Oka, Chikako
(2010)
Labor standard compliance and the role of buyers: the case of the Cambodian garment sector.
PhD thesis, London School of Economics and Political Science.
Abstract
This dissertation consists of four chapters investigating the role of buyers in regulating suppliers' compliance with labor standards in the Cambodian garment sector. The first chapter evaluates an innovative monitoring scheme of the International Labour Organization (ILO) in the Cambodian garment sector, Better Factories Cambodia (BFC). The findings suggest that monitoring standards and procedures are rigorous and positive impacts are felt in monitored factories. Nonetheless, BFC runs in parallel to state institutions and enforcement depends on buyers, throwing its sustainability into question. The second chapter examines the effects of 'reputation-conscious buyers' on labor standard compliance in supplier facilities. Using unique factory-level panel data, this chapter shows that factories producing for reputation-conscious buyers are associated with higher compliance levels than other factories, controlling for factory characteristics. Field interviews also demonstrate that reputation-conscious buyers regulate supplier compliance both 'reactively' and 'proactively.' The third chapter explores the determinants of labor standard compliance across different issue categories (i.e. contract, wage, hours, leave, welfare, occupational safety and health, fundamental rights). Suppliers of reputation-conscious buyers are consistently associated with better compliance levels across many different issue categories including fundamental rights. The result lends support to the behavioral theory rather than the deterrence theory of regulatory compliance and challenges claims that buyer-driven regulation produces effects that are confined only to visible and easyto-fix issues. The fourth chapter exploits original survey data and examines different channels through which buyers influence their supplier compliance. The findings suggest that the main channel linking buyers and supplier compliance-performance is the nature of their relationships: market-based relationships mediated through agents are systematically associated with poorer compliance performance than established relationships. The result suggests the need to develop longer-term buyer-supplier relationships marked by open dialogue, trust, and commitment, which in turn help to foster an environment supportive of continuous improvement in working conditions.
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