Companies implement corporate social responsibility (CSR) practices along their supply chains to fulfil stakeholder requirements. In doing so, failures in which CSR aspects are violated also emerge, caused by single supply chain members. In these situations, quite often the other supply chain members also appear responsible although they mostly do not have complete control over suppliers and sub‐suppliers due to information gaps. Therefore, the malpractice of one single company can harm the reputation of related companies. This paper aims to analyse recent CSR failures along food supply chains with the aim of evaluating why these occurred and what possibilities exist to avoid similar failures in the future.
Agency theory analyses information asymmetries in relationships in which one party delegates work to another party. In the considered failures, the downstream company can be regarded as principal by ordering products from the suppliers (agents). Consequently, agency theory contributes towards understanding failures in CSR implementation and highlighting solutions.
The cases analysed illustrate that CSR failures can have negative impacts on the companies' reputation and therefore also financial effects. Implementing a successful CSR policy should therefore be a primary interest of companies. Agency theory proved suitable to illustrate supply chain relationships and point out implications for companies. The instruments of agency theory can help to avoid CSR failures in food supply chains.
The paper combines agency theory with failures in CSR along food supply chains. In doing so, new insights into supply chain relationships are gained and implications for supply chain members to avoid CSR failures can be deduced. One special characteristic of the analysed failures is that the principal is not aimed at increasing the quantity of the agent's output but the quality.
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