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Codes in Context: How States, Markets, and Civil Society Shape Adherence to Global Labor Standards

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Author Info

  • Michael W. Toffel

    ()
    (Harvard Business School, Technology and Operations Management Unit)

  • Jodi L. Short

    ()
    (University of California, Hastings College of the Law)

  • Melissa Ouellet

    ()
    (Harvard Business School)

Abstract

Transnational business regulation is increasingly implemented through private voluntary programs-such as certification regimes, codes of conduct, and social monitoring-that seek to enforce global standards governing business practices. But little is known about the conditions under which companies are more likely to comply with the standards these programs impose. Using data from tens of thousands of code-of-conduct audits, we conduct one of the first large-scale comparative studies to determine which international, domestic, civil society, and market institutions promote supply chain factories' compliance with the global labor standards embodied in codes of conduct imposed by multinational buyers. We find that supplier factories are more likely to comply when they are embedded in states that are active participants in the International Labour Organization treaty regime and that have highly protective domestic labor regulation and high levels of press freedom. We further demonstrate that supplier factory compliance is associated not only with institutions in the supplier's home country, but also with institutions in the global buyer's home country: Suppliers are more compliant with global labor standards when they serve buyers located in countries where consumers are wealthy and socially conscious. Taken together, these findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation.

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Bibliographic Info

Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 13-045.

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Length: 45 pages
Date of creation: Nov 2012
Date of revision: May 2014
Handle: RePEc:hbs:wpaper:13-045

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Related research

Keywords: Transnational regulation; Labor standards; Consumer politics; Codes of conduct; Compliance;

This paper has been announced in the following NEP Reports:

References

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  1. Chonnikarn Fern Jira & Michael W. Toffel, 2011. "Engaging Supply Chains in Climate Change," Harvard Business School Working Papers 12-026, Harvard Business School, revised Oct 2012.
  2. Erin Marie Reid & Michael W. Toffel, 2008. "Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies," Harvard Business School Working Papers 09-019, Harvard Business School, revised Jun 2009.
  3. Bartley Tim, 2010. "Transnational Private Regulation in Practice: The Limits of Forest and Labor Standards Certification in Indonesia," Business and Politics, De Gruyter, vol. 12(3), pages 1-36, October.
  4. Michael W. Toffel, 2008. "Coerced Confessions: Self-Policing in the Shadow of the Regulator," Journal of Law, Economics and Organization, Oxford University Press, vol. 24(1), pages 45-71, May.
  5. Alexander Dyck & Luigi Zingales, 2002. "The Corporate Governance Role of the Media," NBER Working Papers 9309, National Bureau of Economic Research, Inc.
  6. Michael J. Lenox & Charles E. Eesley, 2009. "Private Environmental Activism and the Selection and Response of Firm Targets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 45-73, 03.
  7. Colin Scott, 2010. "Regulatory Governance and the Challenge of Constitutionalism," EUI-RSCAS Working Papers 7, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  8. David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 31-66, 03.
  9. Michael W. Toffel & Jodi L. Short, 2011. "Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate Effective Self-Policing?," Journal of Law and Economics, University of Chicago Press, vol. 54(3), pages 609 - 649.
  10. Richard M. Locke & Fei Qin & Alberto Brause, 2007. "Does Monitoring Improve Labor Standards? Lessons from Nike," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 61(1), pages 3-31, October.
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