What leads to better working conditions in global supply chains: a case study of apparel factories in China

The diffusion of manufacturing supply chains worldwide has provoked a fierce debate over how to effectively monitor and promote compliance with labor standards in supply chain factories (Frenkle and Scott 2002; Fung, O’Rourke, and Sabel 2001; O’Rouke 2003; Weil 1996). In this paper we aim to identify the factors that lead to better working conditions through a structured comparison of two factories in the same supply chain. In an earlier quantitative study of the labor compliance audit records of all 830 suppliers of a leading multinational corporation (MNC), we found that after country-level variables—such as rule of law and level of economic development—and basic factory characteristics—such as factory age and ownership—are controlled, there are still considerable variations in labor compliance (Locke, Qin, and Brause 2007). The in-depth case study presented in this paper is designed to understand the underlying mechanisms driving these variations. Specifically, we focus on three linked questions: First, why do working conditions vary across factories located in the same region and producing for the same global brand? Second, what are the root causes of the prevalent labor problems in supply chains? And last, what accounts for the improvements in labor conditions among global suppliers? We argue that some of the most prevalent problems in compliance with labor standards are deeply rooted in the way that supply chains are coordinated. To achieve sustainable improvements in working conditions and labor standards, systematic interventions aimed at tackling these root causes are critical—in particular, improving the ability of suppliers to better schedule their work and stabilize and motivate their workforce through new forms of work organization.