Business Interests in Post-Rana Plaza Bangladesh: Understanding Brands As CSR Actors

This paper uses the responses to the Rana Plaza disaster as an illustrative case to explore the role of brands vis-à-vis employers global supply chains. With globalisation and the reduction in trade barriers, corporations seeking to minimise production costs have sought out regimes with low costs and standards as their bases of production.  Global supply chains have also brought about a separation between those who produce goods and those who deliver them to the ultimate consumer.  Thus, the western brands have no legal responsibility for the labour standards of those who produce their goods. These brands have been subjected to public scrutiny in terms of from where they source and many have developed increasingly sophisticated models of Corporate Social Responsibility (CSR) as mechanisms of private governance to protect their reputations.

Employment relations interests and supply chain risk

Much of the literature in the area of employment relations in supply chains has focussed on brands placing downwards on suppliers and workers.  For example, the Labour Process Theory approach associated with the likes of Taylor et al (2013) primarily focuses on the ways in which supply chains are used as mechanisms of worker control to exert negative pressures in workers and assumes an alignment of employer and brand interests. We argue for an alternative approach which highlights the role of diverging interests between brands and employers within global supply chains. The role of employers compared to brands is one which is underdeveloped in the employment relations literature, particularly in the context of global supply chains. While there has been some discussion of the relationship between business interests and employment relations (Offe and Wiesenthal (1980) and Schmitter and Streeck (1981/1999)), a key feature of both these approaches is that they were written in response to the corporatist structures of much of continental Europe in the 1970s where the separation between brands and employers is significantly different to what is found in global supply chains. The CSR literature offers one explanation of why interests might diverge: the role of reputation and brand image as a driver of CSR for consumer facing organizations (den Hond & de Bakker, 2008). However, the CSR literature doesn’t explore in detail the employment relations implications of CSR. Reputational risk is an issue which has been prominent in the CSR/Business ethics literature but not so much in industrial relations (see Donaghey et al, 2014 for further discussion).  A key feature of this literature is that corporate brands can become exposed to negative publicity, particularly from groups like NGOs, student activists and the likes, over labour abuses in supplier firms.

Rana Plaza and brands

Brands which had been involved in moving production to the ineffective regulatory regime of Bangladesh, with its low cost labour, came under intense scrutiny over whether their sourcing models.  In response to the disaster, two initiatives were formed which placed brands, rather than employers, at the centre of the governance of factory health and safety in Bangladesh: the Accord and the Alliance.  In neither initiative are Bangladeshi employers the central driver.  In essence, the interests of capital in the supply chain are being driven by the powerful lead firms at the consumer end of the chain (see Gereffi et al, 2004 and Gereffi, 1994).  However, as outlined above, while there is often reference to lead firms driving down standards in supply chains, there is little written about why such firms may on occasion act in a more progressive manner. This paper argues that it is a mistake to conflate the interests of employers and brands in lead firms and that a more nuanced approach to their interests can lead to a better understanding of their respective behaviour.

 

Our empirical findings highlight that brands, conscious of their exposure to image risk, played a key role in developing the two responses.  As such, the brands were more exposed to action by consumer-based NGOs than employers within the Bangladeshi context. For brands, the Bangladeshi context delivers very cheap produce with a 3-5% labour cost as a percentage of FOB price of each piece of clothing.  However, in the emergence of the Accord, a coalition of brand and labour interests emerged against the interests of employers. Similarly, Bangladeshi employers were publicly critical of brands members of both the Alliance and more so the Accord for interfering against their interests.   As such, Brands in this context were primarily consumer-facing organisations whose primary interest was in satisfying the demands of maintaining brand image. The main risk which brands had to manage was the risk of NGOs targeting their image through campaigning. The paper then develops a discussion of the extent to which the case highlights the ways in which brands can play a positive role in global labour governance.

References

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Donaghey, J., Reinecke, J., Niforou, C., & Lawson, B. (2014). From employment relations to consumption relations: Balancing labor governance in global supply chains. Human Resource Management, 53(2), 229-252.

Gereffi, G. (1994). The organization of buyer-driven global commodity chains: how US retailers shape overseas production networks. Contributions in Economics and Economic History, 95-95.

Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of international political economy, 12(1), 78-104.

Offe, C., & Wiesenthal, H. (1980). Two logics of collective action: theoretical notes on social class and organizational form. Political power and social theory, 1(1), 67-115.

Schmitter, P. C., & Streeck, W. (1999). The organization of business interests: Studying the associative action of business in advanced industrial societies (No. 99/1). MPIfG discussion paper.

Taylor, P., Newsome, K., & Rainnie, A. (2013). ‘Putting Labour in its Place’: Global Value Chains and Labour Process Analysis. Competition & Change, 17(1), 1-5.