Corporate Social Performance of Firms in Conflict Mineral Global Supply Chains

Abstract

The corporate social performance of a diverse group of firms in global supply chains was assessed. Corporate social responsibility (CSR) is a global issue that affects not only enterprises themselves, but also their suppliers, and requires firms to care about not only environmental issues but also social issues in their supply chains. Thus firms should deal with CSR issues via supply chain management to improve their corporate social performance. The work bridges a gap in management scholarship on CSR and supply chain management by addressing corporate social performance in supply chains. The approach used is a statistical analysis of 215 metal smelters that have successfully implemented systems for management of social issues at their suppliers. Specifically, the social issue is of interest is mining of minerals that finances warfare and results in severe human rights violations – the so-called conflict minerals problem associated with the human rights abuses in the Democratic Republic of Congo (DRC) and adjacent areas. The Conflict-Free Smelter Program (CFSP) is a response to these concerns for the extraction of tin, tantalum, tungsten and gold (3TG) minerals. Two dependent variables were operationalised. The “commitment group” divides the compliant smelters into four groups based on their voluntary willingness to engage in the CFSP: leaders, followers, middle majority and laggards. The “implementation period” measures the number of days a firm took from committing to the CFSP standards to actually becoming compliant, thus representing a firm’s implementation performance. Four independent variables were assessed: firm location, firm ownership, management system experience, and firm size. The results for the commitment group generally align with the findings of previous scholars, that larger firms from developed countries are more inclined to do CSR. However, the results for the implementation period did not align with findings of previous scholars. Various explanations are considered and related to business scholarship and theory. The results imply that many kinds of firm can participate in corporate social performance initiatives and CSR initiatives could be applicable beyond the metal industry. Moreover, it is concluded that legislative and market forces can be effective drivers of corporate social performance of firms in global supply chains, including small firms and companies in developing countries.