Manufacturing governance: global norms and policy diffusion – the case of the Chinese apparel industry

Abstract

Transnational corporations (TNCs) have increasingly addressed labour conditions associated with their commercial suppliers in developing countries. For TNCs, however, weak rule of law, poor governance capacity, corruption and gaps in appropriate legislation in developing countries have made the management, enforcement and monitoring of local labour practices problematic, in the process exposing TNCs to reputational risks and potential commercial harm. TNCs have attempted to overcome these constraints by developing corporate responsibility (CR) strategies designed to set in place codes of ethical conduct in the treatment of worker rights while protecting shareholder interests and those of other stakeholders. As this paper explores, TNCs are pursuing the development of regulatory codes that are required to be adopted by their supply chain partners, in the process, setting standards that are diffused to local businesses and organizations and impacting the regulatory structures that govern local business behaviour. As this paper notes, however, this is not a one-way process of norm diffusion but rather a site of norm reciprocity, where local institutions and practices shape the regulatory outcomes that evolve. To this end, the paper examines the interactions between TNCs and other actors (international organizations, the state, civil society and private actors) in norm diffusion, attempting to map and ascertain how reciprocity in norm diffusion shapes norm and institutional outcomes in CR activities.

Keywords:

• transnational corporations
• labour
• governance
• civil society
• norms
• institutions

Notes

1. 1. These structures of meaning are defined as ‘common purposes and accounts that give direction and meaning to behaviour, and explain, justify, and legitimate behavioural codes’ (March and Olsen 2006, p. 3).

2. 2. During the 1978–1981 Democracy Wall movement, workers exercised their four big freedoms (free speech, air views fully, hold great debates, write big character posters) that were removed from the constitution in 1981 along with the right to strike in 1982. Independent worker organizations were banned following heavy worker organizing and protesting during the 1989 Democracy Movement (Sheehan 1998).

3. 3. Wu (2006) refers to cases filed through institutional means. This does not include protests, demonstrations and other forms of contentious activity.

4. 4. In particular, Reebok pushed their factories to exercise Article 9 of the Trade Union Law (revised in 2001) which stipulates that ‘[t]rade union committees at various levels shall be democratically elected at members “assemblies or members” congresses’ (Chan 2009, p. 296).