board member to treat
suppliers and contractors as key business partners?
SOCODP0037 Has there been a public commitment from a senior management or board member to avoid
bribery and corruption in all its operations?
CGVSDP026 Does the company publish a separate CSR/HandS/Sustainability report or publish a section
in its annual report on CSR/HandS/Sustainability?
CGVSDP028 Is the company‘s CSR report published in accordance with the GRI guidelines?
CGVSDP030 Does the company have an external auditor of its CSR/HandS/Sustainability report?
SOPRDP027 Does the company promote the social responsibility of its products or services through
product labels, fair trade labels or local suppliers support labels that the company is
qualified to use or has received?
CGVSDP029 Does the company‘s extra-financial report take into account the global activities of the
company?
Compliance
SOHSDP0073 Does the company describe in the code of conduct that it strives to improve the employee
health and safety of its supply chain?
SOEQDP0054 Does the company describe in the code of conduct that it strives to improve employee
relations within its supply chain?
SOCODP006B Does the company describe in the code of conduct that it strives to treat suppliers and
contractors as key business partners?
SOHRDP0074 Does the company describe in the code of conduct that it strives to apply human rights
standards to its supply chain?
SOCODP0067 Does the company describe in the code of conduct that it strives to avoid bribery and
corruption at all its operations?
SOHSDP0163 Does the company claim to use key performance indicators (KPI) or the balanced scorecard
to monitor the employee health and safety in its supply chain?
SOHRDP021 Does the company monitor human rights in its or its suppliers‘ facilities?
SOHRDP026 Does the company report or show to use human rights criteria in the selection or monitoring
process of its suppliers or sourcing partners?
SOHRDP029 Does the company report or show to be ready to end a partnership with a sourcing partner
if human rights criteria are not met?
Supplier development
SOHSDP0123 Does the company describe, claim to have or mention processes in place to improve
employee health and safety in its supply chain?
SOEQDP0074 Does the company describe, claim to have or mention processes in place to improve
employee relations within its supply chain?
SOTDDP030 Does the company provide training in environmental, social or governance factors for its
suppliers?
SOCODP012B Does the company describe, claim to have or mention processes in place to improve its
partnership with suppliers and contractors?
SOHRDP0104 Does the company describe, claim to have or mention processes in place to apply human
rights standards to its supply chain?
Table 1.
SOPRDP0128 Does the company describe, claim to have or mention processes in place to maintain fair
Indicators for trade practices?
SR-SCM from SODODP034 Does the company describe a supplier diversity program or initiative?
ThomsonReuters SOCODP0127 Does the company describe, claim to have or mention processes in place to avoid bribery
ASSET4 database and corruption practices at all its operations?
In the first step, 25 indicators were found to be suitable for analysis: 8 referred to Supply chain
communication, 9 referred to compliance and 8 referred to supplier development (Table 1). In management
the next step, a 10-year period (from 2007 to 2016) was deemed appropriate to investigate the
long-term development of SR-SCM. In this period, 1,251 companies had no missing values,
resulting in 12,510 firm-year observations. No criteria regarding sector or country of origin
were applied in the sampling scheme. In the last step, missing values were removed after a
comparison with WorldScope data, leaving a final sample of 11,034 firm-year observations
from 1,235 companies from 36 countries and 111 industries (according to Thomson Reuters
Datastream Level 6 industry classification), representing an unbalanced panel. To maintain
the panel structure of the data, only companies with at least two observations were kept in
the final sample.
Table 2 summarizes the sample characteristics, including companies’ industry affiliation,
country of origin and the number of observations per year. It should be noted that for

Measure No. of companies/ observations % of sample

Sector
Primarya 66 5.3
Secondaryb 619 50.1
Tertiaryc 550 44.5
Total no. of companies 1,235 100.0
Country
USA 345 27.9
Japan 249 20.2
UK 120 9.7
Canada 78 6.3
France 57 4.6
Australia 42 3.4
Hong Kong 40 3.2
Germany 34 2.8
Switzerland 33 2.7
Others 237 19.2
Total no. of companies 1,235 100.0
Year
2007 1,013 9.2
2008 1,044 9.5
2009 1,062 9.6
2010 1,067 9.7
2011 1,107 10.0
2012 1,122 10.2
2013 1,138 10.3
2014 1,150 10.4
2015 1,175 10.6
2016 1,156 10.5
Total no. of observations 11,034 100.0

Notes: aThe primary sector contains industries involved in activities concerning extraction and harvesting
of natural resources such as agriculture and mining; bThe secondary sector comprises companies from
construction, manufacturing and processing industries; cThe tertiary sector includes companies that
provide services to consumers, such as retailers, entertainment establishments and financial service Table 2.
providers Sample composition
SAMPJ reasons of simplicity the 111 industries were summarized into the three classical sectors of
economic activity:
(1) The primary sector, which is mainly concerned with the extraction and production
of raw materials (e.g. coal, mining, oil and gas, agriculture and forestry).
(2) The secondary sector, primarily involved in the transformation of raw materials
into intermediate and finished goods (e.g. steel, cement, automobile, food products,
textiles, machinery and consumer goods).
(3) The tertiary sector, mainly consisting of service-oriented businesses (e.g. banks,
tourism, logistics, healthcare, media and software).

What is more, the home country of a company was determined based on the location of its
headquarters.

Measurement of variables
Dependent variables. To measure the extent to which the three SR-SCM strategies are
implemented by the sample companies, an index was constructed by assigning and
summing values according to the respective indicators from ASSET4 (as given in Table 1)
for each strategy type. Dummy variables were assigned to the data, which is based on closed
questions. A value of 1 indicates “yes” and 0 indicates “no.” This approach is based on prior
research in corporate sustainability, which suggests that a company can be considered as
more proactive as it increases the number of sustainability-related measures that it has
implemented (Darnall et al., 2010). Consequently, three count variables were created:
(1) Communication (maximum number of practices = 8) comprising variables relating
to publicly stated commitment to SR practices to key stakeholders (Marais, 2012);
following of third party guidelines and auditing of communication disclosures in
reporting, and external communication to customers via labeling (Yawar and
Seuring, 2017).
(2) Compliance (maximum number of practices = 9) comprising variables, which relate
to codes of conduct used by companies when selecting and assessing suppliers, as
well as the mechanisms for terminating relationships when these codes are not
being met. This follows previous research in sustainable sourcing and purchasing
by Akhavan and Beckmann (2017) and minimum standard requirements by Beske
et al. (2008).
(3) Supplier Development (maximum number of practices = 8). The scores of the three
SR-SCM strategies were then summed to obtain a total score for SR-SCM
(maximum number of practices = 25). The supplier development practices align
closely to those described in the Compliance variable, but explicitly focus on
processes, training, education and supplier diversity schemes to improve supplier
performance rather than mandating these standards to be met (Busse et al., 2016;
Akhavan and Beckmann, 2017; Yawar and Seuring, 2017).

Independent variables. WorldScope data (including data from the WGI, the CGR and the
YIO) were used to capture the pressures exerted by stakeholders from the companies’
country of origin. These data were produced annually, and therefore, a value was assigned
to each company based on its country of origin and the respective year of study. The
variables used were as follows:

“Voice and accountability” from the WGI was used as a proxy for the influence of Supply chain
the public. The variable describes: “perceptions of the extent to which a country’s management
citizens are able to participate in selecting their government, as well as freedom of
expression, freedom of association and a free media” (Kaufmann et al., 2011). The
higher the value, the higher the level of freedom for public expression and
participation and the higher the ability for the public to hold companies to account
through campaigns, demonstrations and boycotts. For SR-SCM, this requires
companies to moderate this situation through communication strategies,
demonstrating compliance with sustainability criteria and implementing supplier
development programs in response to the ability of the public to mobilize.

The influence of regulatory bodies was measured by using the aggregate indicator
“rule of law” from the WGI, capturing “perceptions of the extent to which agents
have confidence in and abide by the rules of society, and in particular the quality of
contract enforcement, property rights, the police and the courts, as well as the
likelihood of crime and violence” (Kaufmann et al., 2011). The resulting variable
Government exhibits a continuous scale and provides a proxy for the extent to
which regulations and legislations are enforced.

The independent variable Workforce is a proxy for the pressure from trade unions and
other workers’ organizations. It was operationalized by including data from the indicator
“cooperation in labor-employer relations” from the GCR, which measures whether labor-
employer relations in a given country are generally cooperative or rather confrontational
(Schwab, 2017). It is obtained by calculating the weighted average of the values of two
subsequent years, in which the indicator is measured on a seven-point Likert scale (1 =
generally confrontational; 7 = generally cooperative). Measuring the extent to which
companies and their workforces act cooperatively is important for the facilitation of labor-
oriented socially responsible practices.

The “strength of investor protection index” from the CGR was used to
operationalize pressures from investors and resulted in the variable Investors. The
index is measured on a continuous scale from 1–10 and combines “the extent of
disclosure index (transparency of transactions), the extent of director liability index
(liability for self-dealing) and the ease of shareholder suit index (shareholders’
ability to sue officers and directors for misconduct)” (Schwab, 2017). This proxy
provides a measurement of the extent to which investors consider the risk to their
investment of firms failing to act in a socially responsible manner.

The variable Competitors was created to assess the importance of competitors for SR-
SCM. To account for both the degree of competition in a company’s home country and the
general ethical orientation of firms, two indicator values from the GCR were used to
derive a composite variable: “intensity of local competition,” measuring the degree of
competition in the local markets on a scale from 1–7; and “ethical behavior of firms,”
which assesses “corporate ethics of companies (ethical behavior in interactions with
public officials, politicians and other firms)” on a scale from 1–7 (Schwab, 2017). The
rationale behind computing a composite variable is that both factors play an important
role in promoting SR-SCM, where firms face higher pressure to compete in a socially
responsible manner in markets with higher levels of competition.

Data on NGOs was sourced from the YIO was sourced in line with previous studies
(Jira and Toffel, 2013; Perez-Batres et al., 2011). This captures the relevance of a
country’s Civil Society by calculating the ratio of numbers of NGOs to million
inhabitants (using population size from the World Bank online database). To reduce
SAMPJ skew, a logarithmic function was used. The basis for this proxy is that a higher
number of NGOs per head of population will pressure companies to adopt SR-SCM
practices (Liesen et al., 2015).

Finally, as a proxy for the degree of a company’s Internationalization the ratio of foreign
sales as percentage of total sales was obtained from ASSET4 for each year, corresponding to
measurement approaches taken in previous studies (Grauel and Gotthardt, 2016).
Control variables. Several variables were used to control for a company’s general ethical
orientation, financial performance, financial risk and firm size. Information about corporate ethics
was obtained from ASSET4, while financial data were sourced from Thomson Reuters’
WorldScope database.
Two dichotomous control variables were created to account for the general ethical
orientation of a company, namely, UN Global Compact and Fundamental Human Rights. At
the time of writing, around 9,500 companies from over 160 countries are signatories to the
UN Global Compact, and therefore, the control variable took a value of 1 if a company is a
signatory (otherwise 0), based on the ASSET4 indicator with the code SOHRDP012. The
variable Fundamental Human Rights refers to the respective indicator in ASSET4 (indicator
code CGVSDP020) derived from the question “does the company claim to comply with the
fundamental human rights convention of the ILO or support the UN declaration of human
rights?” It was coded with 1 in case of a positive answer and with 0 otherwise.
Similar to previous studies (Guenther et al., 2016), a company’s Financial Performance was
measured by return on equity, which captures the shareholder perspective on firm performance
and the internal stock of resources that is available to put SR-SCM strategies into operation. The
variable Leverage was created by taking the value of the debt-to-equity ratio. Accounting for
leverage is important, as firms with higher leverage are exposed to greater financial risks and are,
therefore more dependent on the goodwill of investors and creditors, which, in turn, should
increase their motivation to implement sustainability measures (Guenther et al., 2016). Firm Size
was measured by the natural logarithm of a company’s total assets in million US dollars. Local
currencies were converted using constant exchange rates from the year 2007 to avoid exchange
rate-related distortions in the empirical results. In accordance with existing research, it was
assumed that larger firms possess more slack resources, e.g. financial or human capital, that
facilitate the implementation of SR-SCM practices (Guenther et al., 2016).
On a country level, a country’s general wealth was controlled by including the variable gross
domestic product (GDP) per capita in US dollars, as previous research stipulates a positive
correlation between a country’s economic development and stakeholder pressure to implement
sustainability initiatives (Grauel and Gotthardt, 2016; Jira and Toffel, 2013). Respective data was
obtained from the World Bank and transformed by taking the logarithm to reduce skew.
To account for unobserved sector-specific effects, dummies for the three main economic sectors
(primary, secondary and tertiary) were created. The tertiary sector served as reference category
and the respective dummy variable was therefore, omitted. Additionally, year dummies were
included in the empirical analysis to capture time-related effects, where 2007 served as reference
category. A summary of the dependent, independent and control variables can be found in Table 3.

Regression model
A regression model was used to estimate the relationship between stakeholder pressures,
internationalization and SR-SCM strategies. As the measurement of the dependent variables is
based on counting the number of SR-SCM activities implemented in a year, a negative binomial
(NB) regression model was constructed. The use of an NB model is appropriate, as it can handle
over-dispersion in the data (Allison and Waterman, 2002; Glass et al., 2016). In building the model,
Variable Source Level Indicators Scale Comment

Dependent (social supply chain management strategies)

Communication ASSET4 Company 8 yes/no questions Ordinal, 0–8 Sum of all yes/no (1/0) questions
Compliance ASSET4 Company 9 yes/no questions Ordinal, 0–8 Sum of all yes/no (1/0) questions
Supplier development ASSET4 Company 8 yes/no questions Ordinal, 0–8 Sum of all yes/no (1/0) questions

Independent (stakeholder pressures)

Government World governance indicators (World Country Rule of law continuous, z-score
Bank)
Public World governance indicators (World Country Voice and accountability continuous, z-score Range from 2.5 (weak) to 2.5 (strong –
Bank) more freedoms of expression permitted)
Labor Global competitiveness index (World Country Cooperation in labor-employer Ordinal, 1–7, weighted average
Economic Forum) relations of two years
Investors Global competitiveness index (World Country Strength of investor protection Ordinal, 0–10, weighted average
Economic Forum) of two years
Competitors Global competitiveness index (World Country
Ethical behavior of firms
Ordinal, 1–7, weighted Calculation of composite variable =
Economic Forum)
Intensity of local competition average of two years product of the two variables

Ordinal, 1–7, weighted Range between 1 and 49
average of two years
Civil society Yearbook of international Country Number of NGOs per capita Continuous
organizations

Independent (internationalization)
Internationalization WorldScope Company Foreign sales as a proportion of Continuous, %, 0–100
total sales

Control
Fundamental human rights ASSET4 Company Member of UN global compact Dichotomous, 0/1
Leverage WorldScope Company Debt-to-equity Continuous, %
Financial performance WorldScope Company ROA Continuous, %
Firm size WorldScope Company
Total assets
Continuous, 2006 USD
GDP per capita World Bank Country GDP per capita Continuous, USD Logarithmic Function
all independent and control variables were lagged by one year and regression coefficients were
Supply chain

variables used in the

Information on
Table 3.

study
management
SAMPJ estimated using the maximum likelihood technique. Standard errors were clustered by the
company to account for the non-independence of observations over the time period under study.
The composition of the NB regression model used in this study is as follows:
yi;t ¼ exp b 0 þ b 1 Xi;t1 þ b 2 Mi;t1 þ b 3 Xi;t1 Mi;t1 þ b 4 Controlsi;t1 þ b 5 Yeart
þ b 6 Sectori Þ;
where i denotes firms, t denotes years, yi,t refers to the three dependent count variables
Communication, Compliance and Supplier Development, Xi,t1 refers to the six independent
stakeholder variables (Public, Government, Workforce, Investors, Competitors and Civil
Society), Mi,t1 refers to the moderating variable Internationalization, Xi,t1 Mi,t1 refers to
the interaction effects between the stakeholder variables and Internationalization,
Controlsi,t1 refers to the control variables (UN Global Compact, Fundamental Human
Rights, Leverage, Firm size, Financial performance and GDP per capita) and Yeart and
Sectori refer to the year and sector dummies, respectively.

Results
Descriptive statistics and correlations
Table 4 depicts the development of SR-SCM over time and across economic sectors. From
these results, we see that SR-SCM has gained importance over the studied time period but
there are some sectoral difficulties. On average, the number of implemented activities has
approximately doubled over the 10 years. However, there are some variations among the
sub-samples, for example, it is noteworthy that companies in the tertiary sector appear less
concerned with SR-SCM. These companies show a lower level of scoring in almost all
dimensions across the 10-year period. Surprisingly, the results also show a significant drop
in the number of communication-related practices in 2017, while compliance and supplier
development strategies saw an increase in implementation over the same period.
Table 5 shows descriptive statistics, as well as bivariate correlations based on
Spearman’s Rho coefficients between the dependent, independent and control variables.
Apart from investors and competitors, which exhibit a slightly negative effect on SR-SCM,

SR-SCM activity 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Primary sector
Communication 1.40 2.64 2.97 3.22 3.40 3.58 3.65 3.66 3.63 2.73
Compliance 1.39 1.85 2.19 2.45 2.86 3.28 3.33 3.31 3.36 3.43
Supplier development 0.87 1.54 1.72 1.79 1.98 2.17 2.20 2.24 2.30 2.39
Secondary sector
Communication 1.78 2.79 3.07 3.23 3.64 3.77 3.75 3.54 3.67 2.79
Compliance 1.62 1.88 2.28 2.61 2.92 3.02 2.95 3.05 3.05 3.05
Supplier development 1.02 1.74 1.79 1.84 2.07 2.23 2.21 2.32 2.33 2.52
Tertiary sector
Communication 0.88 1.59 1.86 2.15 2.38 2.61 2.67 2.75 2.76 2.27
Compliance 1.31 1.54 1.79 1.87 2.15 2.40 2.41 2.44 2.43 2.57
Table 4. Supplier development 0.94 1.42 1.50 1.57 1.68 1.81 1.84 1.84 1.85 1.98
Average number of Total, all sectors
SR-SCM activities Communication 1.21 2.21 2.52 2.78 2.98 3.18 3.23 3.27 3.26 2.54
per strategy type, Compliance 1.37 1.72 2.03 2.22 2.56 2.89 2.91 2.93 2.95 3.04
sector and year Supplier development 0.91 1.50 1.64 1.70 1.86 2.02 2.05 2.07 2.11 2.22
Variable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

1 – Communication 1
2 – Compliance 0.59** 1
3 – Supplier development 0.58** 0.77** 1
4 – Public 0.07** 0.21** 0.13** 1
5 – Government 0.05** 0.13** 0.08** 0.75** 1
6 – Workforce 0.07** 0.23** 0.24** 0.05** 0.20** 1
7 – Investors 0.29** 0.11** 0.05** 0.22** 0.07** 0.04** 1
8 – Competitors 0.00 0.19** 0.22** 0.22** 0.35** 0.66** 0.15** 1
9 – Civil society 0.17** 0.01 0.08** 0.47** 0.42** 0.23** 0.39** 0.43** 1
10 – Internationalization 0.26** 0.29** 0.21** 0.24** 0.21** 0.07** 0.17** 0.13** 0.29** 1
11 – UN global compact 0.46** 0.38** 0.33** 0.10** 0.05** 0.04** 0.35** 0.01 0.22** 0.21** 1
12 – Fundamental human rights 0.48** 0.47** 0.43** 0.22** 0.10** 0.09** 0.28** 0.00 0.25** 0.30** 0.45** 1
13 – Financial performance 0.01 0.10** 0.12** 0.11** 0.15** 0.10** 0.06** 0.06** 0.02* 0.09** 0.03** 0.02 1
14 – Leverage 0.11** 0.09** 0.01** 0.03** 0.04** 0.14** 0.08** 0.12** 0.02* 0.10** 0.12** 0.07** 0.07** 1
15 – Firm size 0.35** 0.31** 0.38** 0.11** 0.16** 0.21** 0.08** 0.25** 0.13** 0.04** 0.23** 0.22** 0.03** 0.35** 1
16 – GDP per capita 0.09** 0.18** 0.15** 0.45** 0.53** 0.01 0.10** 0.07** 0.02 0.03** 0.11** 0.04** 0.12** 0.02 0.02* 1
Mean 2.74 2.49 1.82 1.14 1.56 1.93 7.04 31.87 4.70 0.40 0.21 0.24 0.15 1.45 2.32 10.71
Std. dev. 2.13 2.37 1.75 0.36 0.36 0.65 1.37 4.16 1.28 0.32 0.41 0.43 1.49 22.09 1.58 0.36
Min 0.00 0.00 0.00 1.91 0.97 0.68 0.00 12.95 1.06 0.00 0.00 0.00 42.98 180.28 2.82 6.90
Max 7.00 9.00 8.00 1.74 2.10 4.01 9.70 39.74 8.81 1.00 1.00 1.00 104.00 2,237.59 8.45 11.69

Notes: n = 11,034; **p < 0.01; *p < 0.05

statistics
and descriptive
Supply chain

Table 5.
management

Bivariate correlations
SAMPJ the stakeholder variables exhibit a low positive correlation with the three SR-SCM
strategies. Internationalization is also positively correlated with the number of SR-SCM
practices adopted by a firm, as are most of the control variables. Although Government and
Public exhibit a relatively high correlation of 0.753, variance inflation factors of all variables
were below a value of 6, indicating that multi-collinearity should not be a cause for concern
in the regression analysis (Hair et al., 2010).

Negative binomial regression analysis

Table 6 reports the results of the NB regression analysis. For each dependent variable, two
models were estimated, namely, one without and one including moderation effects. An
examination of the Pseudo-R2, log likelihood and goodness-of-fit statistics shows that including
interaction effects improves the overall fit and explanatory power of the regression models.
Significant results of additional omnibus tests confirm that the models fit the data well.
A positive, significant coefficient of Public in the Models 1a, 2a and 3a supports H1a. This
suggests that companies from countries with higher levels of public involvement in politics, and
with a greater freedom of expression are exposed to greater pressures to adopt SR-SCM practices.
The models for Compliance and Supplier Development (2a, 2b, 3a and 3b) provide
support for H1b as the coefficients are positive and significant, which fits the findings of
previous research (Bremmers et al., 2007). However, Models 1a and 1b point in the
opposite direction, suggesting that higher regulatory stringency and effectiveness
negatively effects SR-SCM implementation in terms of Communication. A possible
explanation for this observation could be that in countries with stricter regulation on
social issues the need to communicate action on SR-SCM decreases, as socially-
responsible behavior is already expected by law and not viewed as being a voluntary
endeavor beyond compliance and suggests a mixed relevance for Government.
Except for Model 3b, which indicates a significant and positive influence of Workforce on
SR-SCM, the coefficients of Workforce in the other models are not statistically significant.
Consequently, there is only weak support for H1c. This could point at a weak bargaining
power of workers’ associations when it comes to social issues in supply chains and, in
particular, activities aimed at Compliance and Supplier Development. It may also reflect the
lack of clarity whether confrontational or cooperative workforce is a good proxy for pressure
exercised on companies. Having said that, workers’ organizations usually focus on labor
issues within a certain country, and therefore, may not be concerned with advocating for
social sustainability practices within suppliers in foreign countries. This may explain the
lack of significance between workforce in the MNC country of origin and SR-SCM practice.
Support for H1d is partly provided by the empirical analysis, as Models 2b and 3b have
positive and significant coefficients. This is in accordance with theoretical considerations,
suggesting that companies need to comply with regulation to not deter their shareholders
and potential investors (Whitehouse, 2006). What is more, investments in Supplier
Development can reduce the risk of non-compliance and overall cost of capital, as investors
might be more willing to provide financial capital to compliant firms.
The results show that more intense and socially-oriented Competition in national
markets exercises a negative influence on the number of SR-SCM practices adopted
concerning both Compliance and Supplier Development (Models 2a, 2b, 3a and 3b). Only
Model 1a provides support for H1, which is in line with stakeholder theory, suggesting that
if the competition is intense and competitors simultaneously adopt high ethical standards,
firms that do not keep up will forfeit their competitiveness (Arnold and Hartman, 2003; Park-
Poaps and Rees, 2010). Nevertheless, it can also be argued that in highly competitive markets,
cost pressure is more pronounced, and therefore, companies might be less likely to adopt SR-SCM
 Communication Compliance Supplier Development
Variable 1a 1b 2a 2b 3a 3b

Public 0.184** (0.065) 0.101 (0.092) 0.480** (0.131) 0.407 (0.264) 0.308** (0.105) 0.129 (0.155)
Government 0.326** (0.076) 0.276* (0.114) 0.434** (0.129) 0.573** (0.205) 0.468** (0.121) 0.738** (0.176)
Workforce 0.001 (0.024) 0.030 (0.049) 0.016 (0.039) 0.136 (0.084) 0.018 (0.040) 0.255** (0.077)
Investors 0.014 (0.012) 0.022 (0.022) 0.005 (0.018) 0.106** (0.035) 0.031 (0.019) 0.113** (0.034)
Competitors 0.018** (0.005) 0.015 (0.009) 0.052** (0.007) 0.069** (0.013) 0.047** (0.007) 0.060** (0.012)
Civil society 0.035* (0.016) 0.104** (0.025) 0.131** (0.023) 0.059 (0.038) 0.153** (0.020) 0.111** (0.032)
Internationalization 0.151** (0.050) 0.927 (0.585) 0.550** (0.068) 2.142** (0.815) 0.404** (0.069) 2.095* (0.833)
Public  internationalization 0.141 (0.155) 0.087 (0.393) 0.305 (0.294)
Government  internationalization 0.084 (0.175) 0.447 (0.311) 0.793** (0.287)
Workforce  internationalization 0.096 (0.074) 0.223 (0.121) 0.425** (0.114)
Investors  internationalization 0.008 (0.034) 0.185** (0.049) 0.142** (0.050)
Competitors  internationalization 0.005 (0.014) 0.047* (0.020) 0.047* (0.019)
Civil society  internationalization 0.162** (0.042) 0.149* (0.061) 0.088 (0.057)
UN global compact 0.272** (0.031) 0.269** (0.032) 0.352** (0.047) 0.353** (0.048) 0.276** (0.047) 0.275** (0.048)
Fundamental human rights 0.334** (0.031) 0.343** (0.031) 0.536** (0.045) 0.535** (0.044) 0.542** (0.046) 0.541** (0.045)
Leverage 0.000 (0.000) 0.000 (0.000) 0.000** (0.000) 0.000** (0.000) 0.000* (0.000) 0.000* (0.000)
Firm size 0.124** (0.010) 0.122** (0.010) 0.097** (0.015) 0.095** (0.014) 0.135** (0.014) 0.132** (0.014)
Financial performance 0.008 (0.004) 0.008* (0.004) 0.008 (0.005) 0.007 (0.005) 0.010 (0.006) 0.009 (0.005)
GDP per capita 0.068 (0.046) 0.031 (0.047) 0.044 (0.073) 0.075 (0.082) 0.002 (0.078) 0.037 (0.087)
Primary sector 0.262** (0.062) 0.271** (0.061) 0.012 (0.070) 0.024 (0.072) 0.018 (0.073) 0.029 (0.071)
Secondary sector 0.354** (0.038) 0.354** (0.038) 0.191** (0.050) 0.196** (0.050) 0.147** (0.048) 0.157** (0.048)
Year dummies Yes
Observations 11,034
McFadden’s Pseudo R2 0.112 0.115 0.105 0.109 0.116 0.122
Log likelihood 20,855.69 20,799.91 20,458.60 20,365.26 17,507.12 17,383.20
Goodness-of-fit 2,242.16 2,281.43 1,732.36 1,823.84 1,811.99 1,868.55

Notes: n = 11,034; **p < 0.01; *p < 0.05; unstandardized coefficient estimates and robust standard errors clustered per company in parentheses shown

SR-SCM strategies
Supply chain

Table 6.
Results of the

regarding the three

regression analysis
negative binomial
management
SAMPJ measures that are associated with substantial investments. This might explain why Competition
is positively related to communication measures, which essentially represents the least proactive
and costly form of SR-SCM, but not to Compliance and Supplier Development initiatives.
Models 1a and 1b provide support for the hypothesized positive relationship between Civil
Society and SR-SCM (H1f) in accordance with theoretical arguments (Mont and Leire, 2009;
Gualandris et al., 2015). However, significant and negative coefficients in case of Compliance
(Models 2a and 2 b) and Supplier Development (Models 3a and 3b) point in the opposite direction.
If pressure from NGOs is high, companies thus, seem to prioritize communication strategies over
more profound socially responsible action. Another possible reason for the obtained results could
be that scrutiny from civil society might be higher in countries where SR-SCM is still an emerging
concept. As a result, in countries with a low implementation level of SR-SCM, we see higher
pressures from civil society to adopt socially responsible practices.
As hypothesized in H2, Internationalization is generally positively associated with the
implementation of SR-SCM practices, as confirmed by the positive and significant
coefficients in all models except for Model 1b. It can, therefore be concluded that more
globalized firms exhibit a higher visibility and are exposed to a greater number of varying
regulatory and cultural contexts, which can increase the pressure to be transparent,
compliant and supportive to suppliers in the context of social issues.
According to H3, a higher degree of internationalization should negatively moderate the
influence of home country stakeholders on SR-SCM. This claim is partially supported by the
empirical results. As shown by negative and significant coefficients of the interaction terms,
the relevance of national governments (Model 3b), the workforce (Model 3b), investors
(Models 2b and 3b) and civil society (Models 1b and 2b) is eroded the more global operations
of a company are. This diminishing effect of stakeholders mainly pertains to Supplier
Development, where three out of six interactions terms have a negative impact on SR-SCM,
followed by compliance (two out of six) and communication (one out of six). A possible
reason for this observation is that foreign labor laws, trade unions and investors become
more influential the more a company is exposed to business environments in other countries.
If suppliers are situated abroad, regulation on working conditions passed by national
governments of suppliers might be more relevant for supplier development than policies in
the MNC’s country of origin. While these results provide support for H3, it can be deduced
that the influence of Public is not dependent on whether firms are domestic or internationally
oriented because of statistically non-significant coefficients in all models. Moreover, the
variable Competitors exhibits negative and significant coefficients in Models 2b and 3b,
suggesting that national competition actually becomes more important for Compliance and
Supplier Development when companies operate in foreign markets.
With regard to the used control variables, it can be said that the general ethical
orientation of a firm has a positive influence on SR-SCM implementation, demonstrated by
the positive and significant coefficients of the variables UN Global Compact and
Fundamental Human Rights in all models. Although being rather marginal, Leverage also
has a positive and significant impact on both Compliance and Supplier Development,
implying that financial risk increases the likelihood of socially responsible behavior to
address investors’ concerns. In line with previous research, the results furthermore support
the notion that larger companies possess more resources and are potentially more visible, in
turn, leading to greater proactivity in terms of SR-SCM. This is illustrated by positive and
significant coefficients of Firm size in all models. Apart from Model 1b, the effect of
Financial performance is predominantly non-significant. Thus, a firm’s profitability does
not seem to be an important factor for the decision to pursue SR-SCM strategies. With
regard to the industry context, the results of the regression analysis provide further
evidence for what was deduced from the descriptive statistics (Table 5): businesses in the Supply chain
secondary sector are generally most active in adopting SR-SCM measures compared to those management
in the primary and tertiary sector. This applies to all three dimensions of SR-SCM when
comparing the secondary with the tertiary sector. Moreover, the primary sector is more
active in terms of Communication compared to the tertiary sector.

Robustness tests
Several tests were conducted to check the robustness of the results presented in the last section.
First of all, instead of estimating coefficients for the three strategic dimensions of SR-SCM
separately, a count variable for the sum of all implemented SR-SCM practices was used. As
depicted in Table 7, the regression Models 4a and 4b yield largely similar results compared to the
original models (Table 6). Another robustness test concerned the operationalization of the
independent variable Internationalization. As an alternate measure, a dummy variable was
created, which assumed a value of 1 if a firm’s share of foreign sales in total sales exceeds 50%
and a value of 0 if this figure amounted to less than 50%. The underlying rationale is that when a
company primarily depends on sales in foreign markets, the influence of home country
stakeholders might be lower compared to firms that mainly operate domestically. Interestingly,
the resulting dummy variable exhibited insignificant coefficients in all models. Although this

Total number of SR-SCM activities

Variable 4a 4b

Public 0.262** (0.077) 0.144 (0.113)

Government 0.194* (0.095) 0.325* (0.144)
Workforce 0.023 (0.031) 0.167** (0.062)
Investors 0.001 (0.015) 0.051 (0.028)
Competitors 0.024** (0.005) 0.031* (0.010)
Civil society 0.071** (0.018) 0.003 (0.029)
Internationalization 0.369** (0.056) 2.055** (0.668)
Public  internationalization 0.210 (0.204)
Government  internationalization 0.391 (0.217)
Workforce  internationalization 0.306** (0.093)
Investors  internationalization 0.103* (0.041)
Competitors  internationalization 0.026 (0.016)
Civil Society  internationalization 0.165** (0.047)
UN global compact 0.324** (0.035) 0.319** (0.035)
Fundamental human rights 0.475** (0.034) 0.480** (0.034)
Leverage 0.000* (0.000) 0.000* (0.000)
Firm size 0.137** (0.124) 0.136** (0.123)
Financial performance 0.113 (0.008) 0.011 (0.009)
GDP per capita 0.021 (0.057) 0.005 (0.067)
Primary sector 0.135* (0.060) 0.143* (0.061)
Secondary sector 0.263** (0.041) 0.264** (0.041)
Year dummies Yes
Observations 11,034
McFadden’s Pseudo R2 0.083 0.086 Table 7.
Log likelihood 30,213.14 30,112.71
Results of the
Goodness-of-fit 2627.72 2713.61
regression analysis
Notes: n = 11,034; **p < 0.01; *p < 0.05; unstandardized coefficient estimates and robust standard errors regarding the sum of
clustered per company in parentheses shown all SR-SCM activities
SAMPJ might be attributed to a loss of information caused by the dichotomous coding of the variable, the
results presented in Tables 6 and 7 should be judged with caution.

Discussion
The results of the empirical analysis reveal how firm practices are impacted by their stakeholders
and level of internationalization when implementing practices to address social sustainability
issues in supply chains. Applying the SR-SCM framework of communication, compliance and
supplier development to the findings reveals discrepancies across the different categories of
strategies and stakeholder pressures. In line with theoretical reasoning, it was found that more
globalized companies tend to adopt a greater number of SR-SCM practices. This is in accordance
with results from many of the previous studies on corporate sustainability. Moreover, the
empirical results provide support for the diminishing relevance of home country stakeholders
when companies become more international. This negative moderating effect is context-specific
as it does not apply to all stakeholders and strategic dimensions of SR-SCM. It can be said that
especially investors’ and civil society’s influence on firm behavior decreases the more a company
operates in foreign markets. In general, internationalization primarily erodes the relevance of
home country stakeholders for the implementation of measures in support of supplier
development, while communication and compliance strategies are affected less.

Communication
As expected in the literature that forms the background to SR-SCM, the findings reveal that
firms are pressured by the public to communicate SR-SCM, which aligns with previous
literature in this field (Carter and Jennings, 2004; Kauppi and Hannibal, 2017). NGO
stakeholders are also seen as a strong stakeholder in driving increased SR-SCM performance
also suggest that voluntary SR-SCM decreases as the law enforces sustainability practices
or reporting against sustainability practices. This fits with theories by (Shrivastava and
Hart, 1995; Hörisch et al., 2017), who suggest that CSR reporting can be used for marketing
and greenwashing as opposed to demonstrate compliance with legal requirements. This is
also true for competition, where high competition may be associated with increased
greenwashing, and overall communicating SR-SCM is not seen as a strong response to
competitive stakeholder pressures. There is also little evidence of communication with labor
organizations or with investors, suggesting that reporting communication is not a critical
communication channel when responding to these stakeholders. The findings also suggest
that the stakeholder pressure is not affected by internationalization in communication
strategies where only civil society displays a statistically significant effect on
communicating SR-SCM (with a negative relationship). This suggesting that NGO pressures
are less impactful for a firm’s communication performance away from the home country.

Compliance
The stronger relationship between Public and SR-SCM from a compliance strategy
perspective fits to the wider CSR-literature on the license to operate, and suggests that
demonstration of compliance is more important than simply communicating (Helfaya and
Moussa, 2017; Kauppi and Hannibal, 2017). The results of a much stronger relationship
under compliance strategies for Government, as well as for Labor and Investors similarly
confirm the suggestions that compliance with laws, worker demands and investor
requirements is seen as an important factor for companies (Hörisch et al., 2017). However, we
see the effects of competitors and NGOs to have a negative impact on compliance strategies in the
context of SR-SCM practices. In terms of internationalization, we did not detect any significant
impact of internationalization on compliance and that internationalization increases complexity in
the laws to be adhered to. The results suggest that companies are less inclined to comply with Supply chain
stricter regulations of the home country when operating in international contexts and do not fit management
with the ideas that socially responsible practices will be transposed internationally across the
supply chain (Sethi, 2015; Bartley, 2018). Similar ideas are also seen in following labor laws and
complying with investor demands. We do see some positive internationalization impacts on SR-
SCM compliance in terms of competition and NGOs, suggesting a drive toward companies
responding to non-state and non-geographically constrained.

Supplier development
In terms of supplier development, we see that the public is not a driver on SR-SCM practices.
We see that collaborative approaches are associated with value creating activities with the
other stakeholders. For example, supplier development can be used to pre-empt Government
actions, as suggested in academic literature (Shrivastava and Hart, 1995; Sarkis et al., 2010).
Labor representatives can help to encourage new ways of organizing economic activity, and
therefore, help to improve not only the financial performance of the firm but also its social
performance. Building up long-term, collaborative relationships with suppliers also reduces
risk and improves investor performance. However, supplier development does not appear to
have positive relationship with competitor and NGO pressures. Regarding
internationalization, a similar pattern to compliance is evident from the research in this
paper. The increased international complexity of international laws removes the positive
associations with SR-SCM for both Government and Labor. This international complexity
extends to investor protection and NGO response. However, internationalization does
appear to have a slight positive influence on the relationship between competition and SR-
SCM under a supplier development strategy. This suggests supplier development is
important for international competitive reasons. We also see that at present, supplier
development follows a similar pattern with regard to SR-SCM practices and effects of
internationalization as compliance. This may indicate that supplier development is, at
present, viewed as an extension of compliance strategies rather than as a distinct strategy.

Conclusions
From the findings of inferential statistical analysis in this paper, it is suggested that more
globalized firms exhibit higher public visibility, and are, therefore, exposed to a greater
number of varying regulatory and cultural contexts. These contexts can increase the
pressure to be transparent, compliant of regulations and supportive to the key stakeholders
in their industry. The results suggest that foreign labor laws and the prevalence of trade
unions become more influential as countries increase their internationalization. If suppliers
are located abroad, then regulations relating to working conditions in the country of supplier
appear more relevant than the laws and regulations from the company’s country of origin.
Therefore, in terms of the relevance of home country stakeholders, the results are mixed,
with different stakeholders exerting different impacts on SR-SCM performance depending
on whether the strategy is one of communication or of compliance/supplier development.
The results of this research have some important practical implications. To start with,
the quality and stringency of regulation and law enforcement have been shown to positively
affect SR-SCM. In consequence, governments should ensure that social issues in supply
chains are adequately covered by laws in a company’s country of origin. At best, regulation
should not only cover firms’ domestic operations but also their global activities. This
supports recent developments by policymakers in the UK, France and Germany to ensure
supply chain due diligence in relation to social issues. Second, the results indicate that
countries characterized by a greater public involvement in politics, freedom of association
SAMPJ and freedom of speech promote socially responsible corporate behavior. It is, thus, important
that citizens are given the possibility to raise their voice and publicly express their
disagreement with business misconduct and non-compliance. Apart from that, the role of
workers’ associations and investors in the social sustainability debate should be
strengthened, as the results of this study shows that both stakeholder groups are still of
relatively low importance for SR-SCM. For firms, the impacts of increased action toward
these activities within the supply chain should be captured through well-designed indicators
to ensure that internationalization factors and effects are captured. This adds not only to the
SR-SCM literature but will also have positive implications for sustainable accounting and
value chain perspectives and provide a boost to reporting systems.
The conclusions drawn from this study should be viewed in the context of its limitations.
First of all, because of its reliance on secondary data, the operationalization of pressures
from various stakeholders might not be congruent with actual perceptions of company
managers. It is, thus, advisable to use alternate measures for stakeholder pressure (e.g.
through survey instruments and qualitative interviews) to understand the stakeholder
perspective of how companies are engaging with SR-SCM. A second shortcoming might
result from the measurement of SR-SCM and the specification of the independent variables
in the model. As the used indicators do not necessarily cover all important aspects of what
constitutes SR-SCM, they should be validated further by increasing engagements with
stakeholders to ensure all relevant and legitimate stakeholders are included. This might
especially apply to the results concerning communication-related practices, as the observed
decrease in corporate activity between 2015 and 2016 could not be explained through solely
analyzing secondary data sources. Nevertheless, it is assumed that the proposed set of
indicators represents a promising starting point for subsequent studies, which can be
developed further to capture SR-SCM performance and be of relevance for disciplines such
as accountancy. For example, future research could look at other potential drivers for SR-
SCM in a company’s home country, such as national cultural or institutional characteristics,
which are not available in secondary databases but may be of importance in reflecting how
stakeholder pressures translate into SR-SCM practices. Future work should also determine
how the findings from this study can be applied to practical indicators that can be applied
the accounting and integrated reporting disciplines and address the underlying reasoning
for this drop in communication practices.

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Further reading
Banerjee, S. and Venaik, S. (2018), “The effect of corporate political activity on MNC subsidiary
legitimacy: an institutional perspective”, Management International Review, Vol. 58 No. 5,
pp. 813-844.

Corresponding author
Edeltraud Guenther can be contacted at: ema@mailbox.tu-dresden.de

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