Abstract

The disaggregation and geographic dispersion of global value chains (GVCs) has created an unprecedented need for MNEs to exert control over the social sustainability behavior of their emerging country suppliers. We theorize in this paper that the effectiveness of MNE control strategies for social sustainability - which can be audit-based or cooperation-based - depends on the local institutional context of the supplier. Supplier country institutions exert domain-specific top-down and bottom-up pressures for social sustainability, which shapes suppliers’ attitude and receptiveness towards the type of MNE control mechanism. Using unique primary data from 341 garment and footwear suppliers in ten emerging countries, which supply to Western European or North American multinational enterprises, we show that cooperation-based MNE control is particularly effective for suppliers’ social sustainability adoption when there is isomorphic fit with local bottom-up pressures for social sustainability in the supplier country. Our study extends control strategies in GVCs from economic to legitimacy-enhancing outcomes, and demonstrates that practices can be successfully transferred beyond the boundaries of the firm when the means of practice transfer are aligned with the institutional framework in the GVC partner country.

Keywords: global value chain; MNE control strategy; social sustainability; policy-practice coupling; supplier country institutions