Ethical Supply Chains
Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain
In Distelhorst, Hainmueller, and Locke (2017), this study examines whether lean manufacturing enhances the social performance of manufacturers in emerging markets. The analysis focuses on Nike, Inc.’s intervention to promote lean manufacturing across its apparel supply chain in 11 developing countries. Using difference-in-differences estimates from a panel of over 300 factories, the study finds that lean adoption reduced noncompliance with labor standards, specifically related to wages and work hours, by 15 percentage points. However, no significant effect was observed on health and safety standards. This suggests that improvements stemmed from changes in labor relations rather than from better management systems. These findings demonstrate the potential for capability-building interventions to reduce social harm in global supply chains.
Enhancing Environmental Practices in Agriculture
In Thorlakson, Hainmueller, and Lambin (2018), the study evaluates whether company-led sustainability standards can improve environmental farm management practices. Focusing on a major food retailer’s supply chain in South Africa, the analysis shows that the company’s standard increased adoption of most environmental best practices among its fruit, vegetable, and flower growers. This result is supported by two identification strategies: a panel analysis of over 950 farm audits and a cross-sectional matching analysis using original survey data. In-depth interviews highlight that the program’s success stems from capacity-building audit visits by highly trained staff and the retailer’s close relationships with growers. Contrary to critiques that company-led initiatives are superficial, this research demonstrates their potential to drive meaningful environmental improvements in global agriculture.
Both studies underscore the power and limits of private governance mechanisms to address social and environmental challenges within global supply chains.
