How plural sourcing can help achieve corporate social responsibility in outsourcing relationships

Xun Tong*, Miriam Michiko Wilhelm, Shuo Wang

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract / Description of output

Outsourcing promises economic benefits but creates corporate social responsibility (CSR) risks: As activities are placed outside of a firm’s boundary, firms struggle to adequately measure the performance of their suppliers, particularly with regards to their environmental and social issues. This can lead to increased agency risks due to supplier’s hidden action such as covering up non-compliances. In this paper, we investigate how a buying firm’s sourcing strategy could alleviate some of the CSR-related agency-risks of outsourcing. A plural sourcing strategy builds on the simultaneous pursuit of distinct governance forms (such as make and buy, or make and ally, or all three forms combined). We use an extended agency-theory framework to argue that the buyer’s actual manufacturing experience that is part of plural sourcing can help the buyer to build evaluative capabilities regarding supplier’s internal CSR, and thereby overcome agency-related performance measurement problems. The effectiveness of plural sourcing to overcome agency problems in the outsourcing relationship is further contingent on two conditions: 1) the specific business segment (primary vs. secondary) where plural sourcing takes place; and the buying firm’s presence (i.e., is owning facilities) in the sourcing countries. To test our hypotheses, we consolidate a panel data set consisting of 9,057 firm-year observations based on U.S. publicly traded manufacturing firms. This study combines hitherto unconnected strands of literature on plural sourcing strategies and outsourcing-related CSR-risks to offer novel insights for improving CSR in global supply chains. It also offers an extension of agency theory to incorporate CSR-specific monitoring problems.
Original languageEnglish
Title of host publicationAcademy of Management Annual Meeting Proceedings 2023
PublisherAcademy of Management
DOIs
Publication statusPublished - 1 Aug 2023
EventAOM Annual Meeting 2023: Annual Meeting of the Academy of Management - Boston, Boston, United States
Duration: 4 Aug 20238 Aug 2023
https://aom.org/events/annual-meeting/future-annual-meetings

Publication series

NameAcademy of Management Proceedings
PublisherAcademy of Management
Number1
Volume2023
ISSN (Print)0065-0668
ISSN (Electronic)2151-6561

Conference

ConferenceAOM Annual Meeting 2023
Country/TerritoryUnited States
CityBoston
Period4/08/238/08/23
Internet address

Keywords / Materials (for Non-textual outputs)

  • AOM Annual Meeting Proceedings 2023
  • AOM Boston 2023
  • Operations and Supply Chain Management

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