IDEAS home Printed from https://ideas.repec.org/a/bla/rdevec/v25y2021i1p228-254.html
   My bibliography  Save this article

Working conditions and factory survival: Evidence from better factories Cambodia

Author

Listed:
  • Raymond Robertson
  • Drusilla Brown
  • Rajeev Dehejia

Abstract

A large and growing literature has identified several conditions, including exporting, that contribute to plant survival. A prevailing sentiment suggests that anti‐sweatshop activity against plants in developing countries adds to the risk of closure, making survival more difficult by imposing external constraints that may interfere with optimizing behavior. Using a relatively new plant‐level panel data set from Cambodia, this paper applies survival analysis to estimate the relationship between changes in working conditions and plant closure. The results find little, if any, evidence that improving working conditions increases the probability of closure. In fact, some evidence suggests that improvements in standards relating to compensation are positively correlated with the probability of plant survival.

Suggested Citation

  • Raymond Robertson & Drusilla Brown & Rajeev Dehejia, 2021. "Working conditions and factory survival: Evidence from better factories Cambodia," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 228-254, February.
    • Handle: RePEc:bla:rdevec:v:25:y:2021:i:1:p:228-254
    DOI: 10.1111/rode.12719
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rode.12719
    Download Restriction: no
    File URL: https://libkey.io/10.1111/rode.12719?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brian Bell & Stephen Machin, 2018. "Minimum Wages and Firm Value," Journal of Labor Economics, University of Chicago Press, vol. 36(1), pages 159-195.
    2. Günseli Berik & Yana Van Der Meulen Rodgers, 2010. "Options for enforcing labour standards: Lessons from Bangladesh And Cambodia," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(1), pages 56-85.
    3. 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.
    4. Polaski, Sandra, 2006. "Combining global and local forces: The case of labor rights in Cambodia," World Development, Elsevier, vol. 34(5), pages 919-932, May.
    5. Kimberly Ann Elliott & Richard B. Freeman, 2003. "Can Labor Standards Improve under Globalization?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 338, April.
    6. Soderbom, Mans & Teal, Francis & Harding, Alan, 2006. "The Determinants of Survival among African Manufacturing Firms," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 533-555, April.
    7. Andrew B Bernard & J. Bradford Jensen, 2007. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 193-204, May.
    8. W. Reed Walker, 2011. "Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act," American Economic Review, American Economic Association, vol. 101(3), pages 442-447, May.
    9. Peter Cappelli & Keith Chauvin, 1991. "An Interplant Test of the Efficiency Wage Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 769-787.
    10. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2013. "Does Management Matter? Evidence from India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 1-51.
    11. Daniel Aaronson & Eric French, 2007. "Product Market Evidence on the Employment Effects of the Minimum Wage," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 167-200.
    12. Shiferaw, Admasu, 2009. "Survival of Private Sector Manufacturing Establishments in Africa: The Role of Productivity and Ownership," World Development, Elsevier, vol. 37(3), pages 572-584, March.
    13. Behrman, Jere R & Deolalikar, Anil B, 1989. " . . Of the Fittest? Duration of Survival of Manufacturing Establishments in a Developing Country," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 215-226, December.
    14. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    15. Greenaway, David & Gullstrand, Joakim & Kneller, Richard, 2008. "Surviving globalisation," Journal of International Economics, Elsevier, vol. 74(2), pages 264-277, March.
    16. Raymond Robertson, 2020. "Lights On: How Transparency Increases Compliance in Cambodian Global Value Chains," ILR Review, Cornell University, ILR School, vol. 73(4), pages 939-968, August.
    17. Jen Baggs, 2005. "Firm survival and exit in response to trade liberalization," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1364-1383, November.
    18. Richard I. D. Harris & Qian Cher Li, 2010. "Export‐Market Dynamics And The Probability Of Firm Closure: Evidence For The United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 145-168, May.
    19. Jen Baggs, 2005. "Firm survival and exit in response to trade liberalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(4), pages 1364-1383, November.
    20. Chikako Oka, 2010. "Accounting for the Gaps in Labour Standard Compliance: The Role of Reputation-Conscious Buyers in the Cambodian Garment Industry," Post-Print hal-02952241, HAL.
    21. Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 523-542, December.
    22. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    23. Silviano Pérez & Amparo Llopis & Juan Llopis, 2004. "The Determinants of Survival of Spanish Manufacturing Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 251-273, August.
    24. Chikako Oka, 2010. "Channels of buyer influence and labor standard compliance: the case of Cambodia's garment sector," Post-Print hal-02952274, HAL.
    25. Chikako Oka, 2010. "Accounting for the Gaps in Labour Standard Compliance: The Role of Reputation-Conscious Buyers in the Cambodian Garment Industry," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 22(1), pages 59-78, February.
    26. Norashidah Mohamed Nor & Nor Ghani Md. Nor & Ahmad Zainuddin Abdullah & Suhaila Abd. Jalil, 2007. "Flexibility and small firms' survival: further evidence from Malaysian manufacturing," Applied Economics Letters, Taylor & Francis Journals, vol. 14(12), pages 931-934.
    27. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    28. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Entry, Exit and Establishment Survival in UK Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 91-112, March.
    29. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
    30. Niklas Lollo & Dara O’Rourke, 2020. "Factory benefits to paying workers more: The critical role of compensation systems in apparel manufacturing," PLOS ONE, Public Library of Science, vol. 15(2), pages 1-24, February.
    31. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
    32. Debra Ang & Drusilla Brown & Rajeev Dehejia & Raymond Robertson, 2012. "Public Disclosure, Reputation Sensitivity, and Labor Law Compliance: Evidence from B etter F actories C ambodia," Review of Development Economics, Wiley Blackwell, vol. 16(4), pages 594-607, November.
    33. Greg Distelhorst & Jens Hainmueller & Richard M. Locke, 2017. "Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain," Management Science, INFORMS, vol. 63(3), pages 707-728, March.
    34. Melanie Beresford, 2009. "The Cambodian clothing industry in the post-MFA environment: a review of developments," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 14(4), pages 366-388.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Trifković, Neda, 2017. "Spillover Effects of International Standards: Working Conditions in the Vietnamese SMEs," World Development, Elsevier, vol. 97(C), pages 79-101.
    2. Robertson, Raymond, 2023. "Labor compliance programs in developing countries and trade flows: Evidence from Better Work," Economics Letters, Elsevier, vol. 228(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brown, Drusilla & Dehejia, Rajeev & Robertson, Raymond, 2016. "Laws, Costs, Norms, and Learning: Improving Working Conditions in Developing Countries," IZA Discussion Papers 10025, Institute of Labor Economics (IZA).
    2. Raymond Robertson, 2022. "Pioneering a new approach to improving working conditions in developing countries: Better Factories Cambodia," Chapters, in: Handbook on Globalisation and Labour Standards, chapter 20, pages 359-381, Edward Elgar Publishing.
    3. 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.
    4. Robertson, Raymond, 2019. "Working Conditions, Transparency, and Compliance in Global Value Chains: Evidence from Better Work Jordan," IZA Discussion Papers 12794, Institute of Labor Economics (IZA).
    5. Richard I.D. Harris & Qian Cher Li, "undated". "Export-market dynamics and the probability of firm closure: Evidence for the UK," Working Papers 2008_17, Business School - Economics, University of Glasgow.
    6. Álvarez, Roberto & Vergara, Sebastián, 2013. "Trade exposure, survival and growth of small and medium-size firms," International Review of Economics & Finance, Elsevier, vol. 25(C), pages 185-201.
    7. Erol Taymaz & Şule Özler, 2007. "Foreign Ownership, Competition, and Survival Dynamics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(1), pages 23-42, August.
    8. Ina Jäkel, 2014. "Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 747-775, November.
    9. Richard I. D. Harris & Qian Cher Li, 2010. "Export‐Market Dynamics And The Probability Of Firm Closure: Evidence For The United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 145-168, May.
    10. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, April.
    11. Roger Bandick, 2010. "Multinationals and plant survival," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(4), pages 609-634, December.
    12. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    13. Kneller, Richard & McGowan, Danny & Inui, Tomohiko & Matsuura, Toshiyuki, 2012. "Globalisation, multinationals and productivity in Japan’s lost decade," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 110-128.
    14. Martyn Andrews & Lutz Bellmann & Thorsten Schank & Richard Upward, 2012. "Foreign-owned plants and job security," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(1), pages 89-117, April.
    15. Richard Kneller & Danny McGowan & Tomohiko Inui & Toshiyuki Matsuura, 2012. "Closure within multi-plant firms: evidence from Japan," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 647-668, December.
    16. Ana M. Fernandes & Caroline Paunov, 2015. "The Risks of Innovation: Are Innovating Firms Less Likely to Die?," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 638-653, July.
    17. Silvia Muzi & Filip Jolevski & Kohei Ueda & Domenico Viganola, 2023. "Productivity and firm exit during the COVID-19 crisis: cross-country evidence," Small Business Economics, Springer, vol. 60(4), pages 1719-1760, April.
    18. Gemechu Aga & David Francis, 2017. "As the market churns: productivity and firm exit in developing countries," Small Business Economics, Springer, vol. 49(2), pages 379-403, August.
    19. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    20. Robertson, Raymond, 2023. "Labor compliance programs in developing countries and trade flows: Evidence from Better Work," Economics Letters, Elsevier, vol. 228(C).

    More about this item

    JEL classification:

    • J8 - Labor and Demographic Economics - - Labor Standards
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:25:y:2021:i:1:p:228-254. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.