Safety begins at home: supply chain power and workplace safety
Hasibul Chowdhury, Hien Duc Han, Chandrasekhar Krishnamurti, G.M. Wali UllahPurpose
This paper examines how a major corporate customer's supply chain power affects its workplace safety records. Using the social exchange theory and the resource-based view of the firm as theoretical frameworks, the study examines how relational dynamics and trust between customers and suppliers enable major customers to leverage their bargaining power to create safer working environments.
Design/methodology/approach
A pooled ordinary least squares (OLS) regression approach is used to analyse panel data from major customer firms listed in the US from 2002 to 2011. Endogeneity is addressed through instrumental variable analysis, entropy balancing and the Oster (2019) test.
Findings
We find evidence suggesting that firms with substantial bargaining power over their supply chain partners significantly reduce their own workplace injury and illness rates. The relationship between supply chain power and workplace safety is mediated by financial constraints, safety expenditures, corporate social responsibility (CSR) and brand capital. This relationship weakens during periods of economic policy uncertainty and when major customer firms face greater hold-up risk. Additionally, there is a positive spillover effect, leading to reduced supplier workplace injuries.
Originality/value
This paper is one of the first to empirically examine how a focal firm's supply chain power affects its own workplace safety record. Our research seeks to answer three interrelated questions: whether supply chain power affects workplace safety outcomes within corporate customer firms; through which mechanisms and under what conditions supply chain power fails to mitigate workplace safety incidents.