Supply Chain Guardianship: Why Some Firms Intervene When Other Firms Commit Fraud

Abstract

In supply chains, firms often become aware of illegal actions committed by their partners, prompting the critical question: when and why do those who know become those who act? Drawing on industry examples of supply chain fraud, we introduce the concept of supply chain guardianship to study how firms respond to potential fraud committed by their supply chain partners. We identify key influences on supply chain guardianship and refine these insights into hypotheses, which we test across four behavioral experiments (n = 1000). Study A finds that the tone at the top of an organization can promote supply chain guardianship and that state moral disengagement is negatively correlated with it. Study B manipulates process moral disengagement and finds that it reduces guardianship behavior. Although the network position of the supply chain guardian emerges as important in industry examples, we do not find a significant effect in the experiments. We replicate and validate these findings in Studies C and D. This study offers an initial foundation for a behavioral theory of interfirm fraud responses in supply chains and offers practical insights into how firms can increase supply chain guardianship across macro-, meso-, and microlevels.