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

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