Reputational Risks and Responsible Supply Chain Management: Decision Making Under Bounded Rationality

Abstract

This paper applies the logic of bounded rationality and explores the extent to which companies implement responsible supply chain management (RSCM) as a result of their reputational risk exposure, and how bounded rationality impacts on the decision to implement RSCM. This study draws on primary and secondary data from twelve UK-based companies. We conducted 19 semi- structured interviews and analysed our data through an inductive methodology. We find that reputational risk exposure is a central driver in a company’s decision to implement RSCM practices. However, managers face bounded rationality, in particular: (i) conflicting priorities; (ii) capabilities and resources; (iii) commitment; and iv) contextual environment, which in turn, means that companies do what they can to safeguard their reputation, but balance the extent to which they implement RSCM and the cost of doing so against the likelihood of exposure. By engaging in collaborative relationships with their supply chain partners, focal firms who ...