Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain

45 Pages Posted: 9 Oct 2013 Last revised: 15 Sep 2015

Greg Distelhorst

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Jens Hainmueller

Stanford University - Department of Political Science; Stanford Graduate School of Business; Stanford Immigration Policy Lab

Richard M. Locke

Brown University; Massachusetts Institute of Technology (MIT) - Department of Political Science

Date Written: August 29, 2015

Abstract

This study tests the hypothesis that lean manufacturing improves the social performance of manufacturers in emerging markets. We analyze an intervention by Nike Inc. to promote the adoption of lean manufacturing in its apparel supply chain across eleven developing countries. Using difference-in-differences estimates from a panel of over three hundred factories, we find that lean adoption was associated with a 15 percentage point reduction in noncompliance with labor standards that primarily reflect factory wage and work hour practices. However, we find a null effect on factory health and safety standards. This pattern is consistent with a causal mechanism that links lean to improved social performance through changes in labor relations, rather than improved management systems. These findings offer evidence that capability-building interventions may reduce social harm in global supply chains.

Keywords: corporate social performance, global supply chains, lean manufacturing, human resource management, labor standards

JEL Classification: M11, M54, J50

Suggested Citation

Distelhorst, Greg and Hainmueller, Jens and Locke, Richard M., Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain (August 29, 2015). Watson Institute for International Studies Research Paper No. 2013-09; Management Science, Forthcoming; Watson Institute for International Studies Research Paper No. 2013-09; Rotman School of Management Working Paper No. 2337601. Available at SSRN: https://ssrn.com/abstract=2337601 or http://dx.doi.org/10.2139/ssrn.2337601

Greg Distelhorst

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States

HOME PAGE: http://www.gregdistelhorst.com

Jens Hainmueller

Stanford University - Department of Political Science ( email )

Stanford, CA 94305
United States

HOME PAGE: http://www.stanford.edu/~jhain/

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Stanford Immigration Policy Lab

30 Alta Road
Stanford, CA 94305
United States

Richard M. Locke (Contact Author)

Brown University ( email )

111 Thayer Street
Box 1970
Providence, RI 02912-1970
United States
(401) 863-3596 (Phone)

Massachusetts Institute of Technology (MIT) - Department of Political Science ( email )

77 Massachusetts Avenue
Cambridge, MA 02139
United States

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