Abstract
Most research on private governance examines the design and negotiation of particular initiatives or their operation and effectiveness once established, with relatively little work on why firms join in the first place. We contribute to this literature by exploring firms’ willingness to participate in two recent, high-profile private initiatives established in the aftermath of the Rana Plaza disaster in the Bangladesh ready-made garment (RMG) sector: the Accord on Building and Fire Safety and the Alliance for Worker Safety in Bangladesh. Using novel shipment-level data from U.S. customs declarations, we generate a set of firms that were “eligible” to join these remediation initiatives. We are able to positively attribute only a minority of US RMG imports from Bangladesh to Accord and Alliance signatories. Firms with consumer-facing brands, publicly-traded firms, and those importing more RMG product from Bangladesh were more likely to sign up for the Accord and Alliance. Firms headquartered in the USA were much less likely to sign onto remediation plans, especially the Accord.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
Locke et al. (2013) also note that, from the point of view of suppliers, which often produce for multiple brands, the multiplicity of codes can lead to “monitoring fatigue” and “compliance limbo.”
See Zajak (2017), however, for an argument that the Accord could be used by unions’ opponents to further undermine them.
In 2016, IndustriALL Global Union and UNI Global Union brought claims to the Permanent Court of Arbitration at The Hague, specified in the Accord. The claimants argued that two global brands had failed to address hazards identified in the Accord’s inspection reports, despite promises to do so. Settlements were reached in December 2017 and January 2018; citing fulfillment of the settlements, the parties terminated the arbitration claims in July 2018. The identities of the brands were not disclosed (as a condition of the settlement), nor was the amount of the first settlement. The second settlement required the brand to pay $2 million for safety improvements in supplier factories, as well as $300,000 to the unions’ “supply chain worker support fund.” See Houssart et al. (2018) for an analysis of these cases.
Information on the Accord’s signatories and governance, and on its factory inspections and remediation plans, is available at http://bangladeshaccord.org/
Other firms, such as the Walt Disney Company, decided not to produce at all in Bangladesh, citing reputational risk (Bartley et al. 2015).
“Accord, Alliance or Disunity.” The Economist, July 13, 2013; Steven Greenhouse and Elizabeth A. Harris, “Battling for a Safer Bangladesh,” New York Times, April 21, 2014.
The most recent data are available in the Accord’s October report, https://admin.bangladeshaccord.org/wp-content/uploads/2018/12/Accord_Quarterly_Aggregate_Report_October_2018.pdf
http://www.bangladeshworkersafety.org/488-2018-annual-report-press-release; call volume averages calculated from http://www.bangladeshworkersafety.org/progress-impact/helpline-statistics
As of March 2019, 192 retailers and brands had signed the Transition Accord, which took effect on June 1, 2018. http://www.industriall-union.org/signatories-to-the-2018-accord
For a comparison of the two initiatives, see Donaghey and Reinecke 2018.
Better Work is a multi-stakeholder partnership, focused on the garment sector, with participation from governments, global brands, factory owners, labor unions and workers. As of late 2019, it operated in eight countries, including (since late 2014) Bangladesh.
Hsueh (2017) assesses the determinants of firm participation in voluntary environmental programs. She finds that firms with more employees, revenues and assets, as well as those with a chief sustainability officer, are more likely to participate. She does not, however, consider firms’ brand identity, their nationality of ownership or their ownership structure. See Chrun et al. (2016) for a similar analysis.
One also might view participation in private initiatives as driven by a desire to pre-empt stricter state regulation (Bartley 2018; Vogel 2010). But given that the government of Bangladesh has not acted to regulate RMG strictly, given its own political incentives, this is unlikely to motivate foreign brands. Avoiding regulation or legal action in their home countries, however, may play a role in brands’ decisions.
Malesky and Mosley (2018) discuss how the incentives for labor-related upgrading differ between firms selling final goods and those selling intermediate products.
For broader arguments about supply chain transparency in the apparel industry, see https://www.hrw.org/report/2017/04/20/follow-thread/need-supply-chain-transparency-garment-and-footwear-industry
Sasser et al. (2006) note that NGO targeting may push firms away from, rather than toward, participation in private governance schemes. Nikolaeve and Bicho (2011), however, find that media exposure renders firms more likely to participate in the Global Reporting Initiative (GRI).
But see Schuessler et al. 2019 for an investigation of why Australian and German firms participate in the Bangladesh Accord.
We consider a shipment to originate in Bangladesh if the “shipper address” field contains a Bangladeshi address. In this way we are able to pick up the extensive transshipping of RMG goods through third ports, typically Colombo, Hong Kong, or Singapore.
To develop a benchmark, we consulted Eurostat’s directional trade data to calculate a very rough price per kilogram for RMG exports from Bangladesh. To an initial approximation, it appears that our bill of lading data account for about 40–50% of US RMG imports (by value) from Bangladesh during the periods we cover.
Inference for the models reported is unaffected by this decision.
The multinomial model over a dataset excluding the one firm choosing “both” fails the Hausmann-McFadden test for violations of IIA.
See Appendix Tables 5 and 6 for full listings of signatories.
Bayesian logistic regression (with Cauchy priors), and fitting with each covariate, one at a time, yielded substantively similar results.
Relative risk can be defined as Pr(Y = 1|X = x1) / Pr(Y = 1|X = x2), where x1 and x2 are two different values of the covariate X. A relative risk >1 describes the factor by which the change in X represented by x1 – x2 increases the probability of an event; a relative risk <1 is the factor by which this difference decreases the probability of an event.
But, given that many apparel industry firms source from the same supplier factories, it may be that the Accord and Alliance nevertheless cover a larger majority of the RMG production in Bangladesh, more of a win for workers.
References
Adolph, C., Quince, V., & Prakash, A. (2017). The Shanghai effect: Do exports to China affect labor practices in Africa? World Development, 89, 1–18.
Ahlquist, J. S. (2017). Labor unions, political representation and economic inequality. Annual Review of Political Science, 20, 409–432.
Al Bhadily, M. (2015). Does the Bangladesh accord on building and fire safety provide a sustainable protection to ready-made garment workers? Review of Integrative Business and Economics Research, 4(4), 158–177.
Amengual, M., & Chirot, L. (2016). Reinforcing the state: Transnational and state labor regulation in Indonesia. Industrial and Labor Relations Review, 69(5), 1056–1080.
Amengual, Matthew and Greg Distelhorst. 2019. “Can sourcing help enforce global labor standards? Evidence from the gap Inc supply chain.” Manuscript.
Amengual, Matthew, Greg Distelhorst and Danny Tobin. 2019. “Global purchasing as labor regulation: The missing middle.” Industrial and Labor Relations Review, forthcoming.
Anner, M. (2012). Corporate social responsibility and freedom of association rights: The precarious quest for legitimacy and control in global supply chains. Politics and Society, 40(4), 609–644.
Anner, M. (2018). CSR participation committees, wildcat strikes and the sourcing squeeze in global supply chains. British Journal of Industrial Relations, 56(1), 75–98.
Anner, M. (2019). Squeezing workers’ rights in global supply chains: Purchasing practices in the Bangladesh garment export sector in comparative perspective. Review of International Political Economy.
Anner, M., Bair, J., & Blasi, J. (2013). Towards joint liability in global supply chains: Addressing the root causes of labor violations in international subcontracting networks. Comparative Labour Law and Policy Journal, 35, 1–43.
Appelbaum, R. P., & Lichtenstein, N. (Eds.). (2016). Achieving workers’ rights in the global economy. Ithaca: Cornell University Press.
Arora, S., & Cason, T. N. (1996). Why do firms volunteer to exceed environmental regulations? Understanding participation in the EPA’s 33/50 program. Land Economics, 72(4), 413–432.
Ashwin, Sarah, Chikako Oka, Elka Schüßler, Rachel Alexander and Nora Lohmeyer. 2019. “Spillover effects across transnational industrial relations agreements: The potential and limits of collective action in global supply chains.” ILR Review, forthcoming.
Auld, G., Bernstein, S., & Cashore, B. (2008). The new corporate social responsibility. Annual Review of Environment and Resources, 33, 413–435.
Bach, D., & Newman, A. L. (2007). The European regulatory state and global public policy: Micro-institutions, macro-influence. Journal of European Public Policy, 14(6), 827–846.
Bair, J., Anner, M., & Blasi, J. (2017). Sweatshops and the search for solutions, yesterday and today. In R. Prentice & G. De Neeve (Eds.), Unmaking the global sweatshop: Health and safety of the World’s garment workers (pp. 29–55). Philadelphia: University of Pennsylvania Press.
Barrientos, S., Gereffi, G., & Rossi, A. (2011). Economic and social upgrading in global production networks: A new paradigm for a changing world. International Labour Review, 150(3–4), 319–340.
Bartley, T. (2007). Institutional emergence in an era of globalization: The rise of transnational private regulation of labor and environmental conditions. American Journal of Sociology, 113(2), 297–351.
Bartley, T. (2018). Rules without rights: Land, labor and private Authority in the Global Economy. Oxford: Oxford University Press.
Bartley, T., & Child, C. (2014). Shaming the corporation: The sociological production of targets and the anti-sweatshop movement. American Sociology Review, 79, 653–679.
Bartley, T., Koos, S., Samel, H., & Setrini, G. (2015). Looking behind the label: Global industries and the conscientious consumer. Bloomington: Indiana University Press.
Berliner, D., & Prakash, A. (2014). Public authority and private rules: How domestic regulatory institutions shape the adoption of global private regimes. International Studies Quarterly, 58, 793–803.
Berliner, D., & Prakash, A. (2015). ‘Bluewashing’ the firm? Voluntary regulations, program design and member compliance with the United Nations global compact. Policy Studies Journal, 43(1), 115–138.
Berliner, D., Greenleaf, A. R., Lake, M., & Noveck, J. (2015a). Building capacity, building rights? State capacity and labor rights in developing countries. World Development, 72, 127–139.
Berliner, D., Greenleaf, A. R., Lake, M., Levi, M., & Noveck, J. (2015b). Labor standards in international supply chains: Aligning rights and incentives. Cheltenham: Edward Elgar Publishing.
Bernhagen, P., & Mitchell, N. J. (2010). The private provision of public goods: Corporate commitments and the United Nations global compact. International Studies Quarterly, 54, 1175–1187.
Blattman, Christopher and Stefan Dercon. 2016. “Occupational Choice in Early Industrializing Societies: Experimental Evidence on the Income and Health Effects of Industrial and Entrepreneurial Work.” NBER Working Paper W22683.
Brookes, M. (2019). The new politics of transnational labor: Why some alliances succeed. Ithaca: Cornell University Press.
Cao, X., & Prakash, A. (2011). Growing exports by signaling product quality: Trade competition and the cross-National Diffusion of ISO 9000 quality standards. Journal of Policy Analysis and Management, 30(1), 111–135.
Cao, X., Greenhill, B., & Prakash, A. (2013). Where is the tipping point? Bilateral trade and the diffusion of human rights, 1982-2004. British Journal of Political Science, 43(1), 133–156.
Chrun, E., Dolšak, N., & Prakash, A. (2016). Corporate environmentalism: Motivations and mechanisms. Annual Review of Environment and Resources, 41, 341–362.
Dallas, M. P. (2015). ‘Governed’ trade: Global value chains, firms and the heterogeneity of trade in an era of fragmented production. Review of International Political Economy, 22(1), 1–35.
Delmas, M. A., & Toffel, M. W. (2008). Organizational responses to environmental demands: Opening the black box. Strategic Management Journal, 29(1), 1027–1055.
Distelhorst, Greg and Richard M. Locke. 2018. “Does Compliance Pay? Global Supply Chains and Trade-Based Diffusion of Social Institutions.” American Journal of Political Science, forthcoming.
Donaghey, J., & Reinecke, J. (2018). When industrial democracy meets corporate social responsibility — A comparison of the Bangladesh accord and Alliance as responses to the Rana plaza disaster. British Journal of Industrial Relations, 56(1), 14–42.
Evans, Peter. 2014. “National Labor Movements and transnational connections: Global Labor’s evolving architecture under neoliberalism”. IRLE working paper no. 116-14. http://irle.berkeley.edu/workingpapers/116-14.pdf
Evans, Alice. 2020. “Overcoming the Global Despondency Trap: Strengthening Corporate Accountability in Supply Chains.” Review of International Political Economy, forthcoming.
Fransen, L. (2011). Corporate social responsibility and global labor standards: Firms and activists in the making of private regulation. London: Routledge.
Fransen, L., & Burgoon, B. (2014). Privatizing or socializing corporate responsibility: Business participation in voluntary programs. Business & Society, 53(4), 583–619.
Gereffi, G. (1994). The Organization of Buyer-Driven Commodity Chains: How U.S. retailers shape overseas production networks. In G. Gereffi & M. Korzeniewicz (Eds.), Commodity chains and global capitalism (pp. 95–122). Westport: Praeger.
Gereffi, G. (2014). Global value chains in a post-Washington consensus world. Review of International Political Economy, 21(1), 9–37.
Gereffi, G., & Mayer, F. (2010). Regulation and economic governance: Prospects and limits of private governance. Business & Politics, 12(3), 1–25.
Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of International Political Economy, 12(1), 78–104.
Görg, Holger, Aoife Hanley, Stefan Hoffmann and Adnan Seric. 2016. “When Do Multinational Companies Consider Corporate Social Responsibility? A Multi-Country Study in Sub-Saharan Africa.” EUI Working Paper, RSCAS 2016/03, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2727128
Greenhill, B., Mosley, L., & Prakash, A. (2009). Trade-based diffusion of labor rights: A panel study, 1986–2002. American Political Science Review, 103(4), 669–689.
Hainmueller, Jens and Michael J. Hiscox. 2015. “The Socially Conscious Consumer? Field Experimental Tests of Consumer Support for Fair Labor Standards.” MIT Political Science Department Research Paper 2012–15. https://doi.org/10.2139/ssrn.2062435
Hainmueller, Jens, Michael J. Hiscox and Sandra Sequeira. 2014. “Consumer demand for the fair trade label: Evidence from a multi-store field experiment.” Review of Economics and Statistics.
Houssart, Mark, Richard Croucher, Philip James and Lilian Miles. 2018. “Legal sanction, international Organisations and the Bangladesh accord.” Industrial Law Journal.
Hsueh, L. (2017). Transnational climate governance and the global 500: Examining private actor participation by firm-level factors and dynamics. International Interactions, 43(1), 48–75.
http://people.stern.nyu.edu/twadhwa/bangladesh/downloads/beyond_the_tip_of_the_iceberg_report.pdf n.d.
Innes, R., & Sam, A. G. (2008). Voluntary pollution reductions and the enforcement of environmental law: An empirical study of the 33/50 program. The Journal of Law and Economics, 51(2), 271–296.
International Labour Organization (ILO). (2015). World employment and social outlook: The changing nature of jobs. Geneva: International Labour Office.
James, Philip, Lilian Miles, Richard Croucher and Mark Houssart. 2018. “Regulating factory safety in the Bangladeshi garment industry.” Regulation & Governance.
Keck, M. E., & Sikkink, K. (1998). Activists beyond Borders: Advocacy networks in international politics. Ithaca: Cornell University Press.
King, A.A. & Toffel, M. 2009. Self-regulatory institutions for solving environmental problems: Perspectives and contributions from the management literature, In Magali Delmas and Oran young (ed.), Governing the Environment: Interdisciplinary Perspective. Cambridge University Press, Cambridge, UK.
Knudsen, J. S. (2018). Government regulation of international corporate social responsibility in the US and the UK: How domestic institutions shape mandatory and supportive initiatives. British Journal of Industrial Relations, 56(1).
Knudsen, Jette Steen and Jeremy Moon. 2017. Visible Hands: National Government and International Corporate Social Responsibility. Cambridge: Cambridge University Press (forthcoming).
Labowitz, Sarah and Dorthee Baumann-Pauly. 2014. Supply Chains and Sourcing after Rana Plaza. http://www.stern.nyu.edu/experience-stern/about/departments-centers-initiatives/centers-of-research/business-human-rights/activities/supply-chains-sourcing-after-rana-plaza
Labowitz, Sarah and Dorothee Baumann-Pauly. 2015. Beyond the tip of the iceberg: Bangladesh’s forgotten apparel workers.
Lim, S., & Prakash, A. (2017). Do economic problems at home undermine worker safety abroad? A panel study, 1980-2009. World Development, I96, 568–577.
Lim, A., & Tsutsui, K. (2012). Globalization and commitment in corporate social responsibility. American Sociological Review, 77, 69–98.
Locke, R. M. (2013). The promise and limits of private power: Promoting labor standards in a global economy. New York: Cambridge University Press.
Locke, R. M., Rissing, B. A., & Pal, T. (2013). Complements or substitutes? Private codes, state regulation and the enforcement of labour standards in global supply chains. British Journal of Industrial Relations, 51(3), 519–552.
Lohmeyer, N., & Schuessler, E. (2018). Rana plaza as a threat to the fast fashion model? An analysis of institutional responses to the disaster in Germany. In C. Becker-Leifhold & M. Heuer (Eds.), Eco-friendly and fair: Fast fashion and consumer behavior. Sheffield: Greenleaf Publishing.
Malesky, E. M., & Mosley, L. (2018). Chains of love? Global production and the firm-level diffusion of labor standards. American Journal of Political Science, 62(3), 712–728.
Marx, A. (2008). Limits to non-state market regulation: A qualitative comparative analysis of the international sport footwear industry and the fair labor association. Regulation and Governance, 2, 253–273.
Milner, H., & Rudra, N. (2015). Globalization and the political benefits of the informal economy. International Studies Review, 17(4), 664–669.
Mosley, L. (2011). Labor rights and multinational production. New York: Cambridge University Press.
Nikolaeva, R., & Bicho, M. (2011). The role of institutional and reputational factors in the voluntary adoption of corporate social responsibility reporting standards. Journal of the Academy of Marketing Science, 39(1), 136–157.
O’Rourke, D. (2003). Outsourcing regulation: Analyzing non-governmental Systems of Labor Standards and Monitoring. The Policy Studies Journal, 31(1), 1–29.
OECD, WTO and World Bank Group. 2014. Global Value Chains: Challenges, Opportunities and Implications for Policy. Report prepared for submission to the G20 Trade Ministers Meeting, Sydney, Australia, July 19, 2014.
Osgood, I. (2018). Globalizing the supply chain: Firm and industrial support for US trade agreements. International Organization, 72(2).
Peterson, T. M., Murdie, A., & Asal, V. (2016). Human rights, NGO shaming and the exports of abusive states. British Journal of Political Science, 48(3), 767–786.
Piore, M. J., & Schrank, A. (2008). Toward managed flexibility: The revival of labour inspection in the Latin world. International Labour Review, 147, 1–23.
Potoski, M., & Prakash, A. (2005). Green clubs and voluntary governance: ISO 14001 and firms’ regulatory compliance. American Journal of Political Science, 49(2), 235–248.
Potoski, M., & Prakash, A. (2009). Information asymmetries as trade barriers: ISO 9000 increases international commerce. Journal of Policy Analysis and Management, 28(2), 221–238.
Prakash, A., & Potoski, M. (2006). Racing to the bottom? Trade, environmental governance, and ISO 14001. American Journal of Political Science, 50(2), 350–364.
Prakash, A., & Potoski, M. (2007). Investing up: FDI and the cross-country diffusion of ISO 14001 management systems. International Studies Quarterly, 51, 723–744.
Rathert, N. (2016). Strategies of legitimation: MNEs and the adoption of CSR in response to host-country institutions. Journal of International Business Studies, 47(7), 858–879.
Rudra, N. (2002). Globalization and the decline of the welfare state in less-developed countries. International Organization, 56(2), 411–445.
Sasser, E. N., Prakash, A., Cashore, B., & Auld, G. (2006). Direct targeting as an NGO political strategy: Examining private authority regimes in the forestry sector. Business & Politics, 8(3), 1–32.
Schrank, A. (2013). From disguised protectionism to rewarding regulation: The impact of trade related labor standards in the Dominican Republic. Regulation and Governance, 7, 299–320.
Schuessler, E., Frenkel, S. J., & Wright, C. F. (2019). Governance of labor standards in Australian and German garment supply chains: The impact of Rana plaza. Industrial & Labor Relations Review, 72(3), 552–579.
Seidman, G. (2007). Beyond the boycott: Labor rights, human rights and transnational activism. New York: Russell Sage Foundation.
Silver, B. J. (2003). Forces of labor: Workers’ movements and globalization since 1870. Cambridge: Cambridge University Press.
Sotorrío, L. L., Sánchez, J. L., & Fernández. (2008). Corporate social responsibility of the Most highly reputed European and north American firms. Journal of Business Ethics, 82(2), 379–390.
Subramanian, Ram. 2016. “Case study: When tragedy strikes your supply chain.” Harvard Business Review January/February.
Toffel, M. W., & Short, J. L. (2011). Coming clean and cleaning up? Does voluntary self-reporting indicate effective self-policing? The Journal of Law and Economics, 54(3), 609–649.
UNCTAD. http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_ChosenLang=en. Accessed 11 September 2018.
Vogel, D. (2005). The market for virtue: The potential and limits of corporate social responsibility. Washington: Brookings Institution.
Vogel, D. (2010). The private regulation of global corporate conduct. Business & Society, 49(1), 68–87.
World Bank. (2005). Cambodia: Corporate social responsibility in the apparel sector and potential implications for other industry sectors. Washington, DC: World Bank.
Zajak, S. (2017). International allies, institutional layering and power in the making of labour in Bangladesh. Development and Change, 48, 1007–1030.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Ahlquist, J.S., Mosley, L. Firm participation in voluntary regulatory initiatives: The Accord, Alliance, and US garment importers from Bangladesh. Rev Int Organ 16, 317–343 (2021). https://doi.org/10.1007/s11558-020-09376-z
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11558-020-09376-z