Labor Standards Compliance and Buyer-Supplier Linkages in Global Supply Chains 

Globalization creates opportunities and challenges for improving labor standards in the developing world. Regularly, multinational companies that coordinate global supply chains throughout the developing world are implicated in scandals involving exploitive conditions in their suppliers—ranging from child labor in chocolate producers in Ghana, to unsafe garment factories in Bangladesh, to repression of worker voice in furniture manufacturing in China. Activist groups have explicitly linked these harms to trade and to multinational companies, generating a response by which multinationals now set social standards embodied in corporate codes of conducts for their suppliers to prevent further reputational risk. In addition, firms, states, activist groups, and other civil society organizations have built institutions to regulate global trade – particularly trade-labor linkage strategies that make market access conditional on the protection of fundamental labor rights – that can potentially leverage global supply chains as a means to improve labor standards in the developing world. How well do these institutions function? Under what conditions do they result in improved labor standards? Under what conditions does social compliance by developing country exporters pay off in terms of increased market access? How can the set of institutions that governs trade be further strengthened? Our analyses utilize advanced statistical methods and draws upon proprietary data on buyer-supplier linkages, supplier training, and labor standards coming from one of the largest social compliance initiatives.