Working Paper | HBS Working Paper Series | 2015

Monitoring Global Supply Chains

by Jodi L Short, Michael W. Toffel and Andrea R. Hugill


Firms reliant on supply chains to manufacture their goods risk reputational harm if the working conditions in those factories are revealed to be dangerous, illegal, or otherwise problematic. While firms are increasingly relying on private-sector "social auditors" to assess factory conditions, little had been known about the accuracy of those assessments. We analyzed nearly 17,000 code-of-conduct audits conducted at nearly 6,000 suppliers around the world. We found that audits yield fewer violations when the audit team had been at that particular supplier before, when audit teams are less experienced or less trained, when audit teams are all-male, and when the audits were paid for by the supplier instead of by the buyer. We describe implications for firms relying on social auditors and for auditing firms.

Keywords: Monitoring; transaction cost economics; industry self-regulation; auditing; Codes of conduct; supply chains; corporate social responsibility; globalization; Accounting Audits; Developing Countries and Economies; Supply Chain; Operations; Corporate Social Responsibility and Impact; Safety; Social Issues; Social Enterprise; Labor; Working Conditions; Law Enforcement; Globalization; Corporate Accountability; Fashion Industry; Forest Products Industry; Manufacturing Industry;


Short, Jodi L., Michael W. Toffel, and Andrea R. Hugill. "Monitoring Global Supply Chains." Harvard Business School Working Paper, No. 14-032, October 2013. (Revised June 2015. Previously titled "Monitoring the Monitors: How Social Factors Influence Supply Chain Auditors.")