Private, voluntary compliance programs, promoted by global corporations and nongovernmental organizations alike, have produced only modest and uneven improvements in working conditions and labor rights in most global supply chains. Through a detailed study of a major global apparel company and its suppliers, this article argues that this compliance model rests on misguided theoretical and empirical assumptions concerning the power of multinational corporations in global supply chains, the role information (derived from factory audits) plays in shaping the behavior of key actors (e.g., global brands, transnational activist networks, suppliers, purchasing agents, etc.) in these production networks, and the appropriate incentives required to change behavior and promote improvements in labor standards in these emergent centers of global production. The authors argue that it is precisely these faulty assumptions and the way they have come to shape various labor compliance initiatives throughout the world-even more than a lack of commitment, resources, or transparency by global brands and their suppliers to these programs-that explain why this compliance-focused model of private voluntary regulation has not succeeded. In contrast, this article documents that a more commitment-oriented approach to improving labor standards coexists and, in many of the same factories, complements the traditional compliance model. This commitment-oriented approach, based on joint problem solving, information exchange, and the diffusion of best practices, is often obscured by the debates over traditional compliance programs but exists in myriad factories throughout the world and has led to sustained improvements in working conditions and labor rights at these workplaces.

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Research on global programs to regulate labor standards has emphasized interactions between transnational and state regulatory institutions. If transnational initiatives can make state institutions more relevant, global efforts have the potential to reinforce, rather than displace, state labor regulation. Through a study of the Indonesia-based program of a leading initiative to improve working conditions in the garment industry, Better Work, this paper identifies the conditions under which transnational regulations reinforce domestic ones. Drawing on two case studies comparing regulations governing fixed-term contracts and minimum wage renegotiations in four Indonesian districts, we find that reinforcement is likely when two conditions jointly occur: unions mobilize to activate state institutions, and transnational regulators have support to resolve ambiguities in formal rules in ways that require firms to engage with constraining institutions. We further test the relationship between these conditions and reinforcement through a quantitative analysis of factory participation in state supervised wage renegotiations. Our findings reveal opportunities and constraints to designing global programs that can both improve factory-level standards and support the functioning of state labor market institutions. 1 We are deeply grateful to Better Work for providing us with access and support for this research, especially Arianna Rossi, Simon Field, and Mohamad Anis Agung Nugroho. In addition, we thank the factory managers, union leaders, and government officials who generously shared their time during interviews. Achmed Hasan's interpretation and Mollie Eunjoo Chung's fieldwork contributed greatly to this project. We acknowledge funding from MIT Sloan, the International Labor Organization, and Laura Chirot acknowledges support from the National Science Foundation Graduate Research Fellowship under Grant No. 1122374 (Any opinion, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation). Finally, we thank Lucio Baccaro, Jennifer Bair, Tim Bartley, Teri Caraway, Salo Coslovsky, Yue Hou, Tom Kochan, Khalid Nadvi, Ben Rissing, Michael Piore, Roberto Pires, and participants at seminars and workshops at Brown University, Cornell University, the London School of Economics, the International Labor Organization, Harvard University, and MIT for their comments on drafts of this paper. Data and copies of the computer programs used to generate the results are available from the first author at: amengual@mit.edu. Yet, we should not presume that layering plays out in the same way in countries with weak institutions. In such contexts, the critical question is not how two strong institutions compete for dominance, but whether layering can make weak institutions more relevant. By developing hypotheses for how and why institutional interactions can help turn formal state rules into constraints that actually structure actors' b...

Do purchasing practices support or undermine the regulation of labor standards in global supply chains? This study offers the first analysis of the full range of supply chain regulatory efforts, integrating records of factory labor audits with purchase order microdata. Studying an apparel and equipment retailer with a strong reputation for addressing labor conditions in its suppliers, the authors show that the retailer persuaded factories to improve and terminated factories with poor labor compliance. However, the authors also find that purchase orders did not increase when labor standards improved. If anything, factories whose standards worsened tended to see their orders increase. Contrary to the conventional wisdom, this “missing middle” in incentives for compliance appears unrelated to any cost advantage of noncompliant factories. Instead, lack of flexibility in supplier relationships created obstacles to reallocating orders in response to compliance findings.

Regulations essential for improving labor standards are often ignored to the detriment of workers. In many countries, the agencies charged with enforcement lack resources and are subject to political interference. How can inspectors in flawed bureaucracies overcome these barriers and enforce labor regulations? Based on case studies of subnational variation in Argentina, this article develops a theory to explain enforcement in places with weak and politicized labor inspectorates. The framework focuses on two factors: the strength of linkages between bureaucrats and allied civil society organizations, and the level of administrative resources in the bureaucracy. Linkages facilitate routinized resource sharing and the construction of pro-enforcement coalitions, and administrative resources determine whether bureaucrats use societal resources passively or strategically. By identifying pathways to enforcement that are obscured by dominant approaches to studying labor inspection, this research opens up new possibilities for crafting strategies to improve labor standards.

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