Chain liability educator slides
This research investigates the question whether Will consumer punish companies for wrongdoing of a supplier? We know that when it becomes publicly known that products are associated with suppliers that engage in unsustainable behaviors, consumers protest, as Nestlé, Zara, and Kimberly Clark. The phenomenon by which consumers hold firms responsible for the unsustainable behavior of their upstream partners suggests the notion of “chain liability.” This study aims to generate insights into the antecedents and consequences of such consumer responsibility attributions. In four experiments, the authors find that the chain liability effect increases if an environmental degradation incident (1) results from supplier behavior rather than force majeure, (2) results from a company decision rather than the decision of an individual employee, and (3) is more severe. Responsibility attributions do not differ with varying organizational distance from the supplier, firm size, strategic importance of the supplied product, or the existence of environmental management systems. The chain liability effect also creates strong risks for the focal firm; higher responsibility attributions increase consumers’ anger and propensity to boycott. Therefore, firms should work to ensure sustainable behavior throughout the supply chain, to protect them from chain liability. Get more material at: http://www.sabinebenoit.com/will-consumer-punish-companies-for-wrongdoing-of-a-supplier/
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Chain liability educator slides
- 1. Hartmann, Julia, Moeller (now Benoit), Sabine (2014): "Chain Liability in Multitier Supply Chains? Responsibility Attributions for Unsustainable Supplier Behavior", Journal of Operations Management, Vol. 32 Issue 5, pp. 281-294. Read the entire article: https://doi.org/10.1016/j.jom.2014.01.005
- 2. WHAT IS CHAIN LIABILITY? Consumers hold a (consumer-facing) focal firm responsible for behaviors and incidents of upstream suppliers. Read the entire article: : Hartmann, Julia, Moeller (now Benoit), Sabine (2014): "Chain Liability in Multitier Supply Chains? Responsibility Attributions for Unsustainable Supplier Behavior", Journal of Operations Management, Vol. 32 Issue 5, pp. 281-294. https://doi.org/10.1016/j.jom.2014.01.005 PURPOSE OF STUDY This study aims to generate insights into the antecedents and consequences of consumer responsibility attributions in multi- tier supply chains in case of unsustainable incidents. OVERALL RESULT: CHAIN LIABILITY EFFECT ATTRIBUTION THEORY Views individuals as rational information processors who try to make sense of the world by attributing causes to incidents.
- 3. Companies have been confronted with environmental incidents in their supply chain WHAT WILL CONSUMERS THINK? Consumers are likely to blame the focal firm itself rather than the suppliers Consumers are likely to get angry and boycott the focal firm WHAT WILL CONSUMERS DO? Read the entire article: : Hartmann, Julia, Moeller (now Benoit), Sabine (2014): "Chain Liability in Multitier Supply Chains? Responsibility Attributions for Unsustainable Supplier Behavior", Journal of Operations Management, Vol. 32 Issue 5, pp. 281-294. https://doi.org/10.1016/j.jom.2014.01.005 Focal firmTier-1 supplierTier-2 supplierTier-3 supplier
- 4. WHAT SHIELDS FOCAL FIRMS FROM CHAIN LIABILTY? CONSUMERS’ REACTION ARE NOT AFFECTED BY The incident was caused by the supplier’s behavior rather than some natural disaster (i.e. force majeure) The incident was caused by the supplier’s company-wide strategy rather than by an individual employee The incident is severe rather than minor OUT OF CONTROL ISOLATED ACT MINOR SEVERECOMPANY STRATEGYUNDER CONTROL VS. VS. VS. the size of the company which part of the product the supplier with the incident supplies whether the company has an environmental management system in place where in the supply chain the incident happened Read the entire article: Hartmann, Julia, Moeller (now Benoit), Sabine (2014): "Chain Liability in Multitier Supply Chains? Responsibility Attributions for Unsustainable Supplier Behavior", Journal of Operations Management, Vol. 32 Issue 5, pp. 281-294. https://doi.org/10.1016/j.jom.2014.01.005
- 5. MANAGERIAL IMPLICATIONS Consumers care about unsustainable practices in the supply chain and might punish companies for it, thus hurting company’s sales Brand companies should figure out how to control, monitor, and collaborate with their suppliers Managers must develop skills and capabilities to understand the expectations of stakeholder groups, and customers in particular, for sustainable behavior Read the entire article: Hartmann, Julia, Moeller (now Benoit), Sabine (2014): "Chain Liability in Multitier Supply Chains? Responsibility Attributions for Unsustainable Supplier Behavior", Journal of Operations Management, Vol. 32 Issue 5, pp. 281-294. https://doi.org/10.1016/j.jom.2014.01.005