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Global Purchasing as Labor Regulation: The Missing Middle

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  • Matthew Amengual
  • Greg Distelhorst
  • Danny Tobin

Abstract

Do purchasing practices support or undermine the regulation of labor standards in global supply chains? This study offers the first analysis of the full range of supply chain regulatory efforts, integrating records of factory labor audits with purchase order microdata. Studying an apparel and equipment retailer with a strong reputation for addressing labor conditions in its suppliers, the authors show that the retailer persuaded factories to improve and terminated factories with poor labor compliance. However, the authors also find that purchase orders did not increase when labor standards improved. If anything, factories whose standards worsened tended to see their orders increase. Contrary to the conventional wisdom, this “missing middle†in incentives for compliance appears unrelated to any cost advantage of noncompliant factories. Instead, lack of flexibility in supplier relationships created obstacles to reallocating orders in response to compliance findings.

Suggested Citation

  • Matthew Amengual & Greg Distelhorst & Danny Tobin, 2020. "Global Purchasing as Labor Regulation: The Missing Middle," ILR Review, Cornell University, ILR School, vol. 73(4), pages 817-840, August.
    • Handle: RePEc:sae:ilrrev:v:73:y:2020:i:4:p:817-840
    DOI: 10.1177/0019793919894240
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    References listed on IDEAS

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    1. Greg Distelhorst & Richard M. Locke, 2018. "Does Compliance Pay? Social Standards and Firm‐Level Trade," American Journal of Political Science, John Wiley & Sons, vol. 62(3), pages 695-711, July.
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    Cited by:

    1. Céline Carrère & Marcelo Olarreaga & Damian Raess, 2022. "Labor clauses in trade agreements: Hidden protectionism?," The Review of International Organizations, Springer, vol. 17(3), pages 453-483, July.
    2. Peter Lund-Thomsen, 2020. "Corporate social responsibility: A supplier-centered perspective," Environment and Planning A, , vol. 52(8), pages 1700-1709, November.
    3. Stephen J. FRENKEL & Elke S. SCHUESSLER, 2021. "From Rana Plaza to COVID‐19: Deficiencies and opportunities for a new labour governance system in garment global supply chains," International Labour Review, International Labour Organization, vol. 160(4), pages 591-609, December.
    4. Oya, Carlos & Schaefer, Florian, 2021. "The politics of labour relations in global production networks: Collective action, industrial parks, and local conflict in the Ethiopian apparel sector," World Development, Elsevier, vol. 146(C).
    5. Chunyun Li & Sarosh Kuruvilla, 2023. "Corporate codes of conduct and labour turnover in global apparel supply chains," British Journal of Industrial Relations, London School of Economics, vol. 61(3), pages 481-505, September.
    6. Matthew Amengual & Sarosh Kuruvilla, 2020. "Editorial Essay: Introduction to a Special Issue on Improving Private Regulation of Labor in Global Supply Chains: Theory and Evidence," ILR Review, Cornell University, ILR School, vol. 73(4), pages 809-816, August.
    7. Juliane Reinecke & Jimmy Donaghey, 2021. "Towards Worker‐Driven Supply Chain Governance: Developing Decent Work Through Democratic Worker Participation," Journal of Supply Chain Management, Institute for Supply Management, vol. 57(2), pages 14-28, April.
    8. Jenny COLLINS & Julian S. YATES, 2023. "Leveraging transparency to shift capital‐labour relations in garment sector production: A critical analysis of the design and structure of the Bangladesh Accord," International Labour Review, International Labour Organization, vol. 162(4), pages 641-664, December.
    9. Fabiola MIERES & Siobhán MCGRATH, 2021. "Ripe to be heard: Worker voice in the Fair Food Program," International Labour Review, International Labour Organization, vol. 160(4), pages 631-647, December.
    10. Miriam Wilhelm & Veronica H. Villena, 2021. "Cascading Sustainability in Multi‐tier Supply Chains: When Do Chinese Suppliers Adopt Sustainable Procurement?," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 4198-4218, November.
    11. Jean‐Christophe Graz & Jimena Sobrino Piazza & André Walter, 2022. "Labour Standards in Global Production Networks: Assessing Transnational Private Regulation and Workers’ Capacity to Act," Development and Change, International Institute of Social Studies, vol. 53(4), pages 912-937, July.
    12. Ana ANTOLIN & Laura BABBITT & Drusilla BROWN, 2021. "Why is the business case for social compliance in global value chains unpersuasive? Rethinking costs, prices and profits," International Labour Review, International Labour Organization, vol. 160(4), pages 571-590, December.
    13. Schüßler, Elke & Lohmeyer, Nora & Ashwin, Sarah, 2022. "We can't compete on human rights: creating market-protected spaces to institutionalize the emerging logic of responsible management," LSE Research Online Documents on Economics 115506, London School of Economics and Political Science, LSE Library.
    14. Oya, Carlos & Schaefer, Florian, 2023. "Do Chinese firms in Africa pay lower wages? A comparative analysis of manufacturing and construction firms in Angola and Ethiopia," World Development, Elsevier, vol. 168(C).
    15. Ari Van Assche & Rajneesh Narula, 2023. "Internalization strikes back? Global value chains, and the rising costs of effective cascading compliance," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(1), pages 161-173, March.
    16. Sarosh Kuruvilla & Chunyun Li, 2021. "Freedom of Association and Collective Bargaining in Global Supply Chains: A Research Agenda," Journal of Supply Chain Management, Institute for Supply Management, vol. 57(2), pages 43-57, April.
    17. Lilac Nachum, 2021. "Value distribution and markets for social justice in global value chains: Interdependence relationships and government policy," Journal of International Business Policy, Palgrave Macmillan, vol. 4(4), pages 541-563, December.

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