Decoding supplier codes of conduct with content and text as data approaches

Abstract

AbstractThis study analyzes supplier codes of conduct of multinational firms, with two main research objectives: (1) providing a description of supplier codes' content provisions, specifically focusing on the labor standards provisions included in these self‐regulatory policies, and (2) comparing code content across regions and sectors. To this end, the study uses hand‐coding and novel text‐as‐data techniques for content analysis of a large sample of 880 codes of conduct. Results show that a standardized list of labor rights is included in up to 90% of the aforementioned codes, regardless of the location or sector of the drafting company. Codes are drafted with a clear influence from internationally recognized standards, even though a minority of codes directly refer to international texts. However, the similarity of codes is limited as they differ in length and extent to which they elaborate certain topics. This latter aspect is correlated with the firms' location and the sector they operate in. The research demonstrates that European companies refer to the legal framework and international standards extensively, while American companies more often develop their corporate ethical values or focus on governance and their relationship with suppliers. It also empirically shows that companies evolving in reputation‐sensitive sectors are developing more specific codes including more detailed labor provisions.