26 Dec 2012Working Paper Summaries

Reinforcing Regulatory Regimes: How States, Civil Society, and Codes of Conduct Promote Adherence to Global Labor Standards

by Michael W. Toffel, Jodi L. Short and Melissa Ouellet

Multinational corporations are under increasing pressure to manage their global supply chains in ways that are environmentally sustainable and socially responsible. Many companies have responded to this pressure by asking their suppliers to adhere to codes of conduct governing labor conditions and environmental management. This paper examines the conditions under which tens of thousands of suppliers across many countries are more likely to adhere to the labor practices these codes of conduct call for. Findings indicate that suppliers are more likely to adhere to codes of conduct in countries that not only have made binding domestic and international legal commitments to protect workers' rights, but that also have high levels of press freedom and nongovernmental organization activity. Greater code of conduct adherence is also found among suppliers that serve buyers located in countries where child labor is a more salient issue. This research reveals the critical importance of maintaining multiple, overlapping, and reinforcing governance systems, and urges caution to those hoping that private regulatory regimes can substitute for effective government regulation. Overall, this paper points the way toward building more effective private regulatory regimes. Key concepts include:

Global labor standards were most successfully implemented in countries that made significant formal and binding connections to the international community through their labor treaty ratifications and reinforced these connections by enacting stringent domestic employment legislation.
By maintaining a free press, national governments also play a key role in promoting adherence to global labor standards.
National governments can influence labor practices in their country not only by enacting legislation and signing international treaties, but also by protecting press freedom and non-governmental organizations to enable civil society scrutiny and mobilization.
Political and consumer pressure in multinational corporations' home markets can have a substantive impact on how these companies manage working conditions in their global supply chains, well beyond the mere symbolic act off deploying codes of conduct.

Author Abstract

In response to pressure from various stakeholders, many transnational businesses have developed codes of conduct and monitoring systems to ensure that working conditions in their supply chain factories meet global labor standards. Many observers have questioned whether these codes of conduct have any impact on working conditions or are merely a marketing tool to deflect criticism of valuable global brands. Using a proprietary dataset from one of the world's largest social auditors, containing audit-level data for 31,915 audits of 14,922 establishments in 43 countries on behalf of 689 clients in 33 countries, we conduct one of the first large-scale comparative studies of adherence to labor codes of conduct to determine what combination of institutional conditions promotes compliance with the global labor standards embodied in codes. We find that these private transnational governance tools are most effective when they are embedded in states that have made binding domestic and international legal commitments to protect workers' rights and that have high levels of press freedom and nongovernmental organization activity. Taken together, these findings suggest the importance of multiple, robust, overlapping, and reinforcing governance regimes to meaningful transnational regulation.