Production Goes Global, Standards Stay Local: Private Labor Regulation in the Global Electronics Industry

Abstract:     
Subcontracting relationships in globalized production networks are claimed to depress labor standards in developing countries. These concerns have led to the emergence of private voluntary initiatives aimed at regulating labor and environmental practices in international supply chains. How effective are these initiatives and to what extent can they replace traditional, state-led regulation of the workplace? Is variation in their efficacy consistent with the claim that arms-length exchange harms labor rights? We address these questions by studying Hewlett Packard’s (HP) supply chain compliance program through quantitative and qualitative analysis of audit records, interviews with managers at both HP and its suppliers, and field research at production facilities located in seven countries. We find HP’s program produced improvements in many areas but that the national context of governance remains the strongest predictor of improved working conditions in the supply chain. However, we also find that producers of commoditized goods, subject to greater market pressure in supply chain transactions, improve more in key areas than producers of specialized goods. Contrary to prevailing assumptions about globalization and labor standards, power disparities in subcontracting can actually incentivize better labor practices in suppliers.

Number of Pages in PDF File: 51

Keywords: Transnational governance, globalization, labor standards, corporate social responsibility

working papers series