Developing country sub‐supplier responses to social sustainability requirements of intermediaries: Exploring the influence of framing on fairness perceptions and reciprocity

• Date: 01 March 2018
• Published date: 01 March 2018
• DOI: http://doi.org/10.1016/j.jom.2018.04.001

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Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

Developing country sub-supplier responses to social sustainability

requirements of intermediaries: Exploring the influence of framing on

fairness perceptions and reciprocity

Vivek Soundararajan

a,∗

, Stephen Brammer

b

a

Birmingham Business School, University of Birmingham, Birmingham, West Midlands, United Kingdom

b

Faculty of Business and Economics, MacQuarie University, Sydney, Australia

ARTICLE INFO

Accepted by: Tyson Browning

Keywords:

Social sustainability

Multi-tier supply chains

Developing country

Sub-suppliers

Intermediaries

Framing

Fairness

Reciprocity

ABSTRACT

Research on social sustainability in multi-tier supply chains is limited. Specifically, we know very little about a)

the micro-processes involved in the way in which sub-suppliers (i.e., first-tier suppliers or sourcing agents)

respond to the sustainability requirements imposed by their intermediaries; and b) the micro-level antecedents

that condition their responses. To address these gaps, we used a longitudinal multiple case study method to

explore multiple intermediary –sub-supplier dyads in South India's knitwear garment industry and drew upon

constructs of behavioural economics. We found that the way in which intermediaries frame social sustainability

requirements and their associated procedures influence both the way in which sub-suppliers perceive the pro-

cedural fairness of those requirements and the way in which they thus reciprocate. When intermediaries frame

social sustainability requirements as ‘opportunity’and engage in various procedures perceived to be procedu-

rally fair by sub-suppliers, the latter reciprocate positively. Contrastingly, when intermediaries frame social

sustainability requirements as ‘insulation’and engage in various procedures perceived to be procedurally unfair

by sub-suppliers, the latter reciprocate negatively. Under the production-dominant framing, sub-suppliers ex-

hibit positive reciprocity only related to processing production orders. Our analysis inductively generated

propositions that emphasize the important role played by framing in shaping the perceptions of fairness held by

sub-suppliers towards social sustainability requirements and the reciprocity of the latter's responses to them.

1. Introduction

Social sustainability in supply chains is mainly concerned with im-

proving the rights, welfare and entitlements of workers and enhancing

the quality of their employment (Huq et al., 2016). The increasing

global reach and complexity of many multi-tier global supply chains

poses particular challenges for ‘lead’firms trying to manage social

sustainability (Mena et al., 2013). Much of this complexity stems from

the supply chain's exposure to institutional environments characterized

by weak legal frameworks (Khalid et al., 2015). In multi-tier supply

chains, most social sustainability outcomes are, inevitably, a product of

practices and activities that arise beyond the boundaries of the lead

firm. However, effectively influencing the practices of firms beyond

first-tier dyadic relationships (direct buyer-supplier) is complicated by

the increasingly global scope of supply relationships (Seuring et al.,

2008), the lack of information on the identity and activities of sub-

suppliers (i.e., second-tier to n

th

-tier firms) (Wilhelm et al., 2016), and

the absence or weakness of traditional contractual governance

mechanisms and institutions responsible for enforcing contracts, more

likely in developing countries (Grimm et al., 2014). The challenges

linked to ensuring social sustainability beyond direct supply relation-

ships have meant that many of the severe and damaging examples of

unsustainable conduct have arisen in the context of sub-supplier fac-

tories (Grimm et al., 2016).

The recognition of the difficulties associated with directly managing

social sustainability at the sub-supplier level has resulted in lead firms

transferring the responsibility to first-tier suppliers or sourcing agents

(henceforth, intermediaries). For example, Wilhelm et al. (2016)

showed how and under what conditions first-tier suppliers take on a

double agency role that sees them acting as agents for their lead firms

implementing the sustainability requirements in their own operations,

and acting as agents to make their suppliers implement the sustain-

ability requirements imposed by the lead firms. Similarly,

Soundararajan et al. (2018) explored the boundary-spanning role

played by the sourcing agents commonly found in the textile and gar-

ment supply chains in improving working conditions. They showed

https://doi.org/10.1016/j.jom.2018.04.001

Received 26 October 2016; Received in revised form 27 March 2018; Accepted 9 April 2018

∗

Corresponding author.

E-mail addresses: v.soundararajan@bham.ac.uk (V. Soundararajan), stephen.brammer@mq.edu.au (S. Brammer).

Journal of Operations Management 58–59 (2018) 42–58

Available online 30 April 2018

0272-6963/ © 2018 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/BY/4.0/).

T

that, under certain conditions, sourcing agents act as boundary span-

ners performing work aimed at dismantling or bridging the various

boundaries that affect the interaction between lead firms and sub-

suppliers with respect to improving working conditions. While they

highlighted the shifting roles played by intermediaries, research on the

conditions under which sub-suppliers in developing countries, who

depend on ad-hoc spot production contracts granted by intermediaries,

positively or negatively respond to their social sustainability require-

ments is extremely scant. Specifically, the extant research has shed

relatively little light on the ‘micro-level behavioural processes’or

‘micro-processes’that are involved in the sub-supplier management of

social sustainability requirements and related exchanges between sub-

suppliers and intermediaries. Micro-processes refer to interpersonal and

interactional processes (Staw and Sutton, 2000). Therefore, it is the sub-

supplier - intermediary dyads, and the interaction between them with

respect to social sustainability requirements, especially sub-suppliers’

perceptions of the way in which the requirements are imposed, that are

of central importance to this research.

Therefore, in this article, we ask two questions. a) What micro-

processes are involved in the response of sub-suppliers to the social

sustainability requirements imposed by their intermediaries? b) What

are the micro-level antecedents that condition the responses of sub-

suppliers? We explore these questions by means of an in-depth long-

itudinal multiple case study of intermediary-sub-supplier dyads located

in Tirupur, India. Specifically, by drawing on theoretical constructs

from behavioural economics—namely, procedural fairness (Folger and

Konovsky, 1989), reciprocity (Fehr and Gächter, 1998) and framing

(Levin et al., 1998)—we explore the conditions under which sub-sup-

pliers perceive social sustainability requirements as either fair or unfair

and, thus, on the likelihood that they will reciprocate in those dyadic

relationships by attempting to meet social sustainability requirements.

Our study of the micro-level processes involved in multi-tier supply

relationships shows the connection between intermediaries' framing of

social sustainability requirements and associated procedures, and sub-

suppliers’perceptions of fairness and reciprocity.

Our findings make several important contributions. First, by

adopting a micro-level lens, we show the importance of intermediaries’

framing of sustainability requirements in triggering different types of

procedural fairness perceptions and reciprocity in developing country

sub-suppliers. Second, while literature on framing (e.g. Levin et al.,

1998) suggests that framing alone can induce behavioural changes, our

findings show that framing of social sustainability requirements has to

be coupled with associated procedures to influence fairness perceptions

and reciprocal behaviour of sub-suppliers. Third, our study contributes

to the crisis literature (Bundy et al., 2017) by capturing framing

maintenance and framing shift induced by crisis situations, and the

importance of establishing positive pre-crisis stakeholder relationships

for effective crisis management. Finally, the study also contributes to

emerging behavioural operations management research by qualita-

tively capturing the micro-level exchanges between sub-suppliers and

intermediaries with respect to social sustainability. These findings

highlight the importance of moving beyond instrumental approaches to

social sustainability like pressure, financial incentives, or penalties and

focus on relational processes like dialogue, collaboration, and trust-

building (Jiang, 2009). We argue that understanding the micro-level

processes is critical for the development of innovative sub-supplier

management practices that encourage improved social sustainability

across multiple tiers of global supply chains.

Our paper proceeds as follows. We begin by offering a review of the

literature on social sustainability in global supply chains, framing,

fairness perception and reciprocity, and present our conceptual model.

Then, we describe the research design adopted to answer the research

questions, followed by a comprehensive discussion of the findings

emerging from the data. This is followed by a discussion of the findings

and the development of propositions. Finally, we conclude by offering a

summary of key findings, and discuss the theoretical and practical

implications, limitations, and future research directions.

2. Literature review

According to Wilhelm et al. (2016), most serious social failures

happen at the sub-supplier level of global supply chains. For instance, in

2011, the Dutch based non-governmental organization (NGO) Centre

for Research on Multinational Corporations (SOMO) published a report

titled ‘Captured by Cotton’, which exposed the widespread exploitation

of young girls in Indian garment sub-supplier facilities that produce for

well-known brands like ASOS, Next, C & A, Mothercare, and H & M.

This report attracted numerous local and international activists, media

coverage, and public debates pressurizing brands and retailers. The

social impact of the poor management of social sustainability issues in

developing country supplier facilities is immense. Continuing occur-

rences of worker suicide in the factory of Apple's Chinese supplier

Foxconn (The Wall Street Journal, 2016), fire accidents in Bangladeshi

factories even after the Rana Plaza disaster (AlJazeera, 2016), and

modern slavery practices in supplier facilities in Southern India (Indian

Committee of the Netherlands, 2017) are some instances of key evi-

dence of the inadequate management of social sustainability.

Given the weak regulatory settings found in these contexts, private

social sustainability requirements—in the form of third-party certifi-

cations and lead firm codes of conduct (CoCs)—have emerged as the

primary means through which lead firms monitor and improve social

sustainability in their supply chains (Locke et al., 2009). These re-

quirements are rooted in International Labor Organization (ILO) con-

ventions and local regulations, and share the common intention of

improving social sustainability in supply chains. Although social sus-

tainability requirements are growing, research, media, and NGO reports

frequently remind us of their serious limitations in bringing about

genuine improvements. Some scholars have even argued that, at times,

such requirements push suppliers to engage in unethical behaviours

(e.g., Awaysheh and Klassen, 2010;Lund-Thomsen and Lindgreen,

2014).

Until recently, very few studies focussed on the ways in which social

sustainability requirements must be designed and implemented for

improved compliance among developing country suppliers (e.g.,

Bartley, 2011;Jiang, 2009). For example, Bartley (2011) developed an

institutional layering approach and argued that, to increase com-

pliance, social sustainability requirements must be layered on multiple

other institutional norms and regulations in the contexts in which

suppliers are located. Based upon a study of Chinese apparel and textile

suppliers, Jiang (2009) argued that an arm's length relationship man-

agement approach reduces compliance among suppliers, while a col-

laborative one improves it.

Due to the complexity of their global supply chains, it is problematic

for lead firms to manage suppliers beyond those in first-tier (Wilhelm

et al., 2016). Because of their indirect relationship with sub-suppliers,

information asymmetry, and limited transparency, the traditional con-

trol and/or pressure exercised by lead firms tend to have limited in-

fluence on the former's behaviours (Grimm et al., 2016). Thus, lead

firms transfer the responsibility of managing sub-suppliers to their first-

tier suppliers or middlemen (Grimm et al., 2014). According to Wilhelm

et al. (2016),first-tier suppliers or middlemen act as intermediaries and

play a double agent role by implementing sustainability in their own

operations and by ensuring that their own suppliers comply with the

requirements of sustainability standards. These important insights

notwithstanding, we still lack an in-depth understanding of the devel-

oping country sub-suppliers’perspectives and behaviours towards so-

cial sustainability demands and the micro-level interactions occurring

between the intermediaries and the sub-suppliers that shape them.

2.1. Challenges faced by developing country sub-suppliers

Sub-suppliers in developing countries face at least three challenges

V. Soundararajan, S. Brammer Journal of Operations Management 58–59 (2018) 42–58

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