Ethical Challenges Associated with International Procurement

(Original title in French: Défis éthiques liés à l’approvisionnement international)

Marie-Christine Chartier is one of the two recipients of a $2,000 scholarship awarded by the Canadian Purchasing Research Fund, for a Masters thesis in procurement written in 2006-2007 at HEC Montréal. This abstract is intended for PMAC members. The full version of the Masters thesis is available at HEC Montréal.

Thesis supervisor:

Professor Jean Nollet, Chairholder, Chair in Supply Management

Abstract

The proliferation of ethical products on the market contrasts with the apparent increase of financial scandals. All things considered, ethics is a hot topic. Acting ethically or unethically in the course of one’s work is impacted by many factors, such as individual, organizational and societal values. For the members of the supply function (SF) using foreign suppliers, many more factors come into play.

To our knowledge, few studies concentrate on the factors that specifically impact the ethical conduct of SF members that deal with foreign suppliers. In this study, some of those factors are analyzed: 1) cultural, 2) economical, 3) codes of ethics, 4) the supply chain, 5) performance management, 6) and just-in-time practices. While the impact of some of these factors on SF members’ ethical decisional process has been discussed in the past, very few studies have been specifically done on this topic in the field of international sourcing.

This qualitative study is based upon an analysis of the results obtained from many studies in the fields of business ethics and sourcing.

The conclusions from those analyses demonstrate that some specific factors might have an impact on the ethical behaviour of SF members that deal with foreign suppliers. We have grouped those factors into five categories: cultural, economical, organizational, inter-organizational and operational.

Cultural values have an impact on SF members’ perception of what’s ethical or not. Culture is of great importance nowadays, since international sourcing is increasing drastically. SF members use more and more foreign suppliers, and this latter group might have a totally different view of what’s ethical or not.

Individual values might sometimes be put aside because, for instance, economical uncertainty of an organization might push its SF members to select foreign suppliers whose behaviour might not go along with those values.

An organization might set certain mechanisms in place so that individuals take more ethical decisions in the course of their work. By using some organizational factors, such as codes of ethics and performance management, organizations might force or motivate SF members to select more ethical foreign suppliers.

It might be important for an organization that wishes to maintain a good reputation to make sure that the behaviour adopted by supply chain members helps to maintain that reputation. SF members’ perception of what’s ethical or not. Culture is of great importance nowadays, since international sourcing is increasing drastically. SF members use more and more foreign suppliers, and this latter group might have a totally different view of what’s ethical or not.

Individual values might sometimes be put aside because, for instance, economical uncertainty of an organization might push its SF members to select foreign suppliers whose behaviour might not go along with those values.

An organization might set certain mechanisms in place so that individuals take more ethical decisions in the course of their work. By using some organizational factors, such as codes of ethics and performance management, organizations might force or motivate SF members to select more ethical foreign suppliers.

It might be important for an organization that wishes to maintain a good reputation to make sure that the behaviour adopted by supply chain members helps to maintain that reputation. SF members might find it difficult to overcome inter-organizational factors such as some of the supply chain characteristics.