The Vertical Governance of Modern Slavery Risks in Supply Chains: A Social Exchange Theory Perspective

Purpose – The purpose of this study is to explore the form vertical supply chain governance has taken in response to the Modern Slavery Act 2015. Specifically, this study asks whether relational governance has developed to counteract the shortcomings of using contractual governance to address modern slavery risks.

Design/methodology/approach – A qualitative methodology is used via a case study of the UK construction industry. In all, 50 interviews were conducted, primarily with actors working at different levels of the supply chain, from principal contractors to small subcontractors, among others. The Social Exchange Theory is used to identify the dimensions of social exchange present in vertical governance.

Findings – This study finds two dimensions of social exchange that act as inhibitors of relational governance – mutual mistrust and conflictual relations – and one as a promoter – collaborative commitment. These mixed results represent tentative forms of collaboration, which are undermined by the largely antagonistic nature of supply chain relations.

Originality/value – In terms of responses to modern slavery legislation, this study reveals tensions and conflict between firms, rather than within them, by including firms from different points in supply chains rather than only those at the top. In doing so, the findings of this study problematise the focus on, and value of, horizontal collaboration where this does not translate into effective vertical governance. Finally, to the best of the author’s knowledge, this is the first application of Social Exchange Theory to understand how modern slavery risks are being managed in supply
chains.