In early 2005 a book called The Travels of a T-Shirt in the Global Economy, by Pietra Rivoli, brought to light the market, power and ethics issues surrounding global supply chains. It highlighted the social and ethical problems in the manufacturing of a T-shirt that "travels" from its cotton source in Texas to its manufacturing in China to its retail sale in Florida. In the years since the book, global supply chains have continued to come under scrutiny, particularly after a Bangladesh garment factory collapsed in 2013 killing 1120 workers and hospitalizing more than 1500, exposing substandard working conditions and the use of child labor in the factory. Despite story after story of large global buyers attempting to address these issues, the inequities, unfairness and unsafe working conditions in underdeveloped parts of the world continue.

What can be done to address this issue? In the absence of any global law that might mandate safe working conditions,  many companies have tried to enact initiatives called “multi-stakeholder initiatives” (MSIs) that include codes of conduct, ethical guidelines and principles of behavior designed to address sustainable and environmentally-friendly business practices. MSIs involve many different and diverse stakeholder groups – including corporations, non-governmental organizations, governments, academics, unions and others that come together to address key social and/or environmental issues.

MSIs draw attention to the challenges of global governance and the issue of “institutional voids” that exist in some global supply chains. These voids exist where market functions are impeded. Many developing countries lack the institutional support, standards, and mechanisms to ensure compliance with social and environmental performance benchmarks that are often taken for granted in developed countries. If a multinational corporation (MNC) wants to enact and demonstrate a commitment to an MSI, it must deal not only with governance challenges, but also with the difficulties of institutional voids that challenge the MNC’s ability to create cooperation and trust with extended suppliers.

In our forthcoming study, my co-authors and I show how global firms, through MSI-like codes of conduct, can bridge these institutional voids, minimize opportunism, and promote trust and collaboration in a process that delivers value to each stakeholder – a quality that appears to be missing in current interactions between global buyers and developing country suppliers. The premise, grounded in a study of the Indian textile industry and stakeholder theory, is that there are elements of stakeholder utility (i.e. value) that seem elusive in the relationship between large, global buyers and their global suppliers when implementing MSIs. We propose that global suppliers consider the following in working with their supply chain partners:

• Value. Global suppliers must perceive that the value derived from complying with these MSIs is greater than the alternative, such as going to the black market or retaliating against compliance requirements with other opportunistic behaviors.
• Fairness. Global suppliers must see that there is a "fairness of exchange" between the large global buyer and the small supplier, who, on the surface, might bear some of the costs of implementing the MSIs.
• Input. Global suppliers must perceive that they have some input into the development of MSIs. Because business operates differently in different areas--for example, graft and bribery is common in supply chains in India--suppliers must have input into voluntary compliance programs in order to ensure "buy in."
• Identity. Global suppliers must feel like they are part of a network of suppliers to promote identity and a sense of connection.
• Stakeholder Mindset. Global buyers should start with a stakeholder “script” – namely, that firms exist to create value for a wide array of stakeholders within their value chain. Rather than simply focusing on generating profits for shareholders.  The behaviors that follow would include avoiding the use of economic power to force compliance (while also sharing in both the burdens and costs of the MSI with their partners).
• Regimes of Responsibility. Global buyers and suppliers must feel a sense of responsibility to the local firm and the global supply chain. While this may seem obvious, in practice global firms often do not to have the structure to support this sense of responsibility for their MSI commitment.

While MSIs represent a novel mechanism to increase corporate social and environmental performance, especially across globally distributed supply chains, they are only effective if there is cooperation and perceived value for all of the stakeholders involved. By highlighting the necessary checkpoints such as stakeholder mindset and responsibility, our study provides a roadmap to realize the many benefits of MSIs in global supply chains. That roadmap, along with voluntary initiatives, may someday mean we will no longer have to read about the scandals associated with unsafe and poor working conditions linked to large global buyers.

Jill Brown is an Associate Professor of Management at Bentley University. She holds a Ph.D. in Strategic Management from University of Georgia, an MBA from Augusta State University and a BA from Lehigh University. She has more than ten years of experience in banking industry and small business consulting, and is co-author of the forthcoming Business and Society: Ethics, Sustainability, and Stakeholder Management (Cengage Learning). She has written for Business Ethics Quarterly, Organization Science, The Journal of Business Ethics, and Strategic Organization, among others.