Abstract
AbstractTransnational business regulation is increasingly implemented through private voluntary programs – such as certification regimes and codes of conduct – that diffuse global standards. However, little is known about the conditions under which companies adhere to these standards. We conduct one of the first large‐scale comparative studies to determine which international, domestic, civil society, and market institutions promote supply chain factories' adherence to the global labor standards embodied in codes of conduct imposed by multinational buyers. We find that suppliers are more likely to adhere when they are embedded in states that participate actively in the International Labour Organization treaty regime and that have stringent domestic labor law and high levels of press freedom. We further demonstrate that suppliers perform better when they serve buyers located in countries where consumers are wealthy and socially conscious. These findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation.
Highlights
In the last several years, a series of highly publicized factory fires and building collapses that killed thousands of factory workers in Southeast Asia has focused attention on abusive labor conditions in global supply chain factories, prompting calls for more stringent regulation
As for the influence of civil society institutions in the audited factory’s country, while we find a negative point estimate on log of international nongovernmental organizations (INGOs) density as predicted, we found no evidence that activist pressure significantly predicts fewer labor violations
Contributions Our findings significantly extend the literature on transnational business regulation by revealing the institutional configurations in which supplier factories are most likely to comply with the global labor standards embodied in codes of conduct
Summary
In the last several years, a series of highly publicized factory fires and building collapses that killed thousands of factory workers in Southeast Asia has focused attention on abusive labor conditions in global supply chain factories, prompting calls for more stringent regulation Such calls are merely the latest in more than a century of efforts to raise global labor standards. As economic globalization has extended supply chains around the globe, outside the reach of any one state’s jurisdiction, the locus of efforts to improve global workplace conditions has shifted from states and IGOs to private entities like multinational corporations (MNCs), nongovernmental organizations (NGOs), and multi-stakeholder certification regimes. These findings demonstrate the important roles played by state, civil society, and market institutions in transnational business regulation and substantially advance our understanding of how these regulatory institutions shape private firms’ adherence to global norms
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