Channels of buyer influence and labor standard compliance: the case of Cambodia's garment sector

Abstract

Given the continued growth in the globalization of production, working conditions in global supply chains have come under increased scrutiny. Although there has been much debate about corporate codes of conduct and monitoring procedures, the question of how buyers influence their suppliers’ working conditions at the factory level remains poorly understood. Using a unique data set based on monitoring by the International Labour Organization (ILO) and original survey data collected in Cambodia's garment sector, this study shows that the main channel linking buyers and supplier compliance performance is the nature of their relationships. Market-based relationships mediated through sourcing agents are systematically associated with poorer compliance performance. In particular, when a reputation-conscious buyer is sourcing from a factory, it has a positive effect on compliance, and their presence appears to condition relationship variables. Deterrence and learning channels are not supported by the evidence. The findings signal the need to pay more attention to the nature of buyer–supplier relationships if we seek to improve labor standard compliance. Market-based relationships motivate neither buyers nor suppliers to invest their time and resources to tackle the root causes of poor working conditions. Rather, the results here indicate the need to develop collaborative relationships marked by open dialogue, trust, and commitment, which in turn help to foster an environment supportive of continuous improvement in working conditions.

Citation

Oka, C. (2010), "Channels of buyer influence and labor standard compliance: the case of Cambodia's garment sector", Lewin, D., Kaufman, B.E. and Gollan, P.J. (Ed.) Advances in Industrial and Labor Relations (Advances in Industrial & Labor Relations, Vol. 17), Emerald Group Publishing Limited, Leeds, pp. 153-183. https://doi.org/10.1108/S0742-6186(2010)0000017008