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The Impact of Better Work: Firm Performance in Vietnam, Indonesia and Jordan

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  • Drusilla Brown
  • Rajeev Dehejia
  • Raymond Robertson

Abstract

The impact of Better Work (ILO/OFC) is assessed on costs, profits, productivity and business terms for firms in Vietnam, Indonesia and Jordan. Participation in Better Work has a positive productivity effect on Vietnamese and Indonesian firms. Productivity gains are captured by workers in the form of higher pay. Unit costs rise due to increased compliance with payment requirements such as the minimum wage, paying as promised and mandated promotions. Despite the increase in wages, profits for firms in Better Work Vietnam and Indonesia increase due to improved business terms such as larger orders and possibly an increase in price. The impact of Better Work Jordan suggests that exposure to the program for individual firms may have temporarily increased costs and lowered profits. However, the Jordanian apparel industry becomes more profitable over time, suggesting a positive country reputation effect. Participation in Better Work and firm performance are not jointly determined by manager quality. Early entrants into Better Work are, on average, high cost-low profit firms.

Suggested Citation

  • Drusilla Brown & Rajeev Dehejia & Raymond Robertson, 2018. "The Impact of Better Work: Firm Performance in Vietnam, Indonesia and Jordan," Discussion Papers Series, Department of Economics, Tufts University 0823, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0823
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    File URL: http://ase.tufts.edu/economics/documents/papers/2018/brownImpactBetterWork.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.

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    Keywords

    high road; working conditions; supply chains; social compliance; International Labor Organization; supply chains.;
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