"Building and Transforming to Achieve Social and Environmental Compliance in Global Value Chains: A Dynamic Capabilities View"
Multinational corporations (MNC) are under increasing pressure to improve social and environmental standards in their global value chains (GVC). “Cascading compliance,” the process by which MNCs distribute codes of conduct and request their suppliers to “cascade” those standards to their suppliers, has become the primary method of achieving improving compliance. Yet, even firms strongly motivated to improve compliance may be exposed to supplier compliance shortcomings and we find that these MNCs have little guidance on how to improve their compliance systems. We build a dynamic capability framework to conceptualize higher-order routines MNCs need to orchestrate their GVC social and environmental compliance. We establish three key MNC roles—the internal prioritizer, external developer, and network transformer—that align with Teece’s (2007) concepts of sensor, seizer, and transformer, and we highlight four crucial capabilities associated with each role by drawing upon prior research in operations, sustainability, and supply chain management. Our framework has significant practical value for both scholars and managers as it delineates between levels of analysis as well as temporal considerations.
*Co-authored with Luke Fiske (Queen’s University), Anthony Goerzen (Queen’s University).
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