Supplier Diversity Programs Research Articles

Representative bureaucracy and local government contracting: Examining supplier diversity programs

Representative bureaucracy and local government contracting: Examining supplier diversity programs

From checking the box to driving impact – Perspectives on how to develop a supplier diversity program that is less narrowly scoped and more wholeheartedly adopted

Supplier diversity programs are a concrete way for companies to act out Environment, Social and Governance (ESG) commitments and strategies. Literature however suggests that commitment to supplier diversity programs from buyers, suppliers and stakeholders in the business can be less than wholehearted. The scoping of supplier diversity programs can also be narrow and somewhat binary, only partially reflecting the multi-faceted nature of diversity. This paper contributes to this special issue a study of three supplier diversity programs and shares perspectives of supplier diversity leaders in the case companies studied. We find opportunities for companies to move from a focus on D&I compliance, towards a focus on competitive advantage and ESG impact. We suggest approaches for scoping and designing supplier diversity programs that more closely mirror the complexity of diversity and suggest expanded buying criteria. Finally, we contribute future research pathways and managerial suggestions.

EXPRESS: U.S. Public Sector Supplier Diversity: an Intersectional Invisibility Perspective

Motivated by a desire to understand who benefits from public-sector supplier diversity, and why, we conducted a comparative case study across six U.S. state-level supplier diversity programs. We collected/analyzed qualitative data via semi-structured interviews with high-level state leaders and collected spending data via 2017–2021 semiannual/annual reports. We found that businesses owned by White women benefit more from supplier diversity programs than those owned by ethnic minorities (Blacks, Hispanics, Indigenous, and Asians). Adopting an intersectional invisibility perspective, we conduct within- and cross-case analyses of the collected data, we highlight key themes and make several recommendations for how public-sector supplier diversity programs can systemically address disparities and improve their performance. We also offer recommendations for future research into this ecosystem.

Disability Inclusion in Corporate Supplier Diversity Initiatives

PurposeSince the 1960s, federal and state governments and private-sector companies have used supplier diversity initiatives to ensure their supply chains include businesses owned by traditionally economically disadvantaged or underrepresented groups. Originally concentrated on racial and ethnic minority groups, programs have expanded to include businesses owned by women, veterans, LGBTQ+ individuals, and, in some cases, people with disabilities. This study investigates the extent to which disability is included in supplier diversity initiatives of Fortune 500 companies.MethodsThis paper uses a novel data set created by the authors with information on supplier diversity initiatives and Disability, Equity, and Inclusion (DEI) statements in Fortune 500 companies extracted from public sources. This information is combined with data from Compustat, a corporate financial database published by Standard and Poor’s and additional variables from other sources.Results75% of the Fortune 500 companies have supplier diversity programs that express a commitment to diversity yet only 49% of those with such programs include disability-owned businesses (38% of all Fortune 500 companies). Among the largest 100 companies, 89% had supplier diversity programs that included disability, almost 6 times the rate Ball et al. reported in 2005. This study finds disability inclusion varies significantly by company size, industry, and whether the company is a government contractor.ConclusionDespite the growth in disability inclusion, the absence of disability as a diversity category in regulations mandating supplier diversity initiatives for government contractors impacts disability inclusion. If we want to align our supplier diversity programs with the Americans with Disabilities Act, the first step is to address the issue in the Small Business Administration and federal contracting requirements.

Racial Discrimination in Sourcing: Evidence From Controlled Experiments

Entrepreneurial activity is widely seen as an important tool for addressing the racial wealth gap. However, the survival of minority-owned businesses depends on their ability to win contracts from buyer firms—which might be impacted by buyers’ racial biases. Whether discrimination can exist in sourcing and affect this ability is an unexplored question, perhaps due to an implicit assumption that business-to-business settings are immune from discriminatory biases. In this paper, we use controlled experiments to study whether racial discrimination can affect sourcing decisions. We find that when a supplier's sales manager has a distinctively Black name, buyers are 6.5% less likely (statistically significant at 1% level) to select that supplier compared to a supplier with a sales manager with a distinctively white name. Our findings suggest that equal-opportunity legislation similar to that already in place in the labor market may be needed in the sourcing context. Our findings have implications for executives, suggesting that supplier diversity programs and procurement-bias training can boost corporate performance by expanding the supplier pool, and simultaneously enhance a firm's corporate social responsibility profile.

The impact of perceived buyer justice on the diverse supplier-buyer relationship building

The origins of supplier diversity in the U.S. can be traced back to the Civil Rights Movement in the 1950s and 1960s, with legislations promulgated and agencies established to facilitate market participation of many groups. Since that time, companies have been incorporating diverse supplier businesses into their procurement strategy and supplier selection decisions. However, how buying companies manage diverse suppliers in supplier diversity programs is under-researched. This research takes the perspective of a diverse supplier and investigates how the diverse supplier perceives the relationship with the buyer. Drawing on justice theory, the impact of the diverse supplier’s perception of the buying company’s justice behavior (distributive, procedural, interpersonal, and informational justice) on the supplier’s commitment to, and investment in, the diverse supplier-buyer relationship is investigated. Survey data from 131 women-owned businesses were used to test theoretically derived hypotheses. Analysis shows that perceived buyer distributive justice and interpersonal justice positively affect supplier commitment, and perceived buyer informational justice positively relates to diverse supplier investment in the relationship. Perceived buyer procedural justice, however, has a negative effect on diverse supplier commitment. Diverse supplier commitment and supplier investment positively influence the diverse supplier’s relationship performance. The results contribute to a nuanced understanding of different justice dimensions and offer managerial insights to buying companies on better managing diverse supplier-buyer relationships to increase inclusivity in the supply chain.

Reputational enablers for supplier diversity: An exploratory approach on the inclusion of war veterans and disabled people

This study investigates whether the inclusion of war veterans and disabled people in supplier diversity programs grants firms with reputational gains. With preliminary evidence collected in the content analysis of supplier diversity programs and diverse groups considered by S&P500's top 100 companies, we conducted a duo-factorial scenario-based experiment with a multi-stakeholder approach, exploring the reactions of the general public, customers, investors, and potential suppliers to these initiatives. In particular, we analyse whether their views on companies' benevolence and competence (trust) are affected. We also investigate the potential impacts on these stakeholders' overall attitude towards firms, as the construct represents a proxy of corporate reputation. The empirical results show that including these groups does not impact the way companies are perceived, suggesting that the communication of supplier diversity programs is not always efficient in creating positive images (e.g., greenwashing, social washing). We discuss these outcomes in the context of stakeholder theory and in the debate contrasting the strategic and moral incentives for adopting supplier diversity programs.

Going beyond supplier diversity to economic Inclusion:Where are we now and where do we go from here?

Supplier diversity is not a new concept but has increased in urgency due to racial unrest and social polarization across the globe. As culture shifts globally, demanding more diversity and inclusion in businesses, companies are having to rethink their overarching values and strategies. Supplier diversity programs foster more inclusive relationships with diverse and underrepresented populations of suppliers to produce both economic and social impact. Researchers have shown if managed effectively, a diverse and inclusive supply base can help organizations reduce risk, enhance brand image, and increase innovation and flexibility. The intent of this Notes and Debates article is to introduce and define supplier diversity, showing how an economically inclusive supplier diversity program enhances organizational benefits and provides greater economic and social benefits. A secondary intent is to begin the dialogue on the benefits of transitioning from traditional supplier diversity programs to fully embedded economic inclusion models. What is the purpose behind the transition? Is more supplier diversity necessarily better? What enablers or capabilities may be needed to evolve from a traditional supplier diversity program to a strategically positioned economic inclusion mindset? Suggestions are made about embedding key enablers within an organizational structure so that companies can mature in supplier diversity efforts and drive stronger social and economic value. This Notes and Debates piece uses support from ongoing research efforts that include interviews with companies engaged in supplier diversity programs and several supplier diversity councils. Some initial observations and remarks are incorporated in the text to help illustrate how to move from supplier diversity to economic inclusion. The enablers that help move from traditional diversity programs to economic inclusivity appear to mature and develop over time. Some organizations remain in the early, more traditional phases while others have dynamic ecosystems that have developed to support this transition.

From Supplier Diversity to Economic Inclusion: A Sustainable Model Driving Social and Business Value

Companies have been launching supplier diversity programs for decades. However, these programs are not a truly sustainable inclusion ecosystem fostering competitive advantage for buyers, suppliers and society. Companies are recognizing the potential of supplier diversity programs in business growth, such as response to the changing demographics and benefits including innovation and flexibility. Yet, challenges remain. Utilizing seven pillars of economic inclusion borrowed from the sports literature, this research aims to help companies develop sustainable diversity programs. This comes through development of an inclusive culture, procurement competencies, strategies, ecosystem, appropriate governance and structure, planning for and being able to measure inclusivity, and communication with stakeholders. Interviews with companies engaged in supplier diversity programs and also a number of supplier diversity councils were conducted. Secondary data were then collected to understand how companies are faring along the seven pillars of inclusivity. A maturity model is proposed to help companies build a sustainable supplier diversity and economic inclusion mindset to achieve social and business value.

How Do Large Purchasing Organizations Treat Their Diverse Suppliers? Minority Business Enterprise CEOs’ Perception of Corporate Commitment to Supplier Diversity

Supplier diversity programs were created in the United States nearly 50 years ago to encourage private sector companies to provide business opportunities to underutilized minority business enterprises. In order to assess the experiences that minority business enterprise CEOs have with large purchasing organizations and their perceptions of justice and commitment of large purchasing organizations to the buyer–supplier relationship (BSR), this study utilizes survey data collected from 206 minority business enterprise CEOs who supply large purchasing organizations that espouse a strong commitment to supplier diversity. The theoretical framework of organizational justice is utilized to establish testable hypotheses. The results from hierarchical linear regression show minority business enterprise CEOs’ perception of large purchasing organizations’ commitment to the BSR is positively related to the distributive and informational dimensions of organizational justice. Surprisingly, the procedural dimension was found to have a significantly negative relationship. This research also found a significant, negative relationship between minority firm CEOs’ perception of distributive and informational justice and their perceptions of unethical behavior by large purchasing organizations.

Exclude Me Not: The Untold Story of Immigrant Entrepreneurs in Sweden

This article examines the perspectives of immigrant entrepreneurs on the barriers they face regarding their inclusion in public procurement in Sweden through the so-called supplier diversity programs. Drawing upon modern stakeholder theory and transaction cost economics, this study aims to identify potential barriers such entrepreneurs face in succeeding as suppliers to the public sector. Data were collected through interviews with immigrant entrepreneurs who had experience with the public procurement tender process in Sweden. The results reveal that immigrant entrepreneurs doing business with public procurement face several barriers, ranging from economic to social ones such as information, advertising, human resources, and undercapitalization. The interviewees believe that such barriers weaken their performance and hinder their success in public procurement tenders. When it comes to supplier diversity programs, the entrepreneurs under study were either unaware of such programs in public procurement in Sweden or did not believe in their effectiveness.

Selection behavior of the global container shipping industry for carrier-owned and leased containers

In container shipping practices, containers owned by the shipping lines and leasing companies are generally regarded as homogeneous factor inputs and can substitute each other perfectly in providing the shipping service. Based on industry-wide data, this study surprisingly finds that the behavior of container selection for container shipping lines does not follow the pattern of perfect substitution, but rather the pattern of fixed proportions technology, through a constant elasticity of substitution production function. Combined with the observed relationship between the approximately constant leasing rates and the shrinking price premiums for leasing companies over the past two decades, the empirical results suggest that concerns with both the capital cost and strategic means may play key roles in determining the mix of owned and leased containers for the shipping lines. Several strategic concerns including the long-term leasing contract, supplier diversity program, and option contract are discussed and suggested as approaches that can be applied by the shipping lines to arrange their leasing policies with lessors and to moderate the competition of these two parties in expanding their container fleets. These approaches not only can reduce the costs and the associated risks for the shipping lines, but can also alleviate the situation of over-supplied containers in the global container shipping industry.

The Impact of Corporate Supplier Diversity Programs on Corporate Purchasers’ Intention to Purchase From Women-Owned Enterprises

This doctoral thesis examines the impact of corporate supplier diversity programs on corporate purchasers’ intention to purchase from women-owned enterprises using Ajzen’s theory of planned behavior. Two hundred and seventy-two corporate purchasers across a diverse range of industries and geographical regions in the United States participated in a mail survey in which the participants responded to questions (capturing the constructs of the theory of planned behavior) related to a selected scenario. These scenarios (a 2 × 2 factorial design) manipulated two constructs: male/female of the small enterprise owner and corporate purchasers’ familiarity/unfamiliarity with the enterprise. The goal of the experimental manipulation was to ensure sufficient variance in the study constructs. The results provided general support for the theory of planned behavior in capturing how corporate purchasers make decisions. The findings of the study show that programs designed to promote women-owned enterprises may be effective in gaining acceptance from corporate purchasers. Thus, the dissertation makes a contribution to the corporate social responsibility literature as it reveals that it is possible for business to incorporate positive duty into its core economic activities without compromising its financial gains and that the economic-aligned and duty-aligned orientations can be integrated.

The best‐practice supplier diversity program at Caterpillar

PurposeThe purpose of this paper is to profile the successful implementation of a corporate‐wide supplier diversity program utilized by Caterpillar, Inc., one of the Fortune 500 companies. Caterpillar's supplier diversity program can be a blue‐print for other companies which would like to accomplish the corporate mission of promoting the free enterprise system by prohibiting restraints of trade, unfair practices, reciprocity, or abuse of economic power.Design/methodology/approachTo comply with stricter government regulations demanding a diverse supplier base and match a supplier base to changing customer demographics, a growing number of purchasing organizations have launched supplier diversity programs. Despite such a trend and abundant theory about the supplier diversity program, there is a paucity of case‐based research that can explain what it takes to become a supplier diversity champion. To fill the void left by previous studies, the paper conducted an in‐depth analysis of Capterpillar's best‐practices and unearthed its secret behind the success.FindingsThrough Caterpillar's case, it was found that a supplier diversity program could not only help save sourcing cost, but also enhance quality at the source. Thus, it offers long‐term competitive advantages. Also, a key to the successful supplier diversity program is the buying firm's ability to adapt to new cultural change that breaks the ties with “good old boys networks”.Originality/valueThe paper elaborated on six different strategic initiatives that provided equal contractual opportunity to historically underutilized but qualified suppliers such as small, small disadvantaged, or women‐owned small businesses and leveraged such opportunity to create a strategic sourcing advantage. Other organizations that wish to develop supplier diversity programs may consider these strategic initiatives and emulate Caterpillar's success.

Supplier diversity: A missing link in human resource development

AbstractBy examining supplier diversity programs and comparing their components with the role of the diversity practitioners, we highlight the important role that diversity practitioners can have in supplier diversity programs. In reviewing the U.S. auto industry and its successful supplier diversity model, our findings suggest that diversity practitioners have a real opportunity to expand their existing roles as strategist, educator, and researcher. We explore the aforementioned and offer conclusions and implications for HRD practice.

Disability as diversity infortune 100 companies

To investigate the inclusion of people with disabilities in the diversity policies of the most successful businesses in the United States, we examined the publicly available workforce and supplier diversity policies of the top 100 companies on Fortune Magazine's 2003 list of the 500 most profitable companies in the nation. The majority of these companies have extensive information about their diversity policies and practices available on their corporate website. The information was used to categorize the policies into those that include people with disabilities, do not define diversity, and enumerate what is meant by diversity (e.g. in terms of race or gender) but do not expressly mention disability. In addition, we looked beyond the diversity policies to information available on corporate websites relating to a variety of diversity initiatives. Findings suggest that the majority of the companies that top the Fortune 500 list have developed and implemented diversity policies. Of these, 42% have diversity policies that include people with disabilities in the definition of a diverse workforce. Furthermore, 47% of companies with workplace diversity policies discuss diversity in a way that neither expressly includes nor excludes people with disabilities. Far fewer (15%) supplier diversity policies include disability in the definition of diversity, but a significant number of companies use criteria that allow a business owner with a disability to benefit from the company's supplier diversity program.

Best Practices and Web Practices: Comparing Corporate Supplier Diversity Programs with Web-based Minority Supplier Content

Best Practices and Web Practices: Comparing Corporate Supplier Diversity Programs with Web-based Minority Supplier Content

Categorizing Corporate Web-Based, Supplier Diversity Initiatives

Corporations seek to purchase from a diverse set of suppliers, but so far, supplier diversity programs have received scant research attention and Web-based supplier diversity initiatives no research effort. This study examines the Web-based supplier diversity content and majority supplier communication of Fortune 500 firms and develops a matrix to categorize that content. Innovation diffusion theory determines that firms which currently have Web-based supplier diversity initiatives are early adopters and that the largest firms in the study are the most likely adopters. Only a few firms are using public Web sites to explain their supplier diversity initiatives. Approximately a quarter of these large firms' Web sites make some mention of supplier diversity, and among the sites with the content, just over a quarter describe a supplier diversity initiative. Therefore, public Web sites are largely underutilized as a means of interacting with and attracting suppliers from a diverse population.