The influence of institutional pressures and organization culture on Supplier Social Compliance Management Systems

Abstract

Purpose: The purpose of this paper is to use institutional theory to develop the constructs of institutional pressures for social compliance and argue for a positive relationship between institutional pressures and Supplier Social Compliance Management System (SSCMS). Moreover, the authors theorize that the impact of institutional pressures on SSCMS is moderated by the supplier’s organizational culture. This is done in a particularly salient context, which is apparel manufacturing in a developing country. Design/methodology/approach: The hypothesized model is tested using data of 164 suppliers from the apparel manufacturing sector. PLS-based structural equation modeling is used to test the direct and multi-group moderation hypotheses. Findings: Empirical examination provides evidence that institutional pressures have a positive impact on supplier social compliance and the types of organizational culture have varied moderation effects. Research limitations/implications: This research is based on cross-sectional data from one industry. Future research should collect data from diverse sectors in different countries. Practical implications: The findings suggest that consistent pressures from various stakeholders can increase supplier social compliance. In addition, the partial evidence for moderation effect of organizational culture indicates that supplier’s internal value system’s alignment with social compliance pressures plays an important role in determining how supplier acts on social compliance initiatives. Originality/value: The issue of suppliers’ adoption of social compliance management systems has become prominent as a consequence of the shifting of manufacturing to developing countries. However, comprehensive frameworks explaining antecedents of adoption of SSCMS using large-scale empirical data are limited. In addition, findings on the relationship between supplier social sustainability practices and their antecedents are inconsistent.