Corporate Compliance Issues in Managing Supply Chains in the Environmental-Friendly 21st Century

By Gordon, Linda C.; Kung, David S. | Journal of International Technology and Information Management, August 2012 | Go to article overview

Corporate Compliance Issues in Managing Supply Chains in the Environmental-Friendly 21st Century


Gordon, Linda C., Kung, David S., Journal of International Technology and Information Management


INTRODUCTION

The perceived importance of corporate environmental, social, and governance programs has soared in recent years, as executives, investors, and regulators have grown increasingly aware that such programs can mitigate corporate crises and build reputations. But no consensus has emerged to define whether and how such programs create shareholder value, how to measure that value, or how to benchmark financial performance from company to company. (McKinsey Quarterly, 2009)

Wall Street's "Red October" 2008 saw the S&P 500 drop by 198 points, predicted over twenty million in job losses by 2009, and according to a poll on CSR (Corporate Social Responsibility) found that 44% of CSR professionals believe CSR activity will increase, 22% think it will weaken, and 26% believe CSR will change (Visser, 2008). According to another poll published at Forbes there was s a public loss of confidence in corporate leaders that places the blame at 46% for the government, 34% for big business, 10% on individuals, 1% on foreign competition, and 11% not sure or "other" (Zogby, 2009). The financial impact of the economic crisis was estimated at $145 billion for the Wall Street bank bailout, $71 billion for Federal Deposit Insurance Corporation, $29 billion for General Motors and $109 billion for the Troubled Asset Relief Program (Wessel, 2010). The significance of the issues highlighted the fact that both the government and corporations failed the public's expectations of ethical or socially responsible corporate behavior. The implication was CSR as practiced today was certain to change in the future in reaction to the volatile and sometimes competing constituent influences of the three primary stakeholder groups: Government, industry, and citizens.

Conventional wisdom in corporations was Corporate Compliance was mainly engaged in operating along their supply chains with collaboration from suppliers/customers, and within the regulatory environments of local governments. With the inherent increase in pressure from the CSR perspective by local citizens, corporations need to re-structure their strategic principles to accommodate the additional dimension of CSR, without much, if any, compromise in terms of financial performance. A major first-step is the understanding of what is the true meaning of CSR, and its impact on the corporation's supply chain compliance efforts. More importantly for most corporations is the potential commonality of the understanding and expectation of CSR amongst supply chain partners that can allow synergistic efforts that can optimize corporate utilization of resources. The major research focus of the authors is to develop an actionable model that allows the collection of corporation executives' perceptions of CSR, and empirically explore the opportunity of driving consensus across corporations.

The Wall Street Journal reports:

   ....(E)conomists see greater risk from an economy that overheats in
   2011 than from growth that's too slow. ...It will no longer be
   enough to simply respond -stakeholders will become increasingly
   interested in seeing organizations identify and lead on areas where
   they are capable of doing so. Moreover, many sustainability
   leaders, having seen the benefits of their own proactivity, will
   continue to find more areas to be proactive and take
   leadership--and will find it less necessary to react to what others
   around them are doing. (2011)

Conceding there was no commonly accepted definition of CSR from which to provide the basis for the design of constructs to effectively measure corporate compliance (Zenisek, 1979; Frederick, 1986, 1994; Carroll, 1991, 1999; Porter & Kramer, 2003;Hummels, 2004; Waddock, 2004; Hussein, 2006), the International Organization for Standardization (ISO) provided guidance on social responsibility in the form of ISO 26000-10 standards, issued in 2010.

This action validated Blyth's conclusion the focus in the arena of CSR should be on a process for identifying and accomplishing CSR responsibilities (2005). …

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