Assessing the Social Impact of Corporations: Evidence from Management Control Interventions in the Supply Chain to Increase Worker Wages

53 Pages Posted: 18 Jan 2023 Last revised: 14 Apr 2023

See all articles by Greg Distelhorst

Greg Distelhorst

University of Toronto, Centre for Industrial Relations and Human Resources; University of Toronto, Rotman School of Management

Jee-Eun Shin

University of Toronto - Rotman School of Management

Date Written: January 15, 2023

Abstract

This study examines an initiative by a large multinational garment retailer (H&M Group) to increase wages at its supplier factories by intervening in their wage-related management practices. Difference-in-differences estimates based on eight years of data from over 1,800 factories show that the interventions were associated with an average wage increase of approximately 5 percent by the third year of implementation. Our estimates suggest that the intervention-associated wage increase was many times greater than if the retailer’s cost for the program was instead paid directly to affected workers. We find that the wage effects were driven by factories with relatively poorer supplier ratings and do not find significantly different wage effects depending on the presence of trade unions. We also examine several non-wage outcomes such as factory orders, supplier price competitiveness, overtime pay, and total employment to probe the mechanisms underlying the wage increases. Overall, these findings have implications for assessing corporate social impact in global supply chains.

JEL Classification: F14, F16, J50, J80, L67, M14, M16, M40, M54

Suggested Citation

Distelhorst, Greg and Shin, Jee-Eun, Assessing the Social Impact of Corporations: Evidence from Management Control Interventions in the Supply Chain to Increase Worker Wages (January 15, 2023). Available at SSRN: https://ssrn.com/abstract=4324933 or http://dx.doi.org/10.2139/ssrn.4324933

Greg Distelhorst

University of Toronto, Centre for Industrial Relations and Human Resources ( email )

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

University of Toronto, Rotman School of Management

Jee-Eun Shin (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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