Toffel, Michael W., Short, Jodi L. and Ouellet, Melissa, Reinforcing Regulatory Regimes: How States, Civil Society, and Codes of Conduct Promote Adherence to Global Labor Standards (November 20, 2012). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 13-045. Available at SSRN: http://ssrn.com/abstract=2178540 or http://dx.doi.org/10.2139/ssrn.2178540
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.