For business and legal reasons, corporate governance needs to be reflected in the management of supplier relationships. Under corporation laws and securities laws, boards of directors and senior executives are held legally accountable for failures to manage for accountability, transparency and duty to investors. Supplier management falls within the general responsibility for enterprise management.
In the pursuit of these duties, enterprise managers contemplating methodologies and procedures for governance in the sourcing relationship must consider how corporate governance principles such as accountability, transparency, collaborative decisionmaking and alignment for pursuit of common goals should be extended to up the tiers of suppliers. Legal and criminal liability may apply for failure to do so.
Accordingly, relevant corporate governance principles should suffuse the relationship governance in outsourcing.