Multinational corporations (MNCs) hire auditors to assess their business partners’ compliance with quality, working conditions, and environmental standards. Independent third-party auditors are widely assumed to outperform second-party auditors employed and thus controlled by MNCs. Synthesizing literatures on auditor independence and outsourcing decisions, we compare how independence and control can affect auditor performance. Using proprietary data from a global apparel brand, we find that second-party auditors outperform independent third-party auditors, and that third-party auditors’ performance improves when MNCs concurrent source audits, using both second- and third-party auditors. However, both second- and third-party auditors perform better with more independence from the entities they audit—specifically, when auditing factories most recently audited by a different firm. These findings yield important insights for more effective monitoring of business partners.
Tata Consultancy Services (TCS), a multinational IT services company headquartered in Mumbai, is a subsidiary of one of India’s most reputed conglomerates, the Tata Group. In 2020, TCS was valued at $144.7 billion, the highest for any company in the IT sector, globally. In the immediate aftermath of the COVID-19 crisis, like many companies around the world, TCS moved to remote working. The leadership of the company saw the myriad benefits of remote work. As the company planned for the future roadmap in the post-COVID world, it decided on a blended model. By 2025, only 25% of TCS employees would need to work in company facilities and no employee would need to spend more than 25% of their work hours in a physical office for the company to be productive. For this work model to be successful, the TCS management team had to brainstorm four key areas: What should the norms be for 25% in-person and who should determine them—senior managers, associates, clients, government regulators? How should the company convince veterans that virtual mentoring was as effective—if not more so—in preserving and further enriching the culture of mentorship? How should TCS deal with labor regulations around the world, if ‘Talent on the Cloud’ led to workers relocating and living in different geographies? Finally, how should TCS pitch this new model of work to clients once the pandemic eased?
Urban Company is an India based market platform that helps customers book home services and at home beauty services. The company differentiated itself by investing heavily in building customer trust. Rather than merely positioning itself as a lead generating platform, like many other marketplace platforms such as Uber, Airbnb, and Trip Advisor have done, the company invested in training and supporting the service providers, thus getting significantly involved in the service delivery process itself. While this approach increased the company’s costs and slowed down its growth, the company’s founders believed that its strategy will ultimately lead to a more sustainable business model. During the COVID pandemic, while the company’s business was under significant pressure, the founders proposed to double down on this approach even further to build differentiation, and to strengthen customer trust even more. Is this strategy viable? How should the company leverage its current market position as it examines expansion into new verticals, new customer segments, and new geographies?
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Anjali Raina is the Executive Director of the Harvard Business School India Research Centre. In her leadership role at the IRC, Anjali focuses on building and maintaining relationships with senior business leaders in the region to facilitate the work of the center in research, educational programs, community building and faculty development.
Under her leadership, the IRC has facilitated the writing of over 168 case studies on Indian Business Practice and supported half a dozen research projects. Anjali has co-authored several case studies such as Aadhaar: India’s ‘Unique Identification’ System, TeamLease: Putting India to Work (II) Legally; Pratham – Every Child in School and Learning Well; Naina Lal Kidwai: Investing in Her Country; Tech Mahindra and the Acquisition of Satyam Computers (A); HN Agri Serve : Growing Prosperity as well as an HBR Article on The Ordinary Heroes of the Taj.
Anjali wears several additional hats. She is a Director on the Board of Harvard Business Publishing, India, the Regional President (Western Region) of NHRDN, an Advisor to The Akanksha Foundation, Trustee to LIFE Trust, an Advisory Member on the Board of HBS Club of India, and on the Advisory Board of the Indian Business School.
Prior to joining HBS IRC Anjali spent 15 years with Citigroup India, most recently as Country Director, before which she worked for more than a decade with ANZ Grindlays Bank PLC. Anjali holds an MBA from the Indian Institute of Management, Calcutta, a bachelor's degree (Eng. Hons) from Loreto College and is an alumnus of HBS having completed the Advanced Management Program.