Corporate Social Responsibility in the Global Value Chain: A Bargaining Perspective

Christian Geisler Asmussen*, Andrea Fosfuri, Marcus Møller Larsen, Grazia D. Santangelo

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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Abstract

Breaches of corporate social responsibility (CSR) in global value chains (GVCs) pose a managerial challenge for multinational enterprises (MNEs) and threaten both their reputations and global sustainability. While an MNE-centric perspective on these issues has dominated existing international business research, we show that a dynamic view of bargaining among actors in the GVC can yield novel insights. We draw on coalitional game theory and develop a model where an MNE collaborates, monitors, and negotiates prices with a supplier whose CSR breaches may be revealed by the MNE, external agents, or remain hidden. Our model illustrates how MNEs may face a hold-up problem when irresponsible actions by suppliers are made public, and the suppliers have the power to engage in opportunistic renegotiation. Interestingly, we show that greater monitoring by MNEs, if not combined with specific strategies, can have negative consequences by weakening the MNE’s bargaining position and, in some cases, even prompting more irresponsible actions by the suppliers. Our model advances international business research on GVC sustainability and has important implications for managers and researchers alike.
Original languageEnglish
JournalJournal of International Business Studies
Volume54
Issue number7
Pages (from-to)1175-1192
Number of pages18
ISSN0047-2506
DOIs
Publication statusPublished - Sept 2023

Keywords

  • GVCs
  • Irresponsible behavior
  • Game theory
  • MNE–supplier relationships

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