A complex systems model for transformative supply chains in emerging markets

TLDR: In this paper, the authors outline a transformative model of supply chain fairness, arguing that adopting plural fairness principles and practices generates a higher fairness equilibrium which includes all affected stakeholders in the production of fairness outcomes.

Abstract: Corporations operating global value chains must grapple with a multiplicity of ethical and practical considerations, most notably when value chains extend to emerging markets. Such contexts involve interactions with diverse stakeholders who possess the ability to impact supply chain performance, but who also bring conflicting needs, values and interests. The purpose of this paper is to outline a transformative model of supply chain fairness, arguing that adopting plural fairness principles and practices generates a higher fairness equilibrium which includes all affected stakeholders in the production of fairness outcomes, with consequent positive organizational and system level impacts.,Through a philosophically informed overview of the literature on organizational fairness, the paper applies fairness to the management of supplier relations to identify the institutional features of ethically sustainable supply chains. The proposed conceptual model uses a complex adaptive systems approach (CADs), supplemented by describing the contribution of fairness norms and practices.,This paper argues that a transformative approach to supply chain fairness can suggest new structures for interaction between firms, stakeholders, mediating institutions and governments.,Emerging market supply chains are facing significant changes. Adopting a complex adaptive systems perspective upon stakeholder relationships, this paper offers insights from the theoretical literature on fairness, and proposes a normative model of supply chain fairness which accounts for both the normative and empirical aspects of relational complexity.

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Northumbria Research Link
Citation: Yeoman, Ruth and Mueller Santos, Milena (2019) A complex systems model for
transformative supply chains in emerging markets. International Journal of Emerging
Markets, 15 (1). pp. 50-69. ISSN 1746-8809
Published by: Emerald
URL: https://doi.org/10.1108/IJOEM-02-2017-0044 <https://doi.org/10.1108/IJOEM-02-
2017-0044>
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International Journal of Emerging Markets
A Complex Systems Mod
el for Transformative Supply Chains
in Emerging Markets
Journal:
International Journal of Emerging Markets
Manuscript ID
IJoEM-02-2017-0044.R2
Manuscript Type:
Research Article
Keywords:
emerging markets, fairness, complexity, governance, stakeholders, supply
chain management
http://mc.manuscriptcentral.com/ijoem
International Journal of Emerging Markets

International Journal of Emerging Markets
A Complex Systems Model for Transformative Supply Chains in Emerging Markets
Abstract
Purpose
Corporations operating global value chains must grapple with a multiplicity of ethical and
practical considerations, most notably when value chains extend to emerging markets. Such
contexts involve interactions with diverse stakeholders who possess the ability to impact supply
chain performance, but who also bring conflicting needs, values and interests. This paper
outlines a transformative model of supply chain fairness, arguing that adopting plural fairness
principles and practices generates a higher fairness equilibrium which includes all affected
stakeholders in the production of fairness outcomes, with consequent positive organisational and
system level impacts.
Approach
Through a philosophically informed overview of the literature on organisational fairness, the
paper applies fairness to the management of supplier relations to identify the institutional
features of ethically sustainable supply chains. The proposed conceptual model uses a complex
adaptive systems approach (CADs), supplemented by describing the contribution of fairness
norms and practices.
Findings
This paper argues that a transformative approach to supply chain fairness can suggest new
structures for interaction between firms, stakeholders, mediating institutions and governments.
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International Journal of Emerging Markets
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Originality
Emerging market supply chains are facing significant changes. Adopting a complex adaptive
systems perspective upon stakeholder relationships, this paper offers insights from the theoretical
literature on fairness, and proposes a normative model of supply chain fairness which accounts
for both the normative and empirical aspects of relational complexity.
Key Words
Emerging markets; fairness; complexity; fairness; governance; institutions; stakeholders; supply
chains; values
Conflict of Interest
The authors have received research grants from Mars Incorporated. The paper does not include
any primary data.
Word Count: 10147 words (including references)
1.0 Introduction
Supply chain fairness is a challenge for rapidly growing emerging markets which are becoming
key sourcing regions for many industries. For example, while in 2007 26.4% of Inditex’s
suppliers were located in Asia, by 2012 this share had grown to 44.7% (Orcao and Pérez, 2014).
Emerging markets do not only supply developed markets with goods but have also evolved into
important consumer markets. An out-of-market strategy to supply these markets has the
disadvantages of long lead times and exposure to exchange rates. Hence, many organisations are
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International Journal of Emerging Markets
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attempting to develop local supply chain capabilities to support the growth potential of emerging
consumer markets (Blanco, 2009). This expansion of supply chains in emerging markets
combined with a unique set of institutional characteristics, including institutional voids and the
importance of informal institutions, poses challenges for firms, local suppliers, workers and
communities (Rottig, 2016; Puffer et al., 2016). These include infrastructure issues (for example,
underdeveloped supply chains, inadequate utilities, inadequate human resources and poor
information technology infrastructure) and policy hurdles (e.g., taxation, regulation and real
estate) (A.T. Kearney, 2006). Beyond these often technical issues, fairness considerations are at
the centre of supply chain development in emerging markets. Many global supply chains transfer
value from producers in emerging markets to consumers in developed countries through
exploitative practices (Tallontire and Vorley, 2005). Similarly, disparities between emerging
market producers and consumers raise fairness concerns.
Corporations with operating supply chains in emerging markets are frequently confronted with
negative social and environmental impacts, requiring them to grapple with the governance of
eco-systems, thereby blurring the practical distinction between public and private goods. New
supply chain models are needed to address these issues, including integrating values of fairness,
efficiency, rights and others into supply chain practices. Yet we know very little about how
values act upon supply chain performance. Fairness matters to the variety of stakeholders
affected by their proximity to a supply chain network. Supply chain partners are often in
different positions of power, which exposes the weaker party to vulnerabilities (Duffy et al.,
2013; Kumar, 1996; Touboulic, 2014). In particular, distributors, producers and farmers in
emerging markets frequently operate on a smaller scale than their equivalents in developed
markets, with lower resilience to practices considered to be unfair. Furthermore, suppliers in
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Frequently asked questions

Q1. What are the contributions in this paper?

Copyright © and moral rights for items on NRL are retained by the individual author ( s ) and/or other copyright owners. Single copies of full items can be reproduced, displayed or performed, and given to third parties in any format or medium for personal research or study, educational, or not-for-profit purposes without prior permission or charge, provided the authors, title and full bibliographic details are given, as well as a hyperlink and/or URL to the original metadata page. 

Q2. What is the role of fairness in supply chain relationships?

Distributive and procedural justice can limit the extent of conflict in supply chain relationships and encourage compliance (Brown et al., 2006). 

Q3. What are the mechanisms to measure procedural fairness and evaluate deliberative quality?

Mechanisms to measure procedural fairness and evaluate deliberative quality include: fair policies, fair treatment, equitable treatment (Griffith et al., 2006); non-discrimination, consistent procedures, provision of feedback, familiarity (Liu et al. 2012); fair dealing with suppliers, explanation of decision-making, consistent decisionmaking (Narasimhan et al., 2013). 

Q4. What factors of supply chain fairness have been mentioned in other research?

Other research has mentioned transparency, honesty, reliability, influence and a say in decisions, consideration, respectfulness and consistent behaviour (Diller, 1999). 

Q5. What is the role of line managers in the conduct of dialogic conversational practice?

In the conduct of dialogic conversational practice, Francis et al. (2013) privilege the role of line managers, making them uniquely responsible for engaging people ‘in a type of generative conversation that can creatively address the tension between actualities (what is) and potentialities (what could or ought to be)’ (ibid: p. 2718). 

Q6. What factors of supply chain fairness are highlighted?

Kumar (1996) highlights the following factors of supply chain fairness: bilateral communication, impartiality, refutability, explanation, familiarity and courtesy. 

Q7. What is the definition of supply chain fairness?

Supply chain fairness goes beyond the contractual relationship between supplier and buyer to include the supplier’s context and environment. 

Q8. What are the main challenges of supply chain development in emerging markets?

This expansion of supply chains in emerging markets combined with a unique set of institutional characteristics, including institutional voids and the importance of informal institutions, poses challenges for firms, local suppliers, workers and communities (Rottig, 2016; Puffer et al., 2016). 

Q9. What is the definition of a pluralised system of democratic accountability?

2010: p. 491), or a system of independent institutions which can provide checks and balances within a pluralised system of democratic accountability. 

Q10. How do they suggest that actors deal with the ethical complexities of negotiating what a fair?

They suggest that actors deal with the ethical complexities of negotiating what a fair price means through sensemaking processes involving iterations of deliberation.