Abstract

When managing a global supply chain, one critical challenge encountered by multinational enterprises (MNEs) is the extension of corporate social responsibility (CSR) practices to suppliers in emerging countries. In this study, we use a multi-method approach to explore 1) the nature of suppliers’ CSR heterogeneity based on the various components of CSR in emerging countries, and 2) the choices of MNEs for extending CSR to different types of suppliers in dynamic environments. We begin with a survey of Chinese original equipment manufacturers (OEMs) servicing MNEs to examine how these suppliers vary in CSR implementation based on cluster analysis results. To understand the choices made by MNE buyers for extending CSR to their OEM suppliers, we conduct an agent-based simulation study considering the dynamics of a system with multiple agents (i.e., MNE buyers, OEM suppliers, and the government). The cluster analysis results show that CSR practices implemented by Chinese OEMs differ significantly from one another and can be classified into three clusters (i.e., Leader, Follower, and Laggard). The simulation results provide insights into how the adaption costs (e.g., upgrade cost and cost saved by downgrading) and punitive (inspection with possible penalties) and supportive (subsidies) tactics adopted by the government affect the choices made by MNE buyers for extending CSR practices to suppliers in emerging countries. Moreover, we demonstrate when supportive tactics are more effective than punitive tactics under varying conditions and extend the model to investigate the consequences of switching between these two types of tactics in a sequential simulation.

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