Extending the Boundaries of Supply Chain Transparency: Supplier Monitoring Activity Disclosure, Consumer Evaluations, and Brand Equity
Socially responsible policy makers and consumers are pressuring firms to make their supply chains more transparent by disclosing information about their supplier monitoring activities (SMA). Yet, high monitoring costs and the complexity of supply chains pose challenges for firms to effectively monitor their extended supply chain, including both first-tier and lower-tier suppliers. In order to comprehensively evaluate the net benefit from SMA, it is therefore critical to consider potential effects on drivers of additional revenues that may accrue from the disclosure of SMA to consumers.
Prior research on SMA has examined the associated cost, risk, and supplier relational implications on the focal firm. I examine the effect of supply chain transparency by means of a firm’s SMA disclosure on consumer evaluations through a series of experiments and sentiment analysis of social media data. Further, I study the effect of SMA disclosures on a firm’s brand equity via content analysis of corporate social responsibility (CSR) reports. Specifically, I investigate the effects of (1) mere disclosure of SMA, (2) the breadth of SMA, the depth of SMA, and the specific mechanism used to monitor lower-tier suppliers, and (3) the interactions between issue involvement, SMA disclosure, and SMA characteristics on consumer evaluations.
The results reveal that (1) the disclosure of SMA information improves individual-level consumer evaluations, consumer sentiment, and organizational-level brand equity; (2) SMA characteristics including breadth, depth, and monitoring mechanism each have effects on consumer evaluations; and (3) consumers’ CSR involvement plays an important role in strengthening the relationship between firms’ SMA disclosures and evaluations.
This work makes several important contributions to several literature streams including the CSR literature, the supply chain transparency literature, and the sustainable supplier management literature. This research also provides motivation and guidance for practitioners that engage in or are considering SMA by highlighting SMA disclosure as a means for firms to boost consumer evaluations. Further, for firms that strive to achieve supply chain transparency through SMA disclosures, results show that not only is it critical to understand what to disclose, but also to whom to disclose.
Duan, Y. (2019). Extending the Boundaries of Supply Chain Transparency: Supplier Monitoring Activity Disclosure, Consumer Evaluations, and Brand Equity. Graduate Theses and Dissertations Retrieved from https://scholarworks.uark.edu/etd/3310