| This study explores the emergence of supply chain mandates, initiatives by which businesses demand changes in the social or environmental behavior of suppliers and business partners over whom they exert economic influence. Under these mandates, firms within a corporation's production network are contractually obliged to adopt verifiable codes of conduct or certification institutions using the promise of future business, or threats of no future contracts, as incentives. It examines how major first-tier auto suppliers have themselves received and implemented mandates from the auto manufacturers to adopt formal environmental management systems (EMS), and how Mexican automotive suppliers in turn have responded to these mandates. Finally, it identifies other factors that influence the adoption of more systematic environmental management practices. Evidence for the study was collected through interviews with automotive manufacturers and large multinational suppliers and through a survey of Mexican automotive suppliers, and the resulting data were analyzed using several regression techniques including ordinal logistic regression and two-stage treatment effects models. The analyses find a large discrepancy between those facilities subject to supply chain mandates from major customers and those who actually adopt EMSs. However, several factors including the perceived importance of mandates, technical considerations related to more general industrial upgrading strategies, and ownership by US firms affect the adoption of EMSs by suppliers operating in Mexico. It also finds that while supply chain mandates may have a negligible affect on the emphasis facilities place on specific environmental objectives, including regulatory compliance, pollution prevention, and eco-efficiency, having an EMS in place does influence prioritization of these objectives. Therefore, in cases where supply chain mandates effectively lead to EMS adoption, deeper commitments can be expected. The study also discusses the institutional failures related to monitoring and enforcement that hinder diffusion throughout the value chain and the potential for these quasi-regulatory private mechanisms to provide public benefits, particularly in industrializing nations. |
