Private Governance in the Supply Chain

Although there has always been risk in business, information availability, globalization, outsourcing, and electronic commerce have fundamentally changed how and where business takes place. These developments have led to more formal approaches for managing the entire enterprise, including those dedicated to understanding vulnerabilities and mitigating risks in the supply chain. Today, legal compliance, contractual compliance, and associated risk management systems are required, but insufficient, for the satisfactory performance of individual suppliers and the entire supply chain. This article describes noneconomic interdependencies in the supply chain and advocates for the role of social responsibility and private governance approaches for managing reputation. Through an analysis of supplier codes of conduct we examine marketing in practice and suggest future research opportunities.