Do Factory Audits Improve International Labor Standards? An Examination of Voluntary Corporate Labor Regulations in Global Production Networks

Abstract

This research examined the effects of voluntary factory audits on labor conditions. Sometimes referred to as corporate social responsibility (CSR) codes of conduct, corporations impose voluntary labor standards coupled with regular auditing to help ensure the protection of workers throughout their global production networks (GPNs). While some believe that auditing factories ensures that CSR codes of conduct are followed and helps private corporations promote higher labor standards, others argue that factory audits have little effect on labor standards at the factory level. Using unique panel data of internal factory audit reports of factories in four Southeast Asian countries between 2003 and 2010, this paper sought to understand whether voluntary GPN audits improve labor standards at the factory level. The results showed that a factory's number of audits between 2003 and 2010 did not improve factory working conditions significantly and that the local neighborhood in which a factory is located has a greater effect on changes in factory audit scores. These findings suggest that CSR codes of conduct and auditing alone are not sufficient to improve labor standards in GPNs. Rather, joint private-public collaboration is needed to improve labor conditions for workers in the global south.

Project management challenges and labour migration: opportunities for sustainable development

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Investigating social development inequality among steel industry workers in Pakistan: A contribution to social development policies

“…However, the mechanism to monitor the wellbeing of workers is largely missing in factories in developing countries. Third-party social audits are the most common type of self-regulation among global businesses manufacturing in developing countries, but these are unable to provide a clear understanding of the needs of the workers as they only consider the visible, physical status of a factory at a single point in time while social development is an ongoing process [ 6 – 9 ]. Despite the fact that there is a large body of research on workplace happiness in developed countries, the concepts are yet to be implemented in developling countries [ 10 ].…”

Capturing the psychological well-being of Chinese factory workers

“…It is difficult for businesses to know what is happening in factories. The most common form of self-regulation among global businesses manufacturing in the developing world is social audits conducted by third parties, but these do not provide an understanding of the needs and dissatisfactions of the workers (O'Rourke, 2003; Anner, 2012; Freise and Seuring, 2015; Sanders et al , 2018) as they tend to focus on the visible, physical aspects of a factory rather than taking a more holistic view of worker well-being. Although there is an extensive body of research on workplace well-being in the West (Fisher, 2014), its concepts have not been tested in Chinese factories.…”