Social compliance standards: Re-evaluating the buyer and supplier perspectives.

Buyers in developed countries often spend millions of dollars per year to ensure social compliance of their suppliers, yet the social performance of suppliers in developing countries remains poor. This paper discusses supplier social compliance in terms of adoption of public (e.g., SA 8000) and private (e.g., Walmart's supplier code of conduct) social standards and elaborates on the dynamics of standards adoption decision-making. Building upon ideas of asset specificity, social exchange, and organizational citizenship behavior, this paper develops propositions to provide an overarching framework explaining the adoption of public and private social standards. The paper shows that buyers and suppliers have different perspectives towards the adoption of public and private standards. Accordingly, the extent of supplier social compliance also varies based on the type of standard adoption. Further, adopting multiple social standards, i.e., both private and public, may not bring a corresponding increase in supplier social performance. Finally, from a buyer perspective, the selection of a particular social standard may require managing trade-offs. The findings can help managers in making better social compliance decisions. • Suppliers will prefer public standards due to their lower asset specificity. • Public standards decrease the transaction cost of the buyer. • Private standards allow buyers to customize social compliance requirements. • Public standards can trigger citizenship behavior in supplier employees. • Buyers trade-off cost with flexibility when choosing social standards. [ABSTRACT FROM AUTHOR]