Research Handbook on Transnational Corporations
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Research Handbook on Transnational Corporations

Edited by Alice de Jonge and Roman Tomasic

Transnational corporations (TNCs) have moved to the forefront of regulatory governance both within states and in the international arena. The Research Handbook on Transnational Corporations provides expert background commentary and up-to-date insights into regulatory frameworks impacting on TNCs at global, industry and national levels. Written by global experts in their field, this unique collection of essays provides in-depth understanding of how the forces of globalisation affect the world’s largest corporations, and how those corporations, in turn, shape globalisation.
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Chapter 7: Global sourcing through foreign subsidiaries and suppliers: challenges for Corporate Social Responsibility

Andreas Rühmkorf

Abstract

This chapter discusses the changing sourcing strategies of transnational corporations and the challenges that they raise for the international Corporate Social Responsibility (CSR) activities of companies. Whereas Western transnational corporations traditionally sourced from wholly owned foreign subsidiaries, they now increasingly use a complex supply chain consisting of direct suppliers and, in most cases, also their subcontractors. These supplier companies are usually not owned by the Western transnational corporation. The chapter first introduce global sourcing strategies. It then analyses the barriers that global sourcing through foreign subsidiaries and independent suppliers constitute for the promotion of CSR, for example, the lack of a binding international human rights framework on companies and the territorial limitation of national law. The chapter will then critically review existing attempts to regulate CSR in global sourcing such as private governance schemes, tort law approaches in both English and US law, the extraterritorial criminal liability of companies and disclosure laws. The chapter also reviews the Accord on Fire and Building Safety in Bangladesh as an example of a multi-stakeholder initiative. The chapter argues that the home states of transnational corporations can do more to fill the regulatory gaps in promoting greater CSR in global supply chains.

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