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Trial Title
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ESG Supply Chain Management
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Delegation, Monitoring, and Incentives: A Field Experiment in Supply Chain Governance
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Abstract
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This study examines the systemic integration of Environmental, Social, and Governance (ESG) practices in global supply chains, tackling the challenge of aligning smaller suppliers with the sustainability goals of large downstream firms. In collaboration with a major publicly listed company in China, we utilize comprehensive firm-level data to test innovative, cost-effective mechanisms for enhancing supplier ESG performance. Grounded in organizational economics, our experimental design draws on multitasking and delegation theories to examine the allocation of decision-making authority. Horizontally, we evaluate how data verification and incentive structures influence balanced ESG advancement among suppliers. Vertically, we compare the effects of mandated versus self-selected ESG improvement metrics on supplier engagement and efficiency. By rigorously assessing ESG and financial performance across experimental groups, this research delivers scalable, theory-driven insights to advance sustainable supply chain practices, offering valuable contributions to both academic scholarship and practical application.
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This paper investigates how firms can design governance structures to manage complex objectives in global supply chains. We conduct a randomized controlled trial (RCT) with a large publicly listed firm in China and its network of 149 suppliers, testing how horizontal and vertical allocations of authority affect supplier behavior. Guided by theories of multitasking (Holmström & Milgrom, 1991) and delegation (Aghion & Tirole, 1997), the intervention independently varies the strength of incentives tied to future orders, the scope of third-party auditing, and the specification of environmental, social, and governance (ESG) key performance indicators. Supplier outcomes are measured through a centralized data platform that tracks supplier engagement (data completeness, documentation), objective performance (over 30 ESG indicators), and extensive-margin decisions (contract renewal). The findings aim to provide empirical insights into effective governance structures for sustainable supply chains, addressing the increasing stakeholder and regulatory demands for corporate social responsibility in emerging markets.
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JEL Code(s)
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C93, D23, L22, L23, M14, Q56
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Last Published
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August 08, 2025 07:25 AM
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September 11, 2025 09:46 AM
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Additional Keyword(s)
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Supply Chain Management, ESG, CSR
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Environmental, Social, and Governance (ESG), Corporate Social Responsibility (CSR), Supply Chain Management, Randomized Controlled Trial (RCT), Multitasking, Delegation
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