Supply Chain Management as Private Sector Regulation: What does it Mean for Business Strategy and Public Policy?

The growing practice of environmental supply chain management by firms constitutes private sector regulation that is analogous in many ways to public sector regulation. Similarly to their public counterparts, private sector regulators set standards, apply standards, monitor for compliance, apply sanctions and require corrective action. Private sector regulation differs, however, in the source of authority, external oversight, analytical requirements, public participation and available sanctions. This article argues that supply chain management by firms goes beyond business objectives by creating positive environmental externalities for society, and that more systematic study of the similarities and contrasts between the two forms of regulation may provide valuable lessons for both. Further, it may be possible to increase the effectiveness of private sector regulation to achieve both public societal and private business goals. From a business perspective, supply chain management enables firms to strategically redefine their relationships with government, reduce uncertainty and promote goal‐oriented collaboration. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment