Lights On: How Transparency Increases Compliance in Cambodian Global Value Chains

Abstract

<jats:p> This article evaluates the implementation of a transparency policy in garment factories in Cambodia through the Better Factories Cambodia program. Using a difference-in-difference approach that is often applied to control for endogeneity, the author finds that compliance improved following the implementation of the transparency policy. Compliance increased in a group of 21 critical compliance areas that represent fundamental worker rights relative to relevant comparison groups. Compliance among the least-compliant factories, however, did not increase relative to other factories, possibly reflecting limited access to resources. </jats:p>

Working conditions and factory survival: Evidence from better factories Cambodia

“…According to this strand of evidence, firm benefits from social compliance may be limited to access to export markets and increased orders from and higher prices paid by reputation‐sensitive and socially conscious international buyers (Distelhorst & Locke, 2018; Oka, 2010a, 2010b). The evidence that factories are more likely to improve compliance performance if they fear public disclosure of noncompliance (Ang et al, 2012; Robertson, 2020) further suggests that factories are motivated to comply for reasons related to reputation rather than for the impact that compliance might have on the internal operations of the firm. On the other hand, random exposure to OSH inspections is found to positively impact firm operations, reducing accidents and costs associated with injuries, without adversely affecting stock values or probability of survival (Levine et al, 2012).…”

“…The BFC program has captured the attention of many as an example of an innovative way to improve working conditions in global supply chains (Adler & Woolcock, 2010; Beresford, 2009; Berik & van der Meulen Rodgers, 2010; Miller, Nuon, Aprill, & Certeza, 2009; Oka, 2010a, 2010b; Polaski, 2006). These papers identify several variables that, in the context of the BFC program, are positively related to the factory‐level decision to improve working conditions, such as a relationship with a reputation‐sensitive buyer (Oka, 2010a) and public disclosure of noncompliance (Ang, Brown, Dehejia, & Robertson, 2012; Robertson, 2020). In Section 3 we incorporate these and other factors into a general model that identifies some of the relationships between factory characteristics, the BFC program characteristics, working conditions, and survival.…”

Corporate labour standards and work quality: insights from the agro-export sector of Guanajuato, Central Mexico

“…Distelhorst et al (2015), amongst others, show that compliance with corporate labour standards is often better in countries that have stronger national labour law enforcement. Another important factor that has proven to support improvements on the side of suppliers are a relatively free press, a denser NGO network and openness regarding factory-level assessments through which civil society can monitor compliance (Robertson 2020;Short, Toffel, and Hugill 2020). While not legally binding, compliance with these corporate labour standards has increasingly become an important condition for suppliers to gain and maintain access to global markets (Auret and Barrientos 2004;Donaghey et al 2014).…”

Editorial Essay: Introduction to a Special Issue on Improving Private Regulation of Labor in Global Supply Chains: Theory and Evidence

“…Raymond Robertson (this volume) similarly argues that pressures that arise from institutional contexts can augment compliance. He analyzes data from Better Factories Cambodia (BFC), which was introduced under the aegis of the US–Cambodia bilateral textile trade agreement in 1999.…”