Supply chain contagion of perk consumption: Who is more likely to be corrupted?

Abstract

The contagion of interfirm behaviours along the supply chain has become a significant issue for both supply chain management and the internal governance of firms within the supply chain. By means of panel data of 1893 mated supply chain pairs collected from Chinese listed firms, we examine the supply chain contagion effect of corruption-related perk consumption by investigating whether firms’ perk consumption is influenced by their supply chain peers. We find a unilateral contagion effect of corrupt perk consumption along the supply chain, i.e., only from suppliers to customers. We suggest that suppliers exert this unilateral contagion effect by influencing customers’ managerial culture and the close business relationship between them. In addition, the unilateral contagion effect would be weakened when customers have a high level of employee salary.