The influence of Dutch secondary stakeholders on garment industry Corporate Social Responsibility practices in China.
Master’s Thesis Final version
Author: Arjan Herman Paul Rietveld
Student number: 10069003
Submission date: 14th of January 2014 Institution: University of Amsterdam Program: MSc in Business Studies
Faculty: Economics and Business
First reader: Arno Kourula Second reader: Marlene Vock
Abstract
Issues related to CSR have been the subject of growing debate across an increasingly wide range of disciplines in social sciences and business and management studies. China, a manufacturing-based economy that produces a large proportion of the world’s products, has been facing mounting pressure to take CSR issues seriously, particularly in terms of labour standards. Yet, academic research on the involvement and impact of secondary stakeholders in this discussion is considered limited till date. This multiple case study aims to provide a better insight in the actual impact that secondary stakeholders have on corporate behaviour leading to the development of CSR practices in production areas such as China. The findings are discussed in light of work on stakeholder theory by describing how secondary
stakeholders who are affected by corporate activities can enhance their salience to influence corporations.
Acknowledgments
The author gratefully acknowledges the thoughtful suggestions received from Dr. Arno Kourula on earlier versions of this paper. The author is also thankful to all interviewees and contributors to this study for their thorough comments and directions.
Table of contents Abbreviations 4 1. Introduction 5 1.1. Overview 5 1.2. Research problem 6 1.3. Research gap 6 1.4. Research questions 7 1.5 Research objectives 7 1.5. Key definitions 7 1.6. Structure 11 2. Literature review 12
2.1. Corporate Social Responsibility 12
2.2 Social CSR 13
2.2. CSR practices in the Chinese garment industry 14
2.4. Purchasing practices 16
2.5. Supply chains 16
2.6 Secondary stakeholders 17
2.5. Stakeholder theory 18
2.7 Stakeholder influence strategies and roles 19
3. Methodology 21 3.1. Research design 21 3.2. Data gathering 21 3.3. Data analysis 22 3.4. Sampling 24 4. Results 25 4.1. Multi-stakeholder initiative 25 4.2. Non-governmental organisations 28 4.3. Trade organisations 38 4.4. Labour union 43 4.5. Comparative analysis 46 5. Conclusion 57 5.1. Discussion 57
6. Reference list 60
Appendix 72
Appendix 1: Interview questions 72
Abbreviations
AFW Asia Floor Wage Campaign AMRC Asia Monitor Resource Centre BCI Better Cotton Initiative
BSCI Business Social Compliance Initiative BWP Better Work Program
CCC Clean Clothes Campaign
CNTAC China National Textile and Apparel Council CNV Christelijk Nationaal Vakverbond
CSC9000T China Social Compliance 9000 for Textile & Apparel Industry CSR Corporate Social Responsibility
ETI Ethical Trading Initiative FLA Fair Labor Association
FNV Federatie Nederlandse Vakbeweging FWF Fair Wear Foundation
GRI Global Reporting Initiative IFC International Finance Corporation ILO International Labor Organization MFA Multi-Fiber Agreement
MSI Multi-Stakeholder Initiative NGO Non-Governmental Organisation
OECD Organisation for Economic Co-operation and Development PNP Private Sector Partnership
RND Raad Nederlandse Detailhandel
RSCA Responsible Supply Chain Association SA8000 Social Accountability 8000
SAI Social Accountability International SD Sustainable Development
SOMO Stichting Onderzoek Multinationale Ondernemingen TBL Triple Bottom Line
UN United Nations
1. Introduction 1.1 Overview
With the liberalization of financial markets and international trading, an increasingly interconnected global economy has emerged (Chi, 2010). Market boundaries have been redefined, while a parallel shift to outsourcing and offshore manufacturing has resulted in the rise of global supply chains (Gereffi & Memedovic, 2003). This is particularly true for the garment industry, which is largely dependent on foreign production in low-wage countries. ‘’Sustainability issues are particularly sensitive to this industry, given fierce competition, intensive resource use, and the exposure of penurious labour conditions in regions such as China’’ (De Brito et al., 2008). These issues have been subject to growing debate across an increasingly wide range of disciplines in both academic studies and business practices.
China, a manufacturing-based economy that produces a large proportion of the world’s products, is fully integrated with the global economy through international supply chains and exports of finished products (Cooke & He, 2010; De Abreu et al., 2012). Meanwhile, the country faces the dual pressures of social and economic upgrading while protecting its
ecological environment (Zhang & Wen, 2008; Linfei & Qingliang, 2009; Cooke & He, 2010). China has historical foundations and many real incentives to develop Corporate Social
Responsibility (CSR), but ‘’political, social, and economic constraints do not allow CSR to develop at a quicker pace’’ (Lin, 2010). Therefore, CSR development is still considered to be unbalanced in China (Wang et al., 2010). The country is growing fast economically and changes in government policy over recent years have aimed at supporting accelerated growth (De Abreu et al., 2012). The last decade also witnessed the emergence of international standards aimed at enhancing corporate accountability in the domain of sustainable
development. These include certification standards for social and environmental reporting, such as the Global Reporting Initiative (GRI) and AA1000 Assurance Standard from
AccountAbility. ‘’As non-governmental organisations (NGOs) heighten their monitoring and
the Chinese government enforces new laws to increase transparency and accountability, multinational corporations can expect growing pressure to run a clean supply chain’’ (Plambeck et al., 2012).
Corporations seeking to adopt sustainable practices need to pay attention to their performance on three main dimensions: ecological preservation, social equity, and economic performance
(Gladwin et al., 1995; Starik & Rands, 1995). At the same time, a variety of groups interested in these corporate performance measurements are affected by the sustainability practices of the corporations (Freeman, 1984). Therefore, a corporation on the path to sustainability needs to attend to the perspectives of a wide range of stakeholders and as such its understanding of, and practices related to, sustainability is socially constructed by a multiplicity of external actors (Jennings & Zandbergen, 1995; Henriques & Sharma, 2005).
According to Momin (2013), corporations are ‘’increasingly recognizing the importance of stakeholder perceptions of their CSR practices, and many wish to align practices with stakeholder expectations.’’ Accordingly, stakeholder engagement is gaining importance for corporations in developing CSR agendas (Thomson & Bebbington, 2005). It has been argued that for example NGOs are powerful non-managerial – or secondary – stakeholders, and that they influence corporations to increase the development of CSR practices (Arenas et al., 2009; Bendell & Lake, 2000; Deegan & Blomquist, 2006; Doh & Guay, 2006; Momin, 2013).
1.2 Research problem
Issues related to CSR have been the subject of growing debate across an increasingly wide range of disciplines in social sciences and business and management studies, while CSR has an expanding focus in both academic studies and business practices. China, a manufacturing-based economy that produces a large proportion of the world’s products, has been facing mounting pressure to take CSR issues seriously, with particular reference to labour standards (Cooke & He, 2010; Perego & Kolk, 2012). While former research indicates that corporations practicing CSR actively perform better on both social and economic level (Linfei &
Qingliang, 2009), the garment industry is still facing little improvement on a global scale.
1.3 Research gap
While research interest on CSR has grown significantly in China (Wang, 2005), academic research on the involvement and impact of secondary stakeholders in this discussion is
considered limited till date (van Huijstee & Glasbergen, 2010). According to Zietsma & Winn (2008), little is known about the specific actions taken by secondary stakeholders, their
effects, interactions, or the reactions of corporations to such actions, particularly not in relation to the Dutch garment industry. Studies on secondary stakeholder perceptions and
confrontation to partnership has occurred between stakeholders and corporations in dealing with social, but also environmental issues (Utting, 2002). ‘’There is now a sense prevailing in the corporate sector that the practice of working with stakeholders such as NGOs and other pressure groups as partners minimizes social and environmental costs’’ (Hamann & Acutt, 2003). This study, therefore, contributes to the stakeholder-perception-based CSR literature by looking at the perceptions, actions, and impact of stakeholder strategies to influence the activities of corporations in a developing setting.
1.4 Research questions
Three sub-questions are stated to obtain specific insights that are necessary to describe the three themes involved in this study:
1. How do secondary stakeholders perceive the way CSR practices are handled with regard to
the Chinese garment industry?
2. Which strategies are undertaken by secondary stakeholders to influence corporate activities and how do these strategies relate to one another?
3. What is the impact of secondary stakeholder strategies on corporate activities regarding CSR practices in the Chinese garment industry?
Drawing on the results of these sub-questions, the following research question is addressed:
How do Dutch secondary stakeholders affect garment industry CSR practices in China?
1.5 Research objectives
According to the SOMO website, ‘’public indignation about sweatshop conditions have catalyzed the emerging of initiatives to improve working conditions in the garment supply chains, such as company codes of conduct and multi-stakeholder initiatives.’’ These
initiatives have undoubtedly led to some improvements, although questions can be raised as to what has really changed on the work floor. As initiatives are widely initiated by external actors, this study aims to provide a better insight in the strategies and impact that secondary stakeholders have on corporate behavior leading to the development of CSR practices in production areas such as China.
1.6 Key definitions
The following key definitions are frequently referred to in this study and will be discussed in alphabetical order.
Corporations
Corporations operating in the Dutch garment industry play a key role in this study due to their direct or indirect link to Chinese suppliers, therefore becoming a focal point of discussion among various stakeholder groups. In order to cover all corporations represented by the stakeholders in this study, a broad scope is applied and includes foreign as well as domestic brands, multinational enterprises, family stores, retailers, and others involved in the sales of garment in the Dutch market. When referring to the internal structure of corporations, business, business partners, or corporate business outline a more general reference to its shared mission, vision, and activities, while business management refers to the top
management that is able to set out the broad lines of corporations with regard to CSR. Firms or companies are interchangeable terms of corporations.
CSR vs. SD
One discussion that sets itself apart is whether to focus on Corporate Social Responsibility (CSR) or Sustainable Development (SD), as the terms are frequently used synonymously. SD, being progressively incorporated in governmental policy and corporate strategy, is typically defined as ‘’meeting the needs of the present without compromising the ability of future generations to meet their own needs’’ (Brundtland, 1987). The SD framework is developed as a Triple Bottom Line (TBL) with three dimensions, encompassing environmental and social performance in addition to financial performance (Elkington, 1997; Carter & Rogers, 2008).
Ebner and Baumgartner (2006) define CSR as a social strand of SD, being particularly built on its ‘’stakeholder approach and corporate engagement, realizing its responsibilities as a member of society and meeting the expectations of all stakeholders.’’ CSR is more clearly defined, bounded, and suitable due to its particular focus on the social aspect. In this thesis, I follow the definition for CSR drawn by the Commission of the European Communities (2001), as this definition has been cited most frequently (Dahlsrud, 2008): ‘’CSR is a concept whereby companies integrate social and environmental concerns in their business operations
Garment industry
SOMO notes on its website that the garment sector was one of the first industries in which debates about supply chain responsibility and labour rights came to the fore. When discussing the garment industry, a reference is made to producers and sellers of clothing. This definition covers the entire supply chain, from the production of raw materials such as cotton and textile till the sales of finished apparel, including all references made to terms as apparel, clothing, fashion, or textile industries.
Labour unions
Labour unions can be defined as organisations of workers in the same or related skilled occupations who act together to secure favorable wages, hours, and other working conditions for all members. Two types of labour unions are generally distinguished, namely craft unions and industrial unions. In the case of the garment industry, the industrial type is considered as this union includes all workers in one specific industry, unconditioned for their trade or function.
Multi-stakeholder initiatives
Multi-stakeholder standards have emerged in recent years because of their potential for effective consensus-building, knowledge-sharing, and interest representation. ‘’Multi-stakeholder standards address problems related to other forms of global rule setting for business, generally involve business, NGOs, and sometimes also governments, and are more specific and well-elaborated than other types of standards. Stakeholder assemblies can be seen as sources for new global rule setting involving non-state actors where ‘old’ public
governance is failing and regulatory voids need to be filled’’ (Fransen & Kolk, 2007).
Non-governmental organisations
Non-governmental organisations (NGOs) are secondary stakeholders in the sense that the firm’s survival does not depend on their continuing support (Clarkson, 1995). ‘’Many NGOs are not interested in solely affecting the level of social change activities in an individual firm but, rather, strive for field-level change’’ (Lounsbury et al., 2003). NGOs aim to affect the nature and level of corporate social change activities in a firm, but they do so from varying ideological perspectives (Zald & McCarthy, 1980). ‘’The NGO objective is to create the public force (be it investor, consumer, or voter power) to push the policy maker toward instantiating the ideals of the NGO into the current or proposed policy’’ (Keck & Sikkink,
1998).
Ruggie framework
The Ruggie framework, developed by United Nations Special Representative John Ruggie, brings together social expectations and law into an emerging policy framework of direct relevance to CSR. According to Taylor (2011), ‘’the principle source of the framework’s significance for the policy and practice of CSR is its definition of the theory of business responsibility for human rights as arising from business activities and relationships, and its deployment of due diligence for human rights risk as the core operational concept of this theory of responsibility.’’ Ruggie encompasses three pillars outlining how states and businesses should implement the framework, namely state duty to protect human rights, corporate responsibility to respect human rights, and access to remedy for victims of business-related abuses. Taylor (2011) additionally notes that the framework ‘’creates a regulator dynamic in which both voluntarism and law have relevant and reinforcing roles to play in governing business behaviour.’’
Secondary stakeholders
Stakeholders affect the efforts of a corporation to influence and benefit from favorable public policy through the political advantage process (Cummings & Doh, 2000; Doh & Guay, 2006) and use different types of influence. Secondary stakeholders may hold knowledge and
perspectives that is both key to anticipating potential future sources of problems and to identifying innovative opportunities and business models for the future. Jamali (2008) further notes that secondary stakeholders are generally disconnected from corporate business as they are remote, weak, and/or currently disinterested. Secondary stakeholders are ‘’diverse and include those who are not directly engaged in the economic activities [of a firm] but are able to exert influence or are affected by the organisation’’ (Savage et al., 1991). Although media sources and universities are also recognized as secondary stakeholders, four groups are thought to be more defined and relevant with regard to the Dutch garment industry. These groups could be classified as multi-stakeholder initiatives (FWF), non-governmental
organisations (CCC, MADE-BY, Solidaridad, SOMO), trade organisations (MODINT, RND-VGT), and labour unions (FNV).
garment supply chain. As a focus is laid upon China, this broad definition could refer to direct or indirect producers of garment that are intended to be sold at the Dutch market, and includes Chinese factories, garment producers, subcontractors, and home producers.
Sweatshops
A sweatshop is a negatively connoted term for any working environment considered to be unacceptably difficult or dangerous. The origins of the sweatshop story are rooted in New York at the end of the nineteenth century. ‘’As sweatshops prominently figure in literature on those economic activities, the characteristics are matters of considerable debate’’ (Waldinger & Lapp, 1993). In reality, it is thought that sweatshop workers often work long hours in exchange of low wages, regardless of laws mandating overtime pay or minimum wages. Moreover, laws may be violated, employees may be abused, and locations may have hazardous materials and situations.
Trade organisations
Trade organisations are founded and funded by businesses operating in a specific industry, and participate in public relations activities such as public relations, lobbying, and political donations, while also focusing on collaboration between companies and standardization, representing the interests of employers.
1.7 Structure of the study
In order to enhance the focus of this study, I will first present a literature review, followed by a preliminary methodology section that including a description of the research design,
sampling, data gathering, and data analysis. The subsequent sections include a results section that is subdivided into profile sheets of all secondary stakeholders involved as well as a comparative analysis of these actors. Finally, a summary of main findings, managerial implications, and limitations is presented.
2. Literature review
This chapter shows important findings of previous research in this field of study. It briefly discusses the different interpretations of the concepts and results. Chapter 2.1 elaborates on the different interpretations of CSR, while 2.2 specifies on the social aspects of CSR. Chapter 2.3 covers the development and implementation of CSR in China, whereas respectively 2.4 en 2.5 present purchasing practices and supply chains. Chapter 2.6 encompasses stakeholder theory and 2.7 presents an overview on stakeholder influence strategies and roles.
2.1 Corporate Social Responsibility
Corporate Social Responsibility, or CSR, is considered an essential component of corporate global strategy these days (Brown & Knusden, 2012). ‘’Issues related to CSR have been the subject of growing debate across an increasingly wide range of disciplines in social sciences and business and management studies’’ (Cooke & He, 2010). Although multiple definitions of CSR exist, the concept implies particular attention to the ethical, social, and environmental implications of business. ‘’The concept has a long and varied history, [and] it is possible to trace evidences of the business community’s concern for society for centuries’’ (Carroll, 1999). The term CSR was introduced by Oliver Sheldon in 1924 and formulated as ‘’companies being viewed as having economic, but also legal, ethical, environmental, and social responsibilities on behalf of society, to comply with laws, to do no harm and to do good.’’ Carroll, one of the most prestigious scholars in this discipline, characterized the current area of CSR in 1994 as ‘’an eclectic field with loose boundaries, multiple
memberships, and different perspectives: broadly rather than focused, multidisciplinary, wide breadth, brings in a wider range of literature, and interdisciplinary.’’ In 1979, Carroll
separated four types of corporate social responsibilities, namely economic, legal, ethical, and discretionary. He also presented the argument that a firm wishing to ‘’effectively engage in CSR needed to have a basic definition of CSR, an understanding of the issues for which a social responsibility existed, and a specification of the philosophy of responsiveness to the issues’’ (Carroll, 1979).
Carroll (1991) stated that the economic responsibility, also referred to as the responsibility to be profitable, is the foremost social responsibility of a corporation and conceptualized the
mutually exclusive, ‘’it helps the manager to see that the different types of obligations are in constant tension with one another’’ (Carroll, 1996). Instead of just measuring the degree to which firms are involved in each of the elements, it is noticed that firms should integrate and embed all of these elements in the right ratio into their strategies. Although the model has been widely embraced among studies in the field of CSR, Dahlsrud (2008) observed that the environmental dimension of CSR seems to be missing in Carroll’s model. Nevertheless, considering the wide appeal, practical implications, and its functional incorporation of four important CSR pillars, the pyramid model is set to explain CSR as a function in today’s business system.
Based on compliance with legislation and regulations, CSR typically includes commitments and activities beyond law requirements. ‘’Various CSR activities are being practiced by internationally operating companies and vary considerably across countries and industries’’ (Cooke & He, 2010). These activities can be clustered into five main groups, namely workforce activities, environmental activities, marketplace activities, community activities, and company leadership, vision & values. In addition, two main categories of CSR standards and guidelines exist to provide normative guidance for business (Brown & Knudsen, 2012). The first category relates to domestic and inter-governmental standards, setting the rule for operating companies. The second category relates to private standards developed by NGOs. Also, corporations in particular industries have clustered to develop their own codes of
conduct. At the same time, consumers and other NGOs have been promoting the development of standards and certification programs (Brown & Knudsen, 2012).
2.2 Social CSR
In order to determine what aspects of CSR are particularly important with regard to the garment industry, an overview of social development criteria is presented. Moving more easily with clear guiding principles, Fair Wear Foundation has developed a strong code of conduct that is grounded in eight social development criteria: 1) employment is freely chosen, 2) no discrimination in employment, 3) no exploitation of child labour, 4) freedom of
association and the right to collective bargaining, 5) payment of a living wage, 6) safe and healthy working condition, 7) a legally binding employment relationship, and 8) reasonable hours of work. These fundamental principles are based on specific standards set by the
International Labour Organization (ILO) and the United Nations Declaration on Human Rights (The Fair Wear Formula, 2013), universally applicable, not limited by domestic
boundaries, include all aspects relevant to garment industry employees, and are conceived as a standard in the garment industry.
2.3 CSR practices in the Chinese garment industry
CSR has become an issue of increasing importance concerning the outsourcing of production to developing countries. Thus, CSR implies the claim that such outsourcing should not only be profitable, but also ethically accountable. Involvement in unethical business operations can be fatal for corporations and this is especially true for operations in China, as ‘’the workshop
of the world has been the fastest growing economy in the world for over two decades and a
key global manufacturing center for a wide range of products’’ (Lai, 2006). Due to domestic and international pressure, the Chinese government is making an increasing effort to ‘’engage companies in social and environmental activities to contribute to China’s sustainable
development’’ (Cooke & He, 2010). In the meantime, ‘’CSR in China received increased attention in deliberations concerning environmental protection, labour law compliance issues in the workplace, and responsible supply chains for international branded consumer goods’’ (Buhmann, 2005; Gugler & Shi, 2008). The government, industrial associations, and an increasing number of companies have started to realize the importance of CSR practices in maintaining a good reputation and building long-term competitiveness in the international textile and apparel markets (Domoney, 2007; Chi, 2011). Though, compared to the progress made in developed countries, the CSR practices in China are still at infancy stage of
development. As observed, many corporations use CSR ‘’as a tool of public relations, with a suspicion of CSR policies being set up as window dressing surrounding Chinese companies’’ (Lin, 2010).
Being one of the most traditional industries in China, but also the largest supplier to the world market (Towers & Peng, 2006), the Chinese textile and apparel industry is experiencing substantial pressure to address its CSR problems (Cooke & He, 2010). The introduction of economic reforms since the Open Door Policy in 1978 unleashed economic forces that pushed the rapid development of the Chinese economy (Chi, 2011). ‘’The Chinese garment industry was quick to absorb modern technology and producers, partly because of the
financial and marketing expertise of Taiwanese, Korean, and Hong Kong investors who came in and began to act as intermediaries between China and Western brands and retailers, [and]
was ‘’placed in the vanguard of the reform process and played a major role in China’s drive to development’’ (Chi & Kilduff, 2006). Although the Multi-Fiber Agreement (MFA) – an international trade agreement imposing quotas on the amount that developing countries could export in the form of yarn, fabric, and clothing to developed countries between 1974 and 2004 – limited China’s garment export for 30 years, a rapid economic growth was achieved by the Chinese industry in this period. The total number of employees rose from 3.8 million in 1978 to 19.4 million in 2007, while the entire industry output grew at an average 9.7 per cent per year in the past three decades, peaking at US$362 billion in 2007 and reaching an historical high in export sales (US$187.2 billion) in that same year (Chi, 2011). In 2002, when still restrained by the MFA quota rule, China produced over 20 billion pieces of garment. In 2005, in the first month after the end of the quota regime, Chinese exports to the European Union increased by 46 per cent (Sluiter, 2009).
Particularly due to fierce competition and increasing pressure on price and quality, the business model of the Chinese garment industry is largely based on short-term relationships between suppliers and foreign buyers (Lai, 2006). Various CSR initiatives, partly under the pressure of corporations, have been set up to impose codes of conduct to Chinese suppliers (Lai, 2006). The China National Textile and Apparel Council (CNTAC) is one such initiative and supervises the Responsible Supply Chain Association (RSCA), a trade committee
consisting of enterprises, purchasers, and other institutes in the supply chain with the aim to combine MSIs to advocate and promote social responsibility in order to help corporations enhance their capacity for managing social responsibility. CNTAC introduced the China
Social Compliance (CSC9000T) in 2005, being the first socially responsible auditing standard
for the Chinese garment industry (Frost & Ho, 2005).
Although these initiatives might seem fruitful on the surface, past studies reveal that CSR is not widely embraced in the Chinese garment industry (Zhang & Wen, 2007; Jiang et al., 2009). Moreover, Warner and Rowley (2010) found evidence that external bodies and value chains are not the main drivers for firms’ CSR activities in China. Coercive isomorphism seems to play a dominant role in legitimizing CSR in the case of garment corporations (De Abreu et al., 2011). Lai (2006) suggests that Chinese suppliers implementing CSR practices to satisfy their corporate customers risk losing out to their counterparts who do not implement CSR due to cost disadvantages. This financial burden and trade barrier, combined with
likely to result in a discouragement to implement CSR (Cooke & He, 2010). Another study by Frenkel (2001) highlights the difficulties corporations and international pressure groups face to exert pressure on Chinese suppliers to adopt labour standards as part of their CSR. Peng et al. (2005) suggest this might partly be explained because few influential CSR organisations exist in China, as organized groups are not allowed to operate under the current Communist ruling.
2.4 Purchasing practices
Chinese garment producers face contradictory pressures. Foreign corporations require them to certify and comply with their codes of conducts, while suppliers are also entitled to deliver their products for the lowest price possible and within tight delivery schedules. Therefore, suppliers in developing countries generally place CSR low on their business agenda (Sluiter, 2009). Purchasing practices have been mentioned by many as one of the key obstructions of CSR development, and have a negative impact on the shop floor in three ways: downward pressure on prices translates in lower wages, since for factory owners this is the most obvious way of reducing costs; volatility of ordering causes an increase in factory closures, precarious work, and unemployment; and short and irregular delivery times and unpredictable order volumes force workers into extreme overtime (Sluiter, 2009).
2.5 Supply chains
The global garment industry is characterized by extensive, largely opaque supply chains and spans six continents. Particularities of a country’s labour law and its industrial relations greatly impact workplace conditions, wages received, and the ability of workers to exercise their freedom of association (The Fair Wear Formula, 2010). It is common for large garment corporations to source from various, sometimes hundreds, of different factories. In such cases, it is difficult to effectively build long-lasting relationships between corporations and
suppliers. Also, most factories receive orders from multiple corporations, often having different expectations and requirements. Long-term relationships are thought to be a crucial element in this process, as without collaboration it is unlikely that a single corporation possesses the leverage to affect workplace developments.
finished materials are then send to factories in which garments are crafted into finished products. This process involves activities such as sewing, cutting, trim work, ironing,
washing, finishing, embroidering, and packaging (The Fair Wear Formula, 2010). In all three steps, producers rely heavily on local employees, yet especially the last step is an area of concern, as the working environment of many factory workers is underdeveloped. Next, agents operating for corporations overseas act as intermediaries with suppliers in China to oversee the process and bargain low prices. Finished products are shipped from these factories to the global distribution centres of the corporation that placed the order, after which the products will reach retail shops and customers in different parts of the world.
2.6 Secondary stakeholders
A fundamental thesis of stakeholder-based arguments is that organisations should be managed in the interest of all their constituents, not only in the interest of shareholders (Laplume et al., 2008). Stakeholders affect the efforts of a corporation to influence and benefit from favorable public policy through the political advantage process (Cummings & Doh, 2000; Doh & Guay, 2006) and use different types of influence. In Freeman’s seminal work from 1984,
stakeholders are defined as ‘’groups who could affect or were affected by a firm,’’ making a distinction between primary stakeholders and secondary (fringe) stakeholders. Yet, various competing typologies have been proposed for categorizing these stakeholders (Clarkson, 1995; Friedman & Miles, 2002; Frooman, 1999). Primary stakeholders can be defined as ‘’those that are visible and able to influence company’s survival and prosperity due to their power, legitimacy, and/or urgency, such as government, environment, shareholders, and customers’’ (Donaldson & Preston, 1995). Secondary stakeholders, on the other hand, are disconnected from corporations, as they are remote, weak, poor, isolated, non-legitimate, and/or currently disinterested (Hart & Sharma, 2004; Jamali, 2008). This group may be affected by corporate behaviour but have little, if any, direct connection to the current activities of these corporations. However, secondary stakeholders may hold knowledge and perspectives that are both key to anticipating potential future sources of problems and to identifying innovative opportunities and business models for the future. Therefore, secondary stakeholders are ‘’diverse and include those who are not directly engaged in the
organisations’ economic activities but are able to exert influence or are affected by the organisation’’ (Savage et al., 1991).
2.7 Stakeholder theory
Stakeholder theory has gained currency in the business and society literature in recent years from the perspective of corporate managers due its theoretical rationality and empirical applicability (Clarkson, 1995; Jamali, 2008; Maignan & Ferrell, 2004). Stakeholder theory is based on the premise that corporations have many stakeholders rather than a single group of shareholders, or groups of financial stakeholders, such as creditors. Therefore, a corporation needs to manage its relationship with many stakeholder groups that affect, or are affected by, its business decisions (Clarkson, 1995; Freeman, 1984; Campbell, 2007). Stakeholder theory is also considered controversial because it ‘’questions the natural assumption that pursuit of profits is the preeminent management concern’’ (Laplume et al., 2008), which is also described as the single-valued objective of a corporation (Jensen, 2002). Yet, the theory contributes by addressing the largely overlooked sociological question of how corporations affect society (Stern & Barley, 1995) and provides a more practical alternative for assessing the social performance of corporations (Chi, 2011; Jamali, 2008).
Two views on stakeholder theory can be distinguished. The normative stakeholder
perspective, on the one hand, suggests that corporations have both a duty and an obligation to wider society, and that they discharge this wide accountability by providing comprehensive accounts to relevant stakeholders (Donaldson & Dunfee, 1994; Donaldson & Preston, 1995; Gray et al., 1996). This view emphasizes the principle of responsibility of corporations. According to this perspective CSR is viewed as a process rather than an end, aiming at transforming business practices so that they become socially sustainable (Gray, 2006; Meadows et al., 2004). According to this view, stakeholders see CSR primarily as holding organisations accountable, in principle, for all their social impacts on society. The positive stakeholder perspective, on the other hand, suggests that corporations will make social disclosure only to manage the perceptions of powerful stakeholders (Bailley et al., 2000; O’Dwyer, 2003). Thus, corporations provide information for the strategic purpose of gaining approval and support for their continuing operation rather than to actually demonstrate accountability (O’Dwyer, 2003). The intentions display that the normative perspective can be interpreted as being more valuable as this would indulge that corporations aim to develop CSR practices for creating a sustainable environment in the long run, while the positive perspective only relates to corporate image with short-term objectives.
2.8 Stakeholder influence strategies and roles
Stakeholder influence can be described as the power and legitimacy of the stakeholder
(Eesley & Lenox, 2006; Welcomer, 2002), most obviously towards corporations. But how do
stakeholders influence corporate business? Based on a content analysis study conducted by Laplume et al. (2008), four theory-developing directions have been outlined. The first group of studies point to stakeholders using direct and indirect withholding and conditional usage strategies (Frooman, 1999; O’Connell et al., 2005; Sharma & Henriques, 2005), while a second group notes that the influence is determined by the power and legitimacy of a
stakeholder (Eesley & Lenox, 2006; Welcomer, 2002). The third group of studies emphasizes the formation of coalitions and networks (Kochan & Rubenstein, 2000; Neville & Menguc, 2006; Scott & Lane, 2000), while a fourth group supports the construct that influence depends on relationship structure, contractual forms, and institutional supports (Friedman & Miles, 2002).
Moving forward to studies that refer to direct and indirect withholding and conditional usage strategies, Frooman (1999) developed a typology of stakeholder influence strategies by
applying resource dependence theory to the relationship between firms and stakeholders. He argues that stakeholders use direct strategies when a corporation depends on them for resources, while indirect strategies – such as working through an associate – are directed when a corporation does not. Moreover, ‘’stakeholders withhold resources when they are not dependent on the firm and make use of firm resources conditional when they are.’’ According to Frooman, the direction of resource relationship determines which of the four identified strategy types is implemented, namely direct withholding, direct usage, indirect withholding, or indirect usage. Withholding strategies are defined as ‘’those where the stakeholder
discontinues providing a resource to a firm with the intention of making the firm change a certain behaviour’’, whereas usage strategies are ‘’those in which the stakeholder continues to supply a resource, but with strings attached.’’ Direct strategies are simply defined as ‘’those in which the stakeholder itself manipulates the flow of resources to the firm,’’ as indirect strategies being those in which the stakeholder works through an associate that manipulates the flow of resources to the firm (both strategies by either withholding or usage) (Frooman, 1999). A study on influencing the environmental practices of Canadian forestry companies by Sharma and Henriques (2005) confirms the dual strategy types (withhold vs. usage), while
O’Connell et al. (2005) confirm that ‘’specific direct and indirect mechanisms [are] used by stakeholders to rationalize relations with firms, including internal subunits, legislated
stakeholder participation, legislated access to information, and direct stakeholder activism’’ (Laplume et al., 2008).
Moreover, stakeholders hold particular roles that relate to their implemented strategies. Having studied the role of Dutch stakeholders in partnerships with the private sector in order to understand the nature of Private Sector Partnerships (PNP), van der Heul (2012)
distinguished four (complementary) roles that stakeholders could embrace. Firstly, the
facilitator/broker is an intermediary playing a facilitating role between corporate business and
local partners, with financial contribution not being an element of this role. Secondly, the
donor/sponsor/financier holds a facilitating role and additionally accepts part of the risk,
which is necessary to establish the partnership. The role of the organisation mainly lies with project management, in particular monitoring and evaluation. Thirdly, the technical
assistant/consultant invests in the capacity building of local partners and provides assistance
in the form of knowledge, skill development, and know-how to partners. Fourthly, the
technical expert/implementer contributes resources such as time and money in the field to the
project and the partnership. In addition, the technical expertise role can also be carried out in the form of giving trainings.
3. Methodology
This section describes the research design and method of data collection. More specifically, the research sample will be identified and academic and business relevance will be discussed. In the process of answering the main research question, a combination of qualitative research is conducted.
3.1 Research design
‘’Qualitative research often studies phenomena in the environments in which they naturally occur and uses social actors' meanings to understand the phenomena’’ (Denzin & Lincoln, 1994). This case study is focused on understanding the dynamics present within particular boundaries and involves multiple cases as well as numerous levels of analysis by combining data collection methods. The study is motivated by the lack of research available regarding the function of secondary stakeholders on overseas subcontracting practices exerted by corporations operating within the Dutch garment industry. Three themes, being formed into sub-questions, were described based on the analysis of qualitative data. Addressing Freeman’s work on stakeholder theory, a focus is laid upon stakeholder actions and responses. By
outlining the roles and influence strategies that secondary stakeholders in the Dutch garment industry perform in order to influence corporate decision making, this study is adding to the discussion on stakeholder performance as outlined by Laplume et al. (2008) in a descriptive manner.
3.2 Sampling
Dutch secondary stakeholders involved with the Chinese garment industry have been chosen as sample for a two-fold reason. The Chinese garment industry, on the one hand, is known as a large and labour-intensive industry with high export volumes and low production wages, while being widely recognized for its low attention to CSR. The Netherlands, on the other, holds a thriving market for the garment industry, and different stakeholder groups are involved in this discussion. The units of analysis were selected based on their active role in the development of social CSR practices in this industry, while organisational types vary in terms of size, focus, and motivation. The response rate for interview requests was 70,0 per cent, as seven out of ten organisations positively replied to an interview request sent via e-mail. The response rate to survey requests was 80,0 per cent, as one of the approached organisations (Clean Clothes Campaign) was not able to schedule an interview but managed to fill in a survey by e-mail.
All interviews were conducted independently, and solely based on the professional knowledge and skills of the interviewees. Snowball sampling has been used as a technique to get in touch with other persons who are actively involved in this field. I stopped at this number of
interviews due to time constrains, but also because interviewees as well as background analysis did not provide me with other relevant organisations. This resulted in the final selection of eight organisations, including one MSI (Fair Wear Foundation), four NGOs (Clean Clothes Campaign, MADE-BY, Solidaridad, and SOMO), two trade organisations (MODINT and RND-VGT), and one labour union (FNV Bondgenoten). An overview is presented in table 1. The trade organisations MODINT and RND-VGT were not able to present annual turnover and profit rates due to the nature of these organisations.
Stakeholder group
Establishment Location Annual turnover in Euro
Annual profits in Euro
Period
CCC NGO 1991 Amsterdam 1.029.990 28.014 (2009)
FNV Labour union 1976 Amsterdam 108.324.000 32.529.000 (2012)
FWF MSI 1999 Amsterdam 914.527 -20.739 (2011)
MADE-BY NGO 2004 Amsterdam 1.343.224 1.227.065 (2012)
MODINT Trade org. 2002 Zeist n/a n/a n/a
RND-VGT Trade org. 1949 Leidschendam n/a n/a n/a Solidaridad NGO 1969 Utrecht 19.134.325 -112.618 (2012) SOMO NGO 1973 Amsterdam 3.638.537 70.269 (2012) Table 1: Overview of secondary stakeholders.
3.3 Data gathering
Data was collected via three main methods. First, semi-structured in-depth interviews were conducted with persons either holding a directing, coordinating, or decision-making function within their organisation, are actively involved in the supply chain debates, and have expertise knowledge on the garment industry. Each interviewee provided relevant and up-to-date
background information on the high-quality discussions related to CSR development and practices undertaken in the global garment industry. Before initiating the interviews, an interview guide was prepared to consider the interview topics of interest and to ensure all topics were covered.
Second, a concise survey of four questions was presented to all interviewees during the interview sessions. Based on survey answers, a classification was constructed that showcases greater insight in the fundamental differences between, but even within stakeholder groups.
understand its organisational focus. Moreover, a four-role typology allows defining of stakeholder roles that an organisation contributes to the garment industry at large. Also, the survey provides insights in the perceptions of impact that the organisation has on micro- and meso-level. Based on these numbers, a comparative analysis of the effectiveness of each organisation can be provided.
Knowledge gathered from a literature review and contextual analysis helped to design open-ended questions (interview) and Likert-scale measureable questions (survey) covering the main issues. All interviews started with a brief introduction of the interviewee, followed by a discussion of the notion of CSR and gradually moving towards the concept on industry level and organisational level. During this last phase, the survey was presented and filled out by all interviewees. Background information on the function of the interviewee, interview date, duration, and location is presented in table 2, while an overview of the interview and survey questions can be found in appendix 1 and 2. As CCC was not able to schedule an interview but is included in this study, no background information of the organisation is provided in table 2.
Current position of interviewee
Interview date Duration Location
CCC n/a n/a n/a n/a
FNV Program Manager 13-12-2013 2 hours Amsterdam FWF MADE-BY Coordinator China Principal Consultant 25-10-2013 19-12-2013 1,5 hours 1 hour Amsterdam Amsterdam
MODINT Director 04-12-2013 1,5 hours Zeist
RND-VGT Coordinator 20-11-2013 1,5 hours Leidschendam Solidaridad SOMO Program Manager Researcher 04-12-2013 06-11-2013 1,5 hours 1,5 hours Utrecht Amsterdam Table 2: Background information of interviews.
The interviews were recorded using a portable recorder as well as digital recording software. Afterwards, the interviews were digitally transcripted into a Word-document, coded, and processed into profile sheets. The empirical data was complemented by secondary data that included books, brochures, publications, and websites covering these actors in order to present a more comprehensive insight and comparative analysis between primary and
secondary data. Most interviewees provided organisational reports during interview sessions, while other useful resources were obtained via Internet – mostly with the help of
organisational websites, but also Google Scholar was consulted in order to compare and extent the arguments provided by interviewees.
3.4 Data analysis
An in-depth analysis of the gathered data was conducted per organisation, followed by a comparative analysis to categorize, relate, and compare perceptions on three main themes that emerged from the data. Different codes were created to categorize different issues. With regard to interview answers and secondary data, the coding of perceived impact of other initiatives was based on the premise that naming an initiative ensured that this particular initiative was incorporated in the comparative analysis (table 5) as having made considerable impact (2), also when a negative remark or shortcoming was noted in relation to this
initiative. When superlative terms or arguments were presented supporting the impact, the initiative was noted as having a particularly positive impact (1). Next, a stakeholder’s influence strategy was first determined according to direct or indirect connection with
business, while withhold or usage tactics were based on the nature of actions that were named during interviews or found in secondary data. For the survey questions, three questions were measured along a Likert-scale as this a widely used approach to scaling responses to survey research.
4. Empirical findings and discussion
For this study, eight Dutch secondary stakeholders operating in the garment industry have been analyzed. In this section, the result of interviews combined with secondary data of these secondary stakeholders are revealed through profile sheets of each organisation, followed by a comparative analysis. Quotes refer to the interviewee of the particular organisation, except if stated otherwise.
4.1 Multi-stakeholder initiative (MSI)
Being set up by multiple stakeholders, one leading Dutch MSI (Fair Wear Foundation) is involved with global garment issues and is able to provide a unique approach to problems occurring in this industry.
Fair Wear Foundation (FWF)
Fair Wear Foundation (FWF) is an independent, non-profit organisation working with corporations and suppliers in production areas to improve labour conditions for garment workers. FWF member corporations are based in seven European countries, with member products being sold in more than 80 countries around the world. FWF is directed by three main stakeholders, that is labour unions (FNV and CNV), trade organisations (InRetail and MODINT), and one NGO (CCC) – each having an important role to play in improving working conditions (The Fair Wear Formula, 2010). The interviewee, who holds a position as verification coordinator for China, notes that ‘’these parties broadly define the activities of FWF, which is interesting due to their adverse interests.’’ FWF is funded by corporate business through membership fees (56 per cent), but also by NGOs (21 per cent), labour unions (14 per cent), and governmental as well as inter-governmental subsidies (8 per cent) (FWF Annual Report 2011, 2012).
Perception of China
According to the interviewee, ‘’China is the largest garment production country in the world, with somewhere around ten million people working in garment factories. The domestic market is immense as well, and domestic brands are often less interested in improving social compliance.’’ China is also the biggest supplier for FWF-affiliated companies and one of the priority countries of FWF next to Bangladesh, India, and Turkey. In December 2012, 42 FWF member corporations produced in approximately 850 Chinese factories and accounted for approximately 60 to 70 per cent of the total purchasing volume of all FWF-affiliated members
(Strategic Plan China, 2013). The country has been going through a tremendous development over the last years. ‘’Five to ten years ago, we could not imagine that audits in factories where possible without being presented with double bookkeeping. By now, the realization exists among Chinese suppliers that in order to become competitive in this market it is important to adjust to international standards. Factory owners and managers are becoming more open, and they realize is there that it is important to take care of their employees.’’ Although there is no uniform definition of living wages in China, the interviewee notes that a minimum wage has been introduced recently and increased rapidly, although this differs a lot per region and even between cities. As wages used to be very low in China, this is a good development, but also means that production costs are rising – with an important note that a distinction needs to be made between minimum wage and living wage. Difficulties arise in calculating living wages in China, as eating habits and consumer product prices vary in different provinces, cities, counties, towns, villages, and even city districts (China Country Study, 2012).
Although the interviewee notes that China heavily developed in terms of health & safety, the most persistent issues found during FWF audits in China over the last years are excessive overtime and payment of overtime wages according to local standards (China Country Study, 2012). Workers are normally paid piece rates and do not receive overtime premiums. Another common occupational health hazard is dust and noise. The average workday ranges from 10 to 12 hours, with some even reaching 15 to 17 hours a day. Workers usually receive one to four rest days per month depending on the order schedule in factories. Even though more employers are signing labour contracts with employees, contracts are not universal and workers are not always given a copy of the contract. A detailed job description, legal rights, and occupational hazards are generally not stipulated in contracts. Another common issue is that employees often have difficulties resigning, as more then 80 per cent of all factories impose restrictions on resignation (China Country Study, 2012). Workers sometimes have to give up the final month’s salary or bonus if they leave, and employers frequently refuse to pay workers’ wages or bonus around holidays to ensure their return afterwards. Employers used to prefer young female workers because they are seen as more obedient and stable, but also employing workers younger than 16 years old has been a widespread practice in the industry. Incidents of child labour increased since 2008 due to labour shortages (China Country Study, 2012). The concept of freedom of association and collective bargaining is not widely
system (Strategic Plan China, 2012). ‘’While some factories are unionized or have worker committees, in most cases these entities are not effective in negotiating primary issues such as wages, benefits, or working hours with management’’ (FWF Annual Report 2011, 2012).
Actions
The mission of FWF is to improve labour conditions for the hundreds of thousands of workers involved in making clothes for FWF member companies. The MSI verifies if brands respect human rights in their supply chains, checks working conditions in garment factories, provides worker complaint hotlines in fifteen production countries, and ensures cooperation between factories, brands and all other stakeholders (Fair Wear Foundation Annual Report 2011, 2012). The multi-stakeholder initiative (MSI) functions as a foundation for collaborative actions between various actors involved in the CSR discussion and the FWF board is often referred to as a leading example of MSI and social dialogue in this field (The Fear Wear Formula, 2010). Erica van Doorn, director of FWF: ‘’An MSI needs to be a neutral place, different from the CCC or unions. Their task is to challenge companies and point out abuses, [whereas] our task is to support code implementation and remediation of violations’’ (Sluiter, 2009). FWF also invested significant time and resources in relationship building with local partners in production countries, because the effectiveness and value of the FWF system ultimately relies on the capacity of local stakeholders to enforce local change.
Brands can also join the Fair Wear movement by becoming a member. This means that European corporations commit themselves to respect eight labour standards to be performed by its suppliers. FWF performs audits at factories producing for member corporations. ‘’ We verify 10 per cent of the members’ factories as a sample, but the brands themselves are responsible for monitoring their entire supply base. FWF helps to visualize supply chains, but is not responsible for passing through implications to develop CSR practices among suppliers, as brands need to take their responsibility and apply their influence.’’ By keeping track of the improvements made by members as well as sharing expertise, social dialogue, and
strengthening industrial relations, FWF increases the effectiveness of their efforts and is able to exert influence on its members. Yet, the interviewee believes a great deal is depending on the motivation of its members, for example by looking at its own purchasing practices.
Impact
contribution by initiating benchmarks for improved wages across the continent.’’ Many initiatives and organisations are cooperating with the same goal to improve working
conditions: ‘’Of course I have to mention CCC here, as well as SOMO with regard to research [on the topic]. Another Dutch initiative focused on consumers is Rank a Brand, yet their efforts are based on the analysis of corporate reports on sustainability and consumer awareness.’’ On an international scale, BSCI is mentioned as a leading business-driven initiative for brands committed to improving working conditions in factories and farms worldwide. BSCI unites more than 1000 companies around a development-oriented system applicable to all sectors and sourcing countries. Also the Ethical Trade Initiative (ETI) is named as being a very active alliance, as well as the American Fair Labor Association (FLA).
Although more brands connect with FWF, the organisation does not represent the largest corporations in the industry. Yet, this might not be a disadvantage, as FWF is able to increase scales in other ways. One would be to grow as an organisation with more member
corporations, and by applying structural adjustments such as trainings in factories to empower the capacity of these production sites. ‘’When factories are able to develop the structure themselves, this will inevitably have a more sustained long-term result. Second, it is important to further empower local NGOs in order to develop their network, capacity, and to gradually move the process to China. This means that we would need a larger presence in China, and actually everything needs to develop in terms of scale to increase our impact. The possibilities and potential is large in China, so when we could set this up with corporations as trading partners I think we can really make a difference.’’
4.2 Non-governmental organisations (NGO)
Various NGOs tackling different problems and objectives are actively involved with the activities of corporations operating in the Dutch garment industry. The following four actors are the most visible and actively involved organisations in this industry and therefore selected for in-depth analysis.
Clean Clothes Campaign
Since 1989, the Clean Clothes Campaign (CCC) has worked to help ensure that the fundamental rights of workers are respected. CCC is an alliance of organisations in 15
organisations and unions in garment-producing and consuming countries to identify local problems. Also, the organisation educates and mobilizes consumers, lobby companies, and governments, while offering direct solidarity support to workers as they fight for their rights and demand better working conditions. CCC is funded through Dutch government subsidies (40 per cent), European Union subsidies (33 per cent), private and semi-private funds (22 per cent), and other sources (6 per cent) (Clean Clothes Campaign Annual report 2011, 2012). Unfortunately no interview was conducted with CCC, but it was possible to answer the survey questions via e-mail. Further analysis of the organisation is based on books, websites, and reports published by, or referring to, CCC.
Perception of China
‘’The garment industry around the world is renowned for low wages, excessive overtime, and poor working conditions. In many cases, even the legal minimum wages set for workers in the apparel industry fail to provide enough income to maintain a family of four above the
nationally defined poverty level’’ (Asian Floor Wage Campaign, 2008). Six issues play an important role in the focus of CCC on the Asian garment industry, namely livable wages, working hours and overtime, the right of collective bargaining and working together, health &
safety, women and migrant rights, and international laws.
The global garment industry is characterized by a structural crisis of labour flexibility, meaning ‘’barriers to unionization, the structural power of capital and the stubborn adherence to export-led growth all combine to create a structural crisis of labour flexibility in the
countries at the producing end of the global garment and athletic footwear chain’’ (The structural crisis of labour flexibility, 2008). At the core of this structural crisis of labour flexibility lies a functional divide in the organisation of production and consumption between corporations and suppliers. Transnational outsourcing signals the increasing power that corporations have to organize and control labour on ever larger geographical scales while ignoring the social reproductive needs of labour. Outsourcing towards low-wage areas such as China gives corporations access to so-called dual labour markets, which are characterized by the increased division between core workers and marginalized or peripheral workers. In this type of dual labour market, a company seeks to capitalize the use value of a small number of highly qualified labourers who conceptualize, oversee, manage and reintegrate globally fragmented labourer processes, while the intensive aspects of production are performed by a
insecure, labour-intensive and low-paying jobs (The structural crisis of labour flexibility, 2008).
Actions
CCC focuses on four themes that are thought of having a major impact on the garment
production industry, namely codes of conduct, audits, MSIs, and purchasing practices (Sluiter, 2008; CCC Annual Report 2011, 2012). CCC takes three complementary paths to ensure coverage on multiple levels, namely through local, regional, and sector-wide approaches (The structural crisis of labor flexibility, 2008). One such initiative is the Asia Floor Wage (AFW) campaign, bringing together a wide range of labour organisations from various Asian
countries as well as other stakeholders to establish a floor on the race to the bottom and prevent wage competition between Asian garment-exporting countries (Merk, 2009).
Impact
According to Sluiter (2009), 80 per cent of complaints handled by FWF are solved, but disappointment grows as it becomes clear that CSR is not raising wages or preparing the ground for freedom of association. The purchasing practices of brands and retailers have been mentioned by many as one of the key obstructions, having a negative impact on the shop floor (Sluiter, 2009). The activities that focus on corporate accountability have contributed to widespread attention and a growing awareness of sweatshop problems in the global economy. The CCC campaigns and lobbies around urgent appeals also provided information regarding the specific problems and barriers workers face at workplaces around the world reinforcing organisational efforts on corporate accountability. ‘’The urgent appeals system has reinforced the capacity for worker organisations and NGOs to work on cases on a cross-border level, and a growing group of corporations have now publicly endorsed ethical standards’’ (The
structural crisis of labor flexibility, 2008).
‘’Despite progress in some areas, we can conclude that the systemic problems driving
substandard working conditions have yet not been successfully addressed, such as freedom of association and collective bargaining as well as the flexibilization of labour and national labour laws’’ (The structural crisis of labor flexibility, 2008). Based on numbers provided by CCC on their website, the AFW campaign also not (yet) resulted in wages that are in line with
live on. According to the CCC website and based on an average of five important production areas in China, the minimum wage is set at 176,60 Euro per month, or 46 per cent of a living wage, as the living wage is set at 376,07 Euro per month.
MADE-BY
MADE-BY is a European not-for-profit organisation with a mission to improve environmental and social conditions in the fashion industry. The organisation was launched by Solidaridad in 2004 in direct response to rising consumer concern in Europe over social and environmental issues in the fashion industry. Driven by a commitment to sustainable fashion, MADE-BY collaborates with fashion and textile brands who want to improve sustainability across their entire supply chain. According to its website, MADE-BY offers specialist support on specific sustainability projects and in communicating a brand’s progress in a transparent way that is easily understood by consumers, media, and the industry. The interviewee, principal consultant and responsible for all project-based support that MADE-BY supplies to brands, notes: ‘’Our goal is to make sustainable fashion common practice [MADE-BY slogan], which means that fashion made with respect for people and planet should be the standard and widely available to customers.’’ MADE-BY operates globally in partnership with Solidaridad, has offices in the Netherlands, Germany, and the United Kingdom, and currently works with a number of
multinationals that are guided through the process of sustainable product development. MADE-BY is funded through non-specified subsidies (42 per cent), license and project fees (53 per cent), and other sources (5 per cent) (MADE-BY Annual Report 2012, 2013).
.
Perception of China
‘’You’ll get a high-level story because we do not have teams operating on Chinese ground ourselves. Our work is done via partners in the chain. I believe Wet Processing is rapidly developing, especially with regard to the use of chemicals and water management.’’ The Chinese government also recognizes the importance to solve these problems, as costs will only rise over time. ‘’Yet, as there are so many links involved, it is hard to pinpoint and accurately respond to existing problems. We can do a lot more here. The same conclusions could be applied to the social level of China. What we hear is that more and more suppliers anticipate and understand the necessity of change, although they also request brands to take responsibility. A general feeling is that brands still want to change their orders last-minute and for the lowest price possible, while suppliers also have to become more clean and take better care of their personnel. This dual pressure is hard to accomplish.’’
Actions
MADE-BY focuses in broad terms on training/consultancy and transparency/reporting. The organisation believes that sharing best practices and encouraging progress is vital to success. According to its website, this is why MADE-BY encourages brands to embark on a journey towards improved standards rather than work towards a pass or fail assessment, as it takes time to improve entire production chains and build bridges between brands and suppliers. It is therefore important that this process is transparent and communicated clearly. ‘’We have developed scorecards to report on the actual progress of our partner brands on an annual basis. The information underlying these scorecards undergoes a very thorough verification process to ensure the credibility of our scorecards.’’ The organisation also tries to positively influence the mindset and choices of brands to make sustainable choices on social and environmental issues. ‘’Even small choices made here could have a potentially large – and either positive or negative – influence on the rest of the supply chain.’’
MADE-BY supplies brands with three levels of service. Its starting point is awareness and refers to benchmarks, studies, and information that is widely available on its website for everyone who likes to use it. ‘’The so-called level 1 service consists of all tools that we can offer to brands and includes strategies, trainings, tools, etcetera. The level 2 service is aimed to dive further into the supply chain of a brand and, depending on their demands, supports suppliers through trainings, tools, and guidance.’’ In order to successfully implement these elements, MADE-BY always seeks to work together with local partners who can bridge the language and cultural differences. ‘’This means we work together with Solidaridad, but are also working with, as well as looking for, other partners. Most importantly, these partners need to have a solid local network and possess in-depth knowledge with regard to
sustainability and the industry.’’ According to its website, MADE-BY also runs workshops to help designers and buyers within brands to source and plan in a socially and environmentally conscious way and tries to get its members enthusiastic to have their suppliers join for example the cluster programs of Solidaridad, through which particular problems are tackled together with other suppliers. This way, suppliers can stimulate and learn from each other. ‘’For us, it is important that we work together with other partner organisations as well, so brands are able to choose a project that is relevant to them, such as FWF or BSCI. It all
