Untangling Drivers for Supplier Environmental and Social Responsibility: An Investigation in Philips Lighting’s Chinese Supply Chain

Key Insights for Managers

A case study of Philips Lighting suppliers examines how stakeholder pressures and relational drivers affect environmental and labor compliance at Chinese electronics suppliers. Authors Verónica Villena, Miriam Wilhelm, and Cheng-Yong Xiao find fewer environmental violations among factories that participate in lean management training (a systematic approach to reduce or eliminate waste and inefficiency in an organization). They also find fewer environmental or labor violations among factories that face more environmental regulatory pressure, such as pollution emission fines, and among suppliers with integrated management systems or that are part of Electronics Industry Citizenship Coalition (EICC). The opposite effect occurs for factories under environmental NGO pressure, where suppliers blacklisted in the Institute of Public & Environmental Affairs (IPE) do not seem to experience an incentive to tackle their environmental issues. They also find more labor violations in larger suppliers and in those located in richer provinces. The study is based on audit, archival and survey data for 134 (out of 220) of Philips’ suppliers in China.