Implementing Supplier Codes of Conduct in Global Supply Chains: Process Explanations from Theoretic and Empirical Perspectives

Western buying companies impose Supplier Codes of Conduct (SCC) on their suppliers in developing countries; however, many suppliers cannot fully comply with SCC and some of them even cheat in SCC. In this research, we link contract characteristics – price pressure, production complexity, contract duration – to the likelihood of supplier’s commitment to SCC through a mediating process: how the buying companies govern their suppliers. Our structural equation model analysis shows that the hierarchy/relational norms governance is a perfect mediator of contract characteristics’ effects on the likelihood of supplier’s commitment; the market governance, an insignificant one. The managerial implications are provided for successfully implementing SCC in global supply chains.