Today, most Multinational Corporations (MNCs) are eager to install sustainable standards not just within their own but also within their supply chain operations. While the two pillars of
sustainability, economic and environmental, are well researched within this field of business, the third pillar, social sustainability (SSS)lags behind within the researchers' focus. However, because of recent social scandals within the supply chain operations of Multinationals, an investigation targeting social sustainability and its effective implementation within the supply chain would provide important insights into such yet neglected field of research.
This thesis tries to tackle this issue and analyses whether MNCs extent their SSS practices to suppliers in regulatory distant countries the same way as they do within countries close to their home market. The thesis intends to fill the research gap which exists around SSS and provides valuable insides into how consistent MNCs are in extending SSS practices among their supplier network.
On the basis of telephone interviews and company data, the thesis analyses the social sustainability efforts of The Otto Group, the second largest online retailer in the world. The two methods to monitor suppliers' compliance that are examined in this thesis are assessment and collaboration.
Results show, that Multinationals should not rely on either one of these two monitoring methods, but should combine them, using Assessment only as first step, and Collaboration as second. Since assessment usually provides the buyer solely with a snapshot of the current situation at suppliers' site, collaboration as second step provides the relationship with a more mutual character. Frequent non-compliance of parties, the buyer and the supplier, emphasise that collaboration and therefore mutual controlling processes are necessary. In case the business relationship between buyer and supplier does involve operations in risky, low
regulated countries, these findings are even more highlighted.
Table of Contents
1. Introduction
1.1 Nike as example for the transition of a MNC towards SSS
1.2 Increasingly complex supplier structures
2. International development of MNCs
2.1 Imperatives for MNCs to expand internationally
2.2 Problems associated with expansion of MNCs
2.3 Increased exposure of MNCs
3. Literature review
3.1 Definition of social sustainability
3.2 Social sustainability and performance
3.2.1 Corporate financial performance
3.2.2 Corporate social performance
3.3 SSS within the supply chain of MNCs
3.3.1 Context of SSS within the supply chain
3.3.2 Implementation process
3.4 Institutional social guidelines
3.4.1 The International Labour Organisation (ILO)
3.4.2 Organisation for Economic Co-operation and Development (OECD) Guidelines on Multinationals
3.4.3 United Nations (UN) – Global Compact (GC)
3.4.4 The Fair Labour Association (FLA)
3.5 Individual social guidelines – codes of conduct
3.6 Sustainable risk management of MNCs as competitive advantage
3.7 Tools to monitor supplier’s adherence: assessment versus collaboration
3.8 Influence of the regulatory environment on SSS of MNCs
4. Methodology
5. The Otto Group – A case study about social sustainability and its effective implementation within a MNC
5.1 The Otto Group
5.1.1 Company overview
5.1.2 Company history
5.2 The Otto Group and social sustainability
5.2.1 Vision from the top
5.2.1.1 Top management and its influence on SSS
5.2.1.2 The Otto Group’s SSS organisation
5.2.2 Extensive audit system
5.2.2.1 The Otto Group’s codes of conduct
5.2.2.2 The Otto Group’s social programme
5.2.3 Assessment – Collaboration of suppliers
5.2.3.1 The Otto Group’s supply chain management in low regulated markets
5.2.3.2 Social Officers
5.2.3.3 Classification system
5.3 Lessons learned
6. Conclusion
6.1 Round up
6.2 Future analysis
6.3 Limitations
Research Objectives & Key Topics
This thesis examines the consistency with which multinational corporations (MNCs) extend their social sustainability (SSS) practices to suppliers in regulatory distant countries compared to their domestic markets. The primary research question is: "Do MNCs use the same practices in different regulatory environments when extending sustainability to suppliers?"
- Analysis of social sustainability integration within global supply chains.
- Evaluation of MNCs' responses to increased stakeholder pressure and public exposure.
- Comparison of "assessment" versus "collaboration" as monitoring strategies for supplier compliance.
- Case study of the Otto Group’s strategic approach to managing SSS across diverse regulatory environments.
- Assessment of the role of top management, corporate codes of conduct, and social auditing systems.
Excerpt from the Book
1.1 Nike as example for the transition of a MNC towards SSS
The example of Nike, the world largest athletic shoe company with nearly 40.000 employees and close to US$21 billion in revenues, is a poster child example of why it is essential for MNCs to move towards SSS. This transition discloses how a multinational company, with over 930 suppliers that employs over one million workers globally, can move from having naive and irresponsible sustainability operations to a company which sets industry wide standards in terms of making information about its network transparent and introducing high standards of supplier requirements within its value chain (United States Bureau of International Labour Affairs 2012; The Economist 2012).
In the early 1990s, non-governmental organisations (NGOs) and other human activists accused Nike and its suppliers of employing underage workers in so called sweatshops. They denounced the dire working conditions and started a global boycott on Nike clothing (Zadek 2004; Lim and Phillips 2007). Sweatshops can be defined as an “employer that violates more than one federal or state labour law governing minimum wage and overtime, child labour, industrial homework, occupational safety and health, workers compensation or industry regulations” (United States Bureau of International Labour Affairs 2012).
After product boycotts started to increase, Nike finally had to give in and changed its entire corporate social practices by moving from arms-length contracting to collaborative partnerships (Lim and Phillips 2007). The company created a corporate responsibility department, increased the minimum working age from 16 to 18 and set up air quality standards at all of its 350 overseas Asian plants where most of the labour rights scandals took place (Richards 1998; Zadek 2004). In order to guarantee minimal ethical working conditions within the company’s supply chain, Nike introduced social standards in form of codes of conducts that had to be signed by its suppliers (Phillips and Caldwell 2005).
Summary of Chapters
1. Introduction: This chapter introduces the topic of social sustainability in MNC supply chains and highlights the importance of the field through the Nike case study.
2. International development of MNCs: This chapter analyzes the motives for MNCs to expand globally and the associated problems and increased exposure they face in foreign markets.
3. Literature review: This section covers definitions of social sustainability, the link to financial and social performance, and examines various institutional guidelines like ILO, OECD, and the UN Global Compact.
4. Methodology: This chapter outlines the case study approach focusing on the Otto Group to analyze practical SSS implementation strategies.
5. The Otto Group – A case study about social sustainability and its effective implementation within a MNC: This chapter provides a detailed analysis of the Otto Group's organizational structure, its auditing systems, and its strategic mix of assessment and collaboration for supplier management.
6. Conclusion: The final chapter summarizes the findings regarding MNC consistency in SSS practices, addresses future research directions, and highlights limitations of the study.
Keywords
Social Sustainability, SSS, Multinational Corporations, MNCs, Supply Chain, Corporate Social Responsibility, CSR, Codes of Conduct, Supplier Compliance, Assessment, Collaboration, The Otto Group, Regulatory Environment, Stakeholder Pressure, Risk Management
Frequently Asked Questions
What is the core focus of this research paper?
The paper explores the implementation of social sustainability (SSS) standards by multinational corporations (MNCs) within their global supply chains, specifically analyzing how they adapt to different regulatory environments.
What are the primary themes addressed?
Key themes include the challenges of managing global supply chains, the pressure from stakeholders on MNCs, the effectiveness of various institutional social guidelines, and the strategic differences between assessing and collaborating with suppliers.
What is the main objective of the thesis?
The main objective is to investigate whether MNCs maintain consistency in their social sustainability practices when operating in countries with vastly different regulatory frameworks.
Which scientific methods are utilized?
The thesis utilizes a literature review to establish the theoretical framework and employs a specific case study of the Otto Group, incorporating company data and top-management interviews to analyze real-world SSS implementation.
What topics are discussed in the main body?
The main body examines the evolution of MNCs, existing literature on SSS, institutional guidelines like the UN Global Compact and ILO, and a deep-dive analysis of the Otto Group's organizational structure and auditing processes.
Which keywords define this work?
The most relevant keywords include Social Sustainability (SSS), Multinational Corporations (MNCs), Supply Chain, Corporate Social Responsibility (CSR), and Supplier Compliance.
How does the Otto Group manage supplier compliance in risky environments?
The Otto Group uses an extensive audit system combined with a "Social Officer" program. They move from assessment to collaboration if non-compliance is detected, aiming to help suppliers improve rather than simply terminating contracts, unless severe breaches occur.
What distinguishes the Otto Group’s approach from other MNCs?
The Otto Group demonstrates a strong commitment from top management and integrates sustainability into its corporate core, utilizing a decentralized system of Social Officers to provide direct training and support in high-risk markets.
What conclusion does the author reach about assessment and collaboration?
The author concludes that neither assessment nor collaboration should be used in isolation. Assessment serves as an effective first-step control mechanism, while collaboration is essential as a second step to foster long-term mutual relationships and sustained improvement.
- Arbeit zitieren
- Constantin Beyer von Morgenstern (Autor:in), 2012, Social Sustainability Practices within the Supply Chain of Multinational Corporations, München, GRIN Verlag, https://www.grin.com/document/206260
