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Revisiting Supplier Compliance with MNC Codes of Conduct: Recoupling Policy and Practice at Chinese Toy Suppliers

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Abstract

Does private regulation of workers’ rights in global value chains improve working conditions on the factory floor? Drawing on one of the first systematic longitudinal studies of supplier compliance with multinational corporation (MNC) codes of conduct, this paper finds—in contrast to previous research—substantial improvements over time. While in 2004, the four examined Chinese toy suppliers violated most of the evaluated code of conduct criteria and consciously decoupled the code of conduct policy from actual practices, by 2009 they had recoupled policy and practice and complied with nearly all examined criteria (except working hours). The paper contributes to the private regulation literature by challenging previous research claims, identifying factors that could make private regulation effective, and outlining a research method for empirically studying the effects of codes of conduct over time. The paper also contributes to new institutional theory by discussing how recoupling could be influenced by two factors not identified in previous research: (i) trusting relationships between the organization and the stakeholder exerting pressure and (ii) factors unrelated to main external pressures leading to “accidental” recoupling.

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Notes

  1. Toy Industries of Europe, “Facts and Figures”, July 2008.

  2. Australian Consumers Association, “Choice”, July 2008, p. 27, and http://www.icti-care.org/foundation.html (accessed 27 August 2009).

  3. In 2004, these three firms had a combined market share of approximately 50 % of the Swedish toy market (Top Toy 35 %, BrioPartner 8 %, and Coop 7 %). Their market shares were approximately the same in 2009.

  4. China Labor Watch, “Investigations of Toy Suppliers in China: Workers are still suffering”.

  5. Newsweek, “Is China’s Labor Law Working?”, 14 February 2008, http://www.newsweek.

  6. Swedish Consul in Canton, “Guangdongs ekonomi December 2008—stark nog att rida ut den ekonomiska avmattningen?”, 2 December 2008; Swedish Consul in Canton, “Guangdongs ekonomi inför Oxens år”, 15 January 2009.

  7. SCMP, “Factory bosses protest at pay rise”, 9 November 2011.

  8. Ibid.

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Acknowledgments

I gratefully acknowledge the support of Kristina Areskog Bjurling and SwedWatch in arranging the collection of data for this study.

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  1. Department of Business Administration, School of Business, Economics and Law, University of Gothenburg, Box 600, 405 30, Gothenburg, Sweden

    Niklas Egels-Zandén

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Appendix: Interview Guide

The predefined follow-up questions are indicated in the interview guide by either “If so” or “Follow up”.

Appendix: Interview Guide

  1. 1.

    Personal Information

    1. 1.1.

      What is your name (optional)?

    2. 1.2.

      How old are you?

    3. 1.3.

      What department do you work in?

    4. 1.4.

      Where are you from?

    5. 1.5.

      How long have you been working in the factory?

    6. 1.6.

      What are you employed as?

  2. 2.

    Factory Information

    1. 2.1.

      What is the name of the factory?

    2. 2.2.

      What products are produced in it?

    3. 2.3.

      Who are the major clients of the factory?

    4. 2.4.

      When are the factory’s peak and low seasons? (Follow up: Specify months)

  3. 3.

    Workforce information

    1. 3.1.

      How many workers are there in the factory? What is the male—female ratio?

    2. 3.2.

      What different departments are there in the factory?

    3. 3.3.

      What is the age range of employees? Mean age?

    4. 3.4.

      At what age are workers recruited? (Follow up: Are there any workers under 16 years old working in the factory?)

  4. 4.

    Wages, working hours, and vacation

    1. 4.1.

      Could you explain the organization of working hours used at the factory? How many hours do you work per day/week? (Follow up: Please specify the differences between weekday and weekend hours, regular working hours and overtime, and peak and low season working hours)

    2. 4.2.

      How many days off do you have per week/month?

    3. 4.3.

      Could you explain the wage system of the factory? (Follow up: Does the factory use a piece-work rate or a time rate? Are there differences between departments?)

    4. 4.4.

      Is overtime compensation provided? If so, how?

    5. 4.5.

      What is the average monthly income of the workers? (Follow up: Please specify the differences between the peak and low seasons)

    6. 4.6.

      What happens if the factory does not have enough work for the workers in the low season?

    7. 4.7.

      Are workers guaranteed a certain minimum income every month?

  5. 5.

    Employment

    1. 5.1.

      Does management sign a written contract with workers? If so, are you given a copy of the contract?

    2. 5.2.

      What is the average length of the contract?

  6. 6.

    Insurance and welfare

    1. 6.1.

      Does the factory buy social insurance for its workers? (Follow up: Please specify whether this includes old age, medical, unemployment, and industrial injury insurance)

    2. 6.2.

      If so, is anything deducted from wages for each type of coverage? If so, how much?

  7. 7.

    Occupational safety and health (OSH) conditions

    1. 7.1.

      Could you tell us about the industrial accident situation in the factory?

    2. 7.2.

      Does management pay compensation for injuries or occupational diseases related to work?

    3. 7.3.

      Which department is most likely to have industrial accidents?

    4. 7.4.

      Have you received any occupational training, either before or during employment?

    5. 7.5.

      Is there any fire prevention training for new and current workers?

    6. 7.6.

      Are there fire drills at the work place and in the dormitories? If so, how often?

    7. 7.7.

      Do you know how to get to the fire exits if there is a fire?

    8. 7.8.

      Is there any formal OSH training for new and current workers?

    9. 7.9.

      What is the daily production quota in your department during peak season? What happens if you fail to meet the quota?

  8. 8.

    Code of conduct auditing

    1. 8.1.

      Do any clients perform social audits inside the factory?

    2. 8.2.

      If so, could you tell us how such an audit is conducted? (Follow up: How often do social auditors come? What would they check? Do they talk to workers? How does factory management prepare before the social auditors come?)

    3. 8.3.

      Have you heard of codes of conduct? If so, how can workers access the details of the codes of conduct?

    4. 8.4.

      Do you think that social audits can help improve factory conditions?

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Egels-Zandén, N. Revisiting Supplier Compliance with MNC Codes of Conduct: Recoupling Policy and Practice at Chinese Toy Suppliers. J Bus Ethics 119, 59–75 (2014). https://doi.org/10.1007/s10551-013-1622-5

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