Does Corporate Social Responsibility Make a Difference on Labor Conditions? a Case Study in Southern China
Does Corporate Social Responsibility make a difference on labor conditions? A Case Study in Southern China
Yiu Por Chen Assistant Professor Public Services Graduate Program DePaul University & IZA e-mail: ychen16@depaul.edu Phone: 312/362-8441 Fax: 312/362-5506
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Abstract The corporate social responsibility code of conduct (CSRC) has been the model of corporate governance (CG) used by multinational corporations (MNCs) for their suppliers. Using the transaction cost perspective, this study argues the CSRC system may reduce some transaction costs for MNCs in planning and implementing corporate social responsibility (CSR). However, the CSRC may suffer from opportunism at the supplier level, which may undermine CSRC outcomes. By utilizing a unidimensional item response model with a randomized survey of factory workers of 12 toy manufacturers in Southern China, this study provides a unified measure to evaluate the effects of CSRCs on labor conditions from workers’ voices. Furthermore, this study offers fresh empirical evidence to show the ways opportunism may undermine CSRC effects on labor relations.
JEL code: M14, M23, J28, J50, J81, J83, J88 Keywords: Corporate Social Responsibility, Multinational Corporations, Outsourcing, Safety, LaborManagement Relations, Working Conditions, Workers’ Rights, Labor Market Policy
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“There are lots of firms and lots of changes in labor practices among them, so there is no lack of data. To judge whether formal labor market rules produce worse employment outcomes, as claimed by orthodox analysts, one could contrast employment between firms with more or less rigid internal rules.” − Richard Freeman (2005: 19-20), suggesting that a microanalysis of workers and firms will be a path forward to understanding the effect of labor institutions.
1. Introduction Corporate social responsibility (CSR) has been rapidly institutionalized and now covers the vast majority of industrial sectors around the globe. Donaldson (1996)
Yiu Por Chen Assistant Professor Public Services Graduate Program DePaul University & IZA e-mail: ychen16@depaul.edu Phone: 312/362-8441 Fax: 312/362-5506
1
Abstract The corporate social responsibility code of conduct (CSRC) has been the model of corporate governance (CG) used by multinational corporations (MNCs) for their suppliers. Using the transaction cost perspective, this study argues the CSRC system may reduce some transaction costs for MNCs in planning and implementing corporate social responsibility (CSR). However, the CSRC may suffer from opportunism at the supplier level, which may undermine CSRC outcomes. By utilizing a unidimensional item response model with a randomized survey of factory workers of 12 toy manufacturers in Southern China, this study provides a unified measure to evaluate the effects of CSRCs on labor conditions from workers’ voices. Furthermore, this study offers fresh empirical evidence to show the ways opportunism may undermine CSRC effects on labor relations.
JEL code: M14, M23, J28, J50, J81, J83, J88 Keywords: Corporate Social Responsibility, Multinational Corporations, Outsourcing, Safety, LaborManagement Relations, Working Conditions, Workers’ Rights, Labor Market Policy
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“There are lots of firms and lots of changes in labor practices among them, so there is no lack of data. To judge whether formal labor market rules produce worse employment outcomes, as claimed by orthodox analysts, one could contrast employment between firms with more or less rigid internal rules.” − Richard Freeman (2005: 19-20), suggesting that a microanalysis of workers and firms will be a path forward to understanding the effect of labor institutions.
1. Introduction Corporate social responsibility (CSR) has been rapidly institutionalized and now covers the vast majority of industrial sectors around the globe. Donaldson (1996)
References: 34 Fung, Archon, Dara O 'Rourke, and Chuck Sabel (2001), "Realizing Labor Standards," The Boston Review, New Democracy Forum, February, 2001 35 O’Rourke, Dara (2004), Opportunities and Obstacles for Corporate Social Responsibility Reporting in Developing Countries, policy paper prepared for the Corporate Social Responsibility Practice, Washington, D.C.: The World Bank Group