Drawing from research on dependence and embeddedness in supplier-major customer relationships, this study examines the implementation level of process-based rights (PBR) – including freedom of association, workforce diversity, and fair and non-discriminatory treatment of workers – within supplier-major customer dyads. The study also empirically investigates how customers' transactional governance and relationship history with suppliers interplay in suppliers' PBR implementation.
Using 482 unique supplier-major customer dyads over 14 years (2010–2024), we performed hierarchical analysis to estimate the direct and interaction effects of customers' PBR implementation, transactional governance, and relationship history on their suppliers' PBR implementation.
Our results show that major customers exert a significant influence on suppliers' PBR implementation. Furthermore, transactional governance and a long relationship history work in synergistic ways only when the customer itself demonstrates average to high levels of PBR, but not when customer PBR implementation levels are low.
As one of the first studies to explore PBR within supplier-major customer dyads, our findings underscore the important role of customers in leading the implementation of labor standards, rather than as an enforcer of labor standards, in motivating supplier compliance.
