Organisational Governance and Strategic CSR to Strengthen Local Supply Chains – Navigating the Maze

Demands from key stakeholder groups, some triggered by concerns about human rights and breaches of international guidance on safe and healthy workplaces, have led to an increase in the calls for transnational businesses to be held accountable. The raised expectations that companies will govern transparently and company officials will be held accountable for deviations has seen a steady increase in the number of transnational businesses taking action to improve their processes, create greater accountability in decision making that affects procurement and make informed choices to ensure value for money from companies at the end of the procurement process. This has led to the rethinking of how large global companies make decisions about procurement and the role played by local suppliers to benefit from the engagement of local companies.

In a steadily increasing number of countries, changes have been made also through amendments to companies legislation which require companies to go beyond reporting financial performance only, but to include also updates about social as well as environmental performance indicators. In the case of supply chains for natural resources such as oil and gas and agriculture, there is evidence of some companies taking action to expand and diversify their supply chain.

In a review of supply chain activities of transnational businesses operating in developing countries and emerging economies, this chapter identifies strategies used to shift to more innovative and socially conscious approaches to strengthening local supply chains. The author suggests approaches that can be taken by transnational businesses in creating a greater shareholder value, foster goodwill among key stakeholders as well as strengthen organisational governance and promote sustainable procurement.