Code Contingencies: Designing Monitoring Regimes to Promote Improvement in Supply Chain Working Conditions

Worker rights advocates seeking to improve labor conditions in global supply chains have engaged in activism that led transnational corporations to adopt codes of conduct and monitor their suppliers for compliance, but it is not clear whether these organizational structures raise labor standards. Drawing on thousands of audits conducted by a major social auditor, we identify structural contingencies in the institutional environment and in program design under which codes and monitoring are more likely to be associated with improvements in working conditions. At the institutional level, suppliers improve more when they face greater exposure risk and when their buyers are more sensitive to such exposure. At the program design level, suppliers improve more when the monitoring regime signals a cooperative approach, when auditors are highly trained, and especially when both of these elements are present. These findings should inform monitoring strategies aimed at improving working conditions in global supply chains.