KCG Studies about Standards along the Global Supply Chains
A new KCG study (Görg et al., forthcoming) addressing multinational enterprises (MNEs) with production sites in Africa shows that MNEs are indeed able to influence the working and production conditions of their suppliers in Africa, if the MNEs are motivated to do so. For example, production conditions of MNEs are found to be established in a more sustainable way in Africa, if their products were exported to developed countries such as to Europe or the USA, compared to having been exported to less developed countries like China.
In order to improve working and production conditions worldwide, firms’ own motivation may, however, not be sufficient. Here global incentives driven by measures that aim at increasing transparency along the global supply chains, for example, publicizing drawbacks in working and production conditions of firms would be the key. Moreover, MNEs need to be convinced of potential economic benefits of their active measures in improving working and production conditions of local suppliers in a more socially and environmentally sustainable way. That MNEs can benefit from active measures in this regard reflected in, for example, increase in their productivity and better avoidance of unnecessary supply shortages, was supported by findings from Görg and Seric (2016). More concretely, active engagement of MNEs in local suppliers’ operations has significantly positive impact on the productivity, innovation performance and product quality of local suppliers.
More information can be found here:
(1) Görg, H., Handley, A., Hoffmann, S., Seric, A. (forthcoming). When do Multinational Companies Consider Corporate Social Responsibility? A Multi-Country Study in Sub-Saharan Africa, Business & Society Review.