Reliably Responsible : Structuring Supply Chains for Socially Responsible Behavior

We examine what type of consumer reactions—encouraging ones that emphasize the value of responsible sourcing or discouraging ones that emphasize the possibility of a consumer boycott in the face of violations—can lead supply chain partners engage in more responsible sourcing, using a behavioral lens. The classic model in this context predicts that only discouraging consumer reactions reliably incentivize firms to source responsibly. In contrast, our behavioral model predicts that an encouraging reaction, irrespective of its magnitude, always increases the firm's responsible sourcing when the discouraging reaction from the market is weak, and further refines that a discouraging reaction always increases responsible sourcing irrespective of the type of product considered. We use a behavioral experiment to test our behavioral model