Supply chain accounting and employment practices in the rising economies: global commodity chains, cost effectiveness and competitiveness

This study aims to explore the present role and future potential of supply chain accounting (SCA) in monitoring and promoting better labour standards within two key emerging market settings, Brazil and South Africa. These countries form part of the BRICS (Brazil, Russian, India, China, South Africa) group of large emerging markets with a significant industrial base. Both countries presently enjoy sustained growth, the global financial crisis notwithstanding, but have high levels of unemployment and insecure work. We focus on the automotive and textiles sectors. In both countries, the automotive industry may be considered a success story, but textiles firms battle to stay viable in the face of intense competition from countries such as China. The automotive sector is high value-added, capital intensive and unionised, whilst textiles is labour-intensive, with cost margins increasingly squeezed, but historically unionised.
Over recent years, increasing attention has been paid to employment relations within national and international supply chains. An increasingly influential school of thought has been GCC (Global Commodity Chains) theory, which focuses on imbalances in power relations between the parties involved in the flow of commodities from the raw materials stage to the final marketable good, and the extent to which a dominant party - the core firm (automotive) or end distributer/retailer (textiles) - impacts on subordinate supplier practices (Gereffi and Korzeniewicz, 1994). Both sectors within Brazil and South Africa are highly globalised, but were historically well protected. For historical and logistic reasons, there is a high degree of indigenisation of supply chains, yet the industries' ultimate fortunes are determined by the major textile retailers and automotive majors. Whilst the dominant parties of supply chains may be motivated primarily by cost, they may also be motivated by quality concerns, and actively promote specific work and employment relations practices down supply chains. Moreover, for marketing reasons and/or ethical principles, they may be sensitive to allegations of poor labour standards amongst suppliers. SCA can be described simply as the accounting and management control practices used to record transactions between the organisation and its customers and suppliers and to ensure that these transactions are cost effective, and/or meet additional criteria such as labour standards. However, the bulk of the accounting literature has tended to neglect questions of labour standards and employment relations, whilst the literature on GCCs has similarly ignored the accounting dimension. Our project will explore the manner and extent to which SCA is currently used to monitor suppliers' labour standards, and how processes could be further enhanced, with important implications for practice and theory development.
Our objectives will be attained through a multi-method approach, involving: a) a literature review of the relationship between global commodity chains, SCA and employment practices; b) a survey of companies in Brazil and South Africa; and c) case study research within ten organisations (six in the textiles, and four in the automotive industries), involving an analysis of company documents and in-depth interviews with senior level staff in accounting, human resources and SCM departments, policy makers, nongovernmental organisations and trade unionists. The study is multidisciplinary, drawing on staff expertise in accounting, organisation studies, and employment relations, and interdisciplinary in combining concepts from these fields of study. Members of the team have previously collaborated on various projects. Dissemination to academic audiences will be through conference presentation and peer-reviewed articles, while practitioners will be reached through targeted mechanisms including a project website, interim workshops in South Africa and Brazil, a final symposium and practitioner journals.

The project will benefit a wide range of stakeholders concerned with SCA and employment relations in emerging economies, including those based in advanced economies. Key beneficiaries include:
-Practitioners within the fields of accounting and HR, particularly within the automotive and textile sectors;
-CEOs and shareholders;
-Civil servants and government ministers in departments for employment and business;
-Trade unionists such as the South African Clothing and Textile Workers Union, the National Union of Metalworkers of South Africa, and the Central Unica dos Trabalhadores; employment lawyers and non-governmental organisations;
-Accreditation and related bodies interested in maintaining professional standards such as CIMA and CIPD that are UK based but seeking to extend membership globally to include emerging economies (evidenced by the CIMAGlobal initiative and the CIPD's new office in Singapore);
-Employer bodies in the textile and automotive industries in South Africa and Brazil; and
-Students studying for qualifications in HR and accounting.

The research will benefit the above beneficiaries by shedding light on the nature of commodity chains, inter and intra continental SCA, and its implications for employment relations. In contributing toward the development of more efficient, effective, and accountable supply chains, and in evaluating the employment practices used, it has the potential to impact on competitiveness and sustainability. The project will result in outcomes that are relevant to each of the countries, but also yield comparative findings, shedding light on the situation in countries with relatively open (South African) and relatively closed (Brazilian) economies. In particular, the project will enable a wider understanding of the nature of supply chain accounting techniques, providing useful information for potential customers, suppliers, and investors in those nations, with implications for competitiveness and wealth creation. In addition, it will yield insights into the employment relations of key manufacturing firms and their suppliers that can be used by policy makers, NGOs, employer organisations and trade unionists to develop more ethical guidelines and procedures for monitoring and promoting sustainable and ethical employment practices.

Plans for interaction with the above beneficiaries:
1) The Advisory Board (AB) includes practitioner and professional association members including the Chartered Institute of Personnel and Development (CIPD) and the Chartered Institute of Management Accounting (CIMA). AB members will be involved in an ongoing basis in the project design, development of toolkits and recommendations, and dissemination.
2) The accessible and interactive website will enable discussion on the project's progress, the sharing of good practice examples, and the evaluation of SCA-Emp toolkits. Its continuation after the project completion will facilitate an assessment of impacts on policy and practice (Wiles, Bardsley and Powell, 2009).
3) Project workshops in UK, Brazil and South Africa will be used for discussing initial findings, refining SCA-Emp toolkits, and helping to build an SCA-Emp Community of Practice (CoP) involving multiple stakeholders.
4) Workshops will be run through the Public Service Academy, the CIPD, CIMA and law firms
5) Ongoing media engagement will be facilitated by Sheffield University's press office, including: soundbites for NGOs, e-bulletins for lawyers and press releases to unions
6) Articles in practitioner journals relating to accounting, SCM and HRM will enable dissemination of results in an accessible form in South Africa, Brazil and the UK.
7) The final symposium will present key findings and involve consultation on the refinement of toolkits and feasible recommendations so that these might inform and guide practice.