Selection, Payment, and Information Assessment in Social Audits: A Behavioral Experiment

References

• Abeler J, Nosenzo D, Raymond C (2019) Preferences for truth-telling. Econometrica 87(4):1115–1153.Crossref, Google Scholar
• Ahn J, Akamah H (2022) Is there a dark side to societal trust in auditors’ going concern assessments? Auditing J. Practice Theory 41(3):21–44.Crossref, Google Scholar
• Bartling B, Fehr E, Schmidt KM (2012) Screening, competition, and job design: Economic origins of good jobs. Amer. Econom. Rev. 102(2):834–864.Crossref, Google Scholar
• Bartling B, Weber RA, Yao L (2015) Do markets erode social responsibility? Quart. J. Econom. 130(1):219–266.Crossref, Google Scholar
• Bazerman MH, Moore DA, Tetlock PE, Tanlu L (2006) Reports of solving the conflicts of interest in auditing are highly exaggerated. Acad. Management Rev. 31(1):43–49.Crossref, Google Scholar
• Bazerman MH, Morgan KP, Loewenstein GF (1997) The impossibility of auditor independence. MIT Sloan Management Rev. 38(4):89–94.Google Scholar
• Becker GM, DeGroot MH, Marschak J (1964) Measuring utility by a single-response sequential method. Behav. Sci. 9(3):226–232.Crossref, Google Scholar
• Beer R, Ahn HS, Leider S (2018) Can trustworthiness in a supply chain be signaled? Management Sci. 64(9):3974–3994.Link, Google Scholar
• Bolton GE, Ockenfels A, Werner P (2016) Leveraging social relationships and transparency in the insider game. J. Econom. Sci. Assoc. 2(2):127–143.Crossref, Google Scholar
• Buell RW, Kalkanci B (2021) how transparency into internal and external responsibility initiatives influences consumer choice. Management Sci. 67(2):932–950.Link, Google Scholar
• Buell R, Kim T, Tsay C (2017) Creating reciprocal value through operational transparency. Management Sci. 63(6):1673–1695.Link, Google Scholar
• Charness G (2004) Attribution and reciprocity in an experimental labor market. J. Labor Econom. 22(3):665–688.Crossref, Google Scholar
• Charness G, Dave C (2017) Confirmation bias with motivated beliefs. Games Econom. Behav. 104(C):1–23.Crossref, Google Scholar
• Charness G, Levin D (2005) When optimal choices feel wrong: A laboratory study of Bayesian updating, complexity, and affect. Amer. Econom. Rev. 95(4):1300–1309.Crossref, Google Scholar
• Charness G, Gneezy U, Halladay B (2016) Experimental methods: Pay one or pay all. J. Econom. Behav. Organ. 131:141–150.Crossref, Google Scholar
• Chen L, Lee HL (2017) Sourcing under supplier responsibility risk: The effects of certification, audit, and contingency payment. Management Sci. 63(9):2795–2812.Link, Google Scholar
• Chen DL, Schonger M, Wickens C (2016) oTree—An open-source platform for laboratory, online, and field experiments. J. Behav. Experiment. Finance 9:88–97.Crossref, Google Scholar
• Chen L, Yao S, Zhu K (2020) Responsible sourcing under supplier-auditor collusion. Manufacturing Service Oper. Management 22(6):1234–1250.Link, Google Scholar
• Coca-Cola (2021) Supplier guiding principles. Retrieved December 14, 2023, https://www.coca-colacompany.com/policies-and-practices/supplier-guiding-principles.Google Scholar
• Dawande M, Qi A (2021) Auditing, inspections, and testing for social responsibility in supply networks. Swaminathan JM, Deshpande V, eds. Responsible Business Operations: Challenges and Opportunities (Springer, Cham, Switzerland), 243–259.Crossref, Google Scholar
• Doty (2011) Issuance of a Concept Release on auditor Independence and Audit firm Rotation. Speech, PCAOB Open Board Meeting, Public Company Accounting Oversight Board, Washington, DC, August 16. Retrieved January 1, 2024, https://pcaobus.org/news-events/speeches/speech-detail/issuance-of-a-concept-release-on-auditor-independence-and-audit-firm-rotation_338.Google Scholar
• Dreier H (2023) They’re paid billions to root out child labor in the U.S. Why do they fail? New York Times (December 28), https://www.nytimes.com/2023/12/28/us/migrant-child-labor-audits.html.Google Scholar
• Duflo E, Greenstone M, Pande R, Ryan N (2013a) Truth-telling by third-party auditors and the response of polluting firms: Experimental evidence from India. Quart. J. Econom. 128(4):1499–1545.Crossref, Google Scholar
• Duflo E, Greenstone M, Pande R, Ryan N (2013b) What does reputation buy? Differentiation in a market for third-party auditors. Amer. Econom. Rev. 103(3):314–319.Crossref, Google Scholar
• Etilé F, Teyssier S (2016) Signaling corporate social responsibility: Third-party certification versus brands. Scandinavian J. Econom. 118(3):397–432.Crossref, Google Scholar
• Falk A, Fischbacher U (2006) A theory of reciprocity. Games Econom. Behav. 54(2):293–315.Crossref, Google Scholar
• Falk A, Fehr E, Fischbacher U (2008) Testing theories of fairness—Intentions matter. Games Econom. Behav. 62(1):287–303.Crossref, Google Scholar
• Fehr E, Gächter S (2000) Cooperation and punishment in public goods experiments. Amer. Econom. Rev. 90(4):980–994.Crossref, Google Scholar
• Fehr E, Schmidt KM (2006) The economics of fairness, reciprocity and altruism: Experimental evidence and new theories. Kolm S-C, Ythier JM, eds. Handbook Econom. Giving Altruism Reciprocity, vol. 1 (Elsevier, Amsterdam), 615–691.Crossref, Google Scholar
• Forsythe R, Horowitz JL, Savin NE, Sefton M (1994) Fairness in simple bargaining experiments. Games Econ. Behav. 6(3):347–369.Crossref, Google Scholar
• Guo J, Recalde MP (2022) Overriding in teams: The role of beliefs, social image, and gender. Management Sci. 69(4):2239–2262.Google Scholar
• Guo R, Lee HL, Swinney R (2016) Responsible sourcing in supply chains. Management Sci. 62(9):2722–2744.Link, Google Scholar
• Hainmueller J, Hiscox MJ, Sequeira S (2015) Consumer demand for fair trade: Evidence from a multistore field experiment. Rev. Econom. Statist. 97(2):242–256.Crossref, Google Scholar
• He X, Pittman JA, Rui OM, Wu D (2017) Do social ties between external auditors and audit committee members affect audit quality? Accounting Rev. 92(5):61–87.Crossref, Google Scholar
• Holt CA, Laury SK (2002) Risk aversion and incentive effects. Amer. Econom. Rev. 92(5):1644–1655.Crossref, Google Scholar
• Holt CA, Smith AM (2016) Belief elicitation with a synchronized lottery choice menu that is invariant to risk attitudes. Amer. Econom. J. Microeconom. 8(1):110–139.Crossref, Google Scholar
• Hurley PJ, Mayhew BW, Obermire KM (2019) Realigning auditors’ accountability: Experimental evidence. Accounting Rev. 94(3):233–250.Crossref, Google Scholar
• Hyndman K, Honhon D (2020) Flexibility in long-term relationships: An experimental study. Manufacturing Service Oper. Management 22(2):273–291.Link, Google Scholar
• Industry Arc (2022) Social audit services market 2020-2025. Retrieved December 14, 2023, https://www.industryarc.com/Report/19328/social-audit-services-market.html.Google Scholar
• Kagel JH, Roth AE, eds. (1995) The Handbook of Experimental Economics (Princeton University Press, Princeton, NJ).Crossref, Google Scholar
• Karni E (2009) A mechanism for eliciting probabilities. Econometrica 77(2):603–606.Crossref, Google Scholar
• Kashyap A (2022) “Obsessed with audit tools, missing the goal”: Why social audits can’t fix labor rights abuses in global supply chains. Report, Human Rights Watch, United States of America.Google Scholar
• Katok E (2011) Using laboratory experiments to build better operations management models. Foundations Trends Tech. Inform. Oper. Management 5(1):1–86.Crossref, Google Scholar
• Kraft T, Valdés L, Zheng Y (2018) Supply chain visibility and social responsibility: Investigating consumers’ behaviors and motives. Manufacturing Service Oper. Management 20(4):617–636.Link, Google Scholar
• Kunda Z (1990) The case for motivated reasoning. Psych. Bull. 108(3):480–498.Crossref, Google Scholar
• LeBaron G, Lister J, Dauvergne P (2017) Governing global supply chain sustainability through the ethical audit regime. Globalizations 14(6):958–975.Crossref, Google Scholar
• Loch CH, Wu Y (2008) Social preferences and supply chain performance: An experimental study. Management Sci. 54(11):1835–1849.Link, Google Scholar
• Locke RM, Qin F, Brause A (2007) Does monitoring improve labor standards? Lessons from Nike. ILR Rev. 61(1):3–31.Crossref, Google Scholar
• Mayhew B, Pike J (2004) Does investor selection of auditors enhance auditor independence? Accounting Rev. 79(3):797–822.Crossref, Google Scholar
• Montiel I, Husted BW, Christmann P (2012) Using private management standard certification to reduce information asymmetries in corrupt environments. Strategic Management J. 33(9):1103–1113.Crossref, Google Scholar
• Moore DA, Tetlock PE, Tanlu L, Bazerman MH (2006) Conflicts of interest and the case of auditor independence: Moral seduction and strategic issue cycling. Acad. Management Rev. 31(1):10–29.Crossref, Google Scholar
• Moroney R, Trotman KT (2016) Differences in auditors’ materiality assessments when auditing financial statements and sustainability reports. Contemporary Accounting Res. 33(2):551–575.Crossref, Google Scholar
• Nelson MW (2009) A model and literature review of professional skepticism in auditing. Auditing J. Practice Theory 28(2):1–34.Crossref, Google Scholar
• O’Rourke D (2000) Monitoring the monitors: A critique of PricewaterhouseCoopers (PwC) labor monitoring. Report, Department of Urban Studies and Planning, Massachusetts Institute of Technology, Cambridge, MA.Google Scholar
• Patagonia (2024) Working with factories. Retrieved May 15, 2024, https://www.patagonia.com/our-footprint/working-with-factories.html.Google Scholar
• PCAOB (2020) AS 2401: Consideration of fraud in a financial statement audit. Retrieved November 1, 2024, https://pcaobus.org/oversight/standards/auditing-standards/details/AS2401.Google Scholar
• Pigors M, Rockenbach B (2016) Consumer social responsibility. Management Sci. 62(11):3123–3137.Link, Google Scholar
• Plambeck EL, Taylor TA (2016) Supplier evasion of a buyer’s audit: Implications for motivating supplier social and environmental responsibility. Manufacturing Service Oper. Management 18(2):184–197.Link, Google Scholar
• Rode J, Hogarth RM, Le Menestrel M (2008) Ethical differentiation and market behavior: An experimental approach. J. Econom. Behav. Organ. 66(2):265–280.Crossref, Google Scholar
• Rubin J, Sheremeta R (2016) Principal–agent settings with random shocks. Management Sci. 62(4):985–999.Link, Google Scholar
• Samuelson W, Zeckhauser R (1988) Status quo bias in decision making. J. Risk Uncertainty 1(1):7–59.Crossref, Google Scholar
• Schlag K, Tremewan J (2021) Simple belief elicitation: An experimental evaluation. J. Risk Uncertainty 62(2):137–155.Crossref, Google Scholar
• SEDEX (2023) SMETA audit, the world’s leading audit. Retrieved December 14, 2023, https://www.sedex.com/solutions/smeta-audit/.Google Scholar
• Short J, Toffel M, Hugill A (2016) Monitoring global supply chains. Strategic Management J. 37(9):1878–1897.Crossref, Google Scholar
• Skarmeas D, Leonidou CN (2013) When consumers doubt, watch out! The role of CSR skepticism. J. Bus. Res. 66(10):1831–1838.Crossref, Google Scholar
• Starbucks (2024) C.A.F.E. practices: Starbucks approach to ethically sourcing coffee. Retrieved July 30, 2025, https://about.starbucks.com/press/2024/cafe-practices-starbucks-approach-to-ethically-sourcing-coffee/.Google Scholar
• Terwindt C, Armstrong A (2019) Oversight and accountability in the social auditing industry: The role of social compliance initiatives. Internat. Labour Rev. 158(2):245–272.Crossref, Google Scholar
• Thorlakson T, De Zegher JF, Lambin EF (2018) Companies’ contribution to sustainability through global supply chains. Proc. National Acad. Sci. USA 115(9):2072–2077.Crossref, Google Scholar
• Villena VH (2019) The missing link? The strategic role of procurement in building sustainable supply networks. Production Oper Management 28(5):1149–1172.Crossref, Google Scholar
• Villena V, Gioia D (2018) On the riskiness of lower-tier suppliers: Managing sustainability in supply networks. J. Oper. Management 64:65–87.Crossref, Google Scholar
• Villena VH, Wilhelm M, Xiao CY (2021) Untangling drivers for supplier environmental and social responsibility: An investigation in Philips Lighting’s Chinese supply chain. J. Oper. Management 67(4):476–510.Crossref, Google Scholar
• Walmart (2023) People in supply chains. Retrieved May 15, 2024, https://corporate.walmart.com/purpose/esgreport/social/people-in-supply-chains.Google Scholar
• Walmart (2024) Global ethics & compliance. Retrieved July 28, 2025, https://one.walmart.com/content/dam/responsiblesourcing/guidancedocuments/audit_assessment_policy_and_guidance/Resource_AuditAssessmentPolicy_ENG.pdf.Google Scholar