Working Paper | HBS Working Paper Series | 2014

Codes in Context: How States, Markets, and Civil Society Shape Adherence to Global Labor Standards

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

Abstract

Transnational business regulation is increasingly implemented through private voluntary programs—like certification regimes and codes of conduct—that diffuse global standards. But little is known about the conditions under which companies adhere to these standards. We conduct one of the first large-scale comparative studies to determine which international, domestic, civil society, and market institutions promote supply chain factories’ adherence to the global labor standards embodied in codes of conduct imposed by multinational buyers. We find that suppliers are more likely to adhere when they are embedded in states that participate actively in the ILO treaty regime and that have stringent domestic labor law and high levels of press freedom. We further demonstrate that suppliers perform better when they serve buyers located in countries where consumers are wealthy and socially conscious. Taken together, these findings suggest the importance of overlapping state, civil society, and market governance regimes to meaningful transnational regulation.

Keywords: Transnational regulation; Labor standards; Consumer politics; Codes of conduct; Compliance; Accounting Audits; Corporate Accountability; Governance Compliance; Governance Controls; Working Conditions; Law Enforcement; Production; Corporate Social Responsibility and Impact; Performance Evaluation; Safety; Quality; Nonprofit Organizations; Non-Governmental Organizations; Supply Chain; Supply Chain Management; Apparel and Accessories Industry; Electronics Industry; Manufacturing Industry; Asia; Europe; China; United States;

Citation:

Toffel, Michael W., Jodi L. Short, and Melissa Ouellet. "Codes in Context: How States, Markets, and Civil Society Shape Adherence to Global Labor Standards." Harvard Business School Working Paper, No. 13-045, November 2012. (Revised August 2014.)