Essays on Ethics in Supply Chain Management

Abstract

Ethical concerns in business practice have received considerable attention in recent years. However, limited research has examined the role of ethical decision-making in supply chain management. My first essay examines the ethical decision-making process where the magnitude of unethical behavior in a specific supply management decision is determined. Diverging from the prior research that focuses on identifying factors that influence ethical behaviors, my study proposes a theoretical framework that incorporates a multitude of mechanisms that affect the actual magnitude of unethical behavior. Utilizing this framework and an experimental study which rests on data from the US, China, and Italy, I provide a more granular examination of how individuals behave differentially when an unethical decision in the context of supply management would lead to disparate consequences. I then examine how firms can effectively reduce the magnitude of employee’s unethical behavior in supply management by adopting appropriate incentive structures. In my second essay, I extend my investigation of ethical decision-making and examine the dynamics between consecutive decisions that invoke ethical considerations in supply chain management. Instead of taking a static perspective and focusing on individual instances of ethical decision-making, I investigate an individual’s ethical decision-making behaviors in the long term via a stochastic process methodology. Three aspects of the ethical decision-making process are examined in this study via a longitudinal experimental design over a 10 week period: the overall tendency of an individual engaging in ethical/unethical behaviors, the consistency and inconsistency in his/her behavioral patterns, and his/her vulnerability against ethical failures. My results suggest that ethics education achieved through frequent communication of ethical standards can effectively induce not only an ethical but also a consistent behavioral pattern in a supply chain manager’s decision-making process. Finally, I provide an overall discussion of the important findings in my essays as well as their theoretical and practical implications. I then discuss a common theme that emerges from my studies where individuals tend to adopt different mentalities in ethical decision-making process. Based on this finding, I outline an approach that potentially identifies managerial levers that can effectively promote ethical practice in supply chain management.