The role of businesses in contemporary society is changing. Many companies experience rapt attention to their actions from a number of stakeholders, among others customers, media, governments and investors. Even public organisations are getting under public scrutiny. Despite the growing attention to social issues, little knowledge exists regarding the incorporation of social aspects into procurement activities by both businesses and public organisations. Although much can be learned from looking at the green purchasing literature, it is a fact that many of the preconditions and practices are different in socially responsible purchasing (Carter, 2004).
There appears to be a gap between the societal desire of more socially responsible purchasing and the slow implementation and uptake of socially responsible purchasing at the aggregate level across companies and organisations. And although many companies have some kind of policy for including social aspects in dealing with suppliers, the extent of deployment and integration of these policies can differ significantly (Murray, 2003). Therefore, there is need for an in-depth investigation of available experiences from pioneer companies. The purpose of this study is to empirically examine how social issues are addressed in purchasing activities in 20 Swedish public and private organisations and what are the existing and potential drivers and barriers for socially responsible purchasing.
The study finds that in Swedish organisations, the main drivers for socially responsible purchasing include stakeholder influence and organisational values, media and NGOs attention and employees' concern. The main barriers are a lack of resources for supplier audits, difficulties to ensure that all suppliers fulfil the Code of Conduct, differences in culture and management style, low levels of social standards and high levels of corruption in some countries of supply, all of which makes assurance practices a very costly enterprise.
The general conclusion from the interviews and analysis of academic literature is that there are still very few Swedish organisations that integrate social criteria into their purchasing practices. Among these companies, absolute majority are large international companies. Also, what becomes clear is that much of the reality of socially responsible purchasing in Sweden is still risk management. The type of strategy that organisations choose to work with in socially responsible purchasing reflects the development stage an organisation is at. Often, an organisation initially employs a reactive strategy having just faced the first hang-out in media for inappropriate action in the supply chain. With time, many organisations develop a more proactive strategy by shifting towards more hands-on, pre-emptive and systematic approach. Thus, there is a large difference between the level and extent of development of socially responsible purchasing in different organisations.
There is also a big difference in the level of efforts and available for socially responsible purchasing resources between public and private organisations, with latter having typically more resources to invest in social issues, but also being much more driven by media attention, investors and public interests. There is however a large degree of divergence also among organisations in public sector in the level of their efforts. There are still very few public organisations that have included social issues in their policies and are just few organisations that have placed requirements on suppliers and checked their performance.
There seems to be a higher number of companies from private sector that develop their Code of Conduct with social aspects, include social requirements into their purchasing contracts, monitor supplier performance through evaluation of provided documentation or through audits, and that develop long-term relations with suppliers aiming at improving social standards in the entire supply chain. Among business companies, producers of consumer products seem to be under more pressure from media and consumers, than companies that supply to other businesses. Also companies that are on the stock market seem to have a drive from socially responsible investors and have therefore progressed further.
Reflecting on the difference in the scale of efforts and the progress, organisations express different needs for support tools, manuals and external support. However, the most problematic stage is when an organisation has to develop own tailor-made tools that suit the main set of organisational values and structure, the range of suppliers and types of products. Another problematic stage is the supplier audits. Organisations reveal that current tools and methods of monitoring business practices of suppliers are unsatisfactory. They are too time and resource consuming, are often in need of external verification and are of seemingly decreasing quality if conducted by auditors located in the country of supply. This indicates that perhaps a more coordinated approach of collaborative and complementary monitoring might be a way forward.
Though exploratory in nature, this study furnishes managers and public procurers with an understanding of the dimensions and drivers of socially responsible purchasing, as well as of steps for how organisations incorporate social issues into their structures, procedures and everyday practices. The study is also useful for public authorities, businesses and public sector, as well as for broader audience, including NGOs, academia and other stakeholders interested in the current situation with social issues in supply chains of Swedish organisations.