August 2020
Article
ILR Review

Improving Working Conditions in Global Supply Chains: The Role of Institutional Environments and Monitoring Program Design

By: Jodi L. Short, Michael W. Toffel and Andrea R. Hugill

Format:Print

Abstract

Activism seeking to improve labor conditions in global supply chains has led many transnational corporations to adopt codes of conduct and monitor suppliers for compliance. Drawing on thousands of audits conducted by a major social auditor, we identify structural contingencies in the institutional environment and program design under which codes and monitoring are more likely to be associated with improvements in conditions. At the institutional level, suppliers improve more when they face greater risk that NGOs and the press will expose harmful working conditions and when their buyers have experienced negative publicity for supply chain labor abuses. At the program design level, suppliers improve more on average when audits are pre-announced, when auditors are highly trained, and especially when both are true. However, extended analysis reveals nuances to these findings, demonstrating that improvement varies across violation types. For instance, we find that pre-announced audits were followed by greater improvement in OSH practices but not child labor practices. These findings can inform strategies for improving supply chain working conditions.