Current Research Projects
Sourcing and Compliance
A key element of private regulation is the link between sourcing and compliance. The theory of private regulation suggests that highly compliant factories should be rewarded by receiving more orders –or sustained orders over a longer period - whereas factories that do not comply, after repeated efforts, should be eliminated from supply chains. There is considerable speculation that compliance may be driven by poor sourcing practices. There are new efforts such as the “Better Buying” initiative that seeks to provide feedback to buyers as to how suppliers experience their sourcing practices. However, there is little empirical research that shows, within buyers, the linkage between sourcing and compliance, as most firms are not willing to share this data.
However, in a path breaking set of studies, NCP researchers Matt Amengual (MIT and Oxford) and Greg Distelhorst (MIT and Toronto) examine the relationship between sourcing and compliance using data from two global buyers. Read paper here.
The Practice of Private Regulation: The View from the Other Side
The relatively few studies on private regulation and the degree of compliance of supplier factories, have been accomplished because certain buyers (such as NIKE, or HP) have shared their data with researchers. However, till now, there have been no studies that have examined the practice of private regulation as experienced by suppliers.
In this study, Sarosh Kuruvilla and his colleagues examine the experience of a leading global supplier who works with over 70 global brands. They find considerable variation in the practice of private regulation as experienced by the supplier. There is variation with regards to how serious the brands are in their practice; whether brands use their own auditors or subcontract to other auditing entities. They also find variation in terms of how auditors are paid - with many brands requiring that the supplier pays for the audit. There is variation in terms of the degree to which sourcing is linked to auditing (with most brands not linking the two at all). The extent to which brands are willing to build collaborative relationships with the supplier also varies. Finally, the research shows that the practice of auditing is dominated by the “tick the box” mentality rather than a clear developmental orientation that improves workers’ lives.
Evaluating Private Regulation: The Role of the Audit Score
Most buyers/brands and other analysts evaluate how private compliance monitoring systems perform by taking the audit score as the primary indicator and examining score changes over time. These audit scores are built on audit results which stem from the company’s scoring system, which generally involves a numerical score based on the auditing results. Since this is one of the ONLY metrics available, which is private and within-company generated, it is crucial to examine the utility of this metric. The research strategy involved comparing the audit scores of Chinese suppliers supplying a global retailer, with the paychecks of workers in selected supplier factories of that retailer. The results suggest a lack of congruence. The key implication of this result is that audit scores are not a reliable indicator of the progress of private regulation. The paper provides a variety of reasons why this may be so, and highlights the need for an alternative source of information.
The Role of Collective Bargaining in Compliance
Using compliance data from global companies, Sarosh Kuruvilla and Fabiola Mieres investigate whether unionized factories in different countries exhibit better compliance scores than non-union factories. Freedom of Association (FOA) and Collective Bargaining (CB) are considered core labor standards because they can affect improvements in working conditions. Codes of conduct appear to have freedom of association provisions when they reference core ILO Conventions. Yet, we do not find significant evidence that FOA matters in terms of compliance. In fact, unionized factories appear to have worse compliance scores relative to non-union factories in several Asian garments producing sectors. Given the weak institutional support for trade unions, and their limited penetration in global garment chains in Asia, we argue that FOA provisions in codes of conduct need to be altered in ways that add different dimensions of worker empowerment.
What Makes a Decent Factory?
Until recently, there has been a lack of data that allowed researchers to distinguish between highly compliant factories and non-compliant ones. Using data from the supply chain of a large retailer, as well as data from other sources, the aim of this project is to examine the drivers behind highly compliant factories, why they differ from non-compliant factories and in what ways. The research for this project is ongoing and carried out by Sarosh Kuruvilla and Fabiola Mieres.
The State of Private Regulation
Led by Sarosh Kuruvilla and co-authors, this is a unique empirical investigation of audit data from over 3,000 audits in six industries across 30 countries. The purpose of this project is to examine improvements over time in factory performance regarding labor standards across multiple countries and industries. The research is ongoing.
Research on “Better Work” Cambodia
The Better Work program offers an innovative alternative to improving working conditions in developing country apparel factories. By combining stakeholder involvement, detailed assessments, and supportive services, the Better Work program has been associated with improvements in aggregate working conditions. In this project, the relationship between participation in Better Work and measures of factory-level compliance is examined. In addition the relationship between various aspects of better work and worker perceptions of working conditions is examined.
Monitoring the Bangladesh Accord and Alliance
The Accord on Fire and Building Safety in Bangladesh signed in May 2013 is a five year independent, legally binding agreement between global brands and retailers and trade unions designed to build a safe and healthy Bangladeshi Ready Made Garment (RMG) Industry. The agreement consists of six key components: The Accord has an independent inspection program supported by brands in which workers and trade unions are involved, involves the public disclosure of all factories, inspection reports and corrective action plans (CAP), includes a commitment by signatory brands to ensure sufficient funds are available for remediation and to maintain sourcing relationships, and mandates democratically elected health and safety committees in all factories to identify and act on health and safety risks. This is clearly a landmark effort and our ongoing research seeks to examine the process and to identify roadblocks and enabling and facilitating conditions that make the implementation of a program like this successful.
The Alliance, in contrast adopts a different approach where safety standards are specified, assessments are undertaken by qualified engineers who are paid by the brands, workers and trade unions are involved during the assessments and factory owners are held accountable for remediation and reporting on the results of such remediation. Here too, the goal of our research efforts is to evaluate the effectiveness of such approaches over a longer period.