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Corporate Social Responsibility in Global Value Chains: Where
Are We Now and Where Are We Going?
Peter Lund-Thomsen •Adam Lindgreen
Received: 28 June 2013 / Accepted: 2 July 2013 / Published online: 10 July 2013
Springer Science+Business Media Dordrecht 2013
Abstract We outline the drivers, main features, and
conceptual underpinnings of the compliance paradigm. We
then use a similar structure to investigate the drivers, main
features, and conceptual underpinnings of the cooperative
paradigm for working with CSR in global value chains. We
argue that the measures proposed in the new cooperation
paradigm are unlikely to alter power relationships in global
value chains and bring about sustained improvements in
workers’ conditions in developing country export indus-
tries. After that, we provide a critical appraisal of the
potential and limits of the cooperative paradigm, we
summarize our findings, and we outline avenues for
research: purchasing practices and labor standard non-
compliance, CSR capacity building among local suppliers,
and improved CSR monitoring by local resources in the
developing world.
Keywords Compliance paradigm Cooperative
paradigm Corporate social responsibility
Global value chains
Introduction
On Sept 11, 2012, more than 300 workers died in a fire in
the Ali garment factory in the commercial hub of Karachi,
Pakistan. Workers were burned alive, succumbed to smoke
inhalation, or died after trying to jump from the top floors
of the factory building to escape the fire. Many of the
windows and exit doors had been blocked by factory
managers, preventing workers from escaping the blaze
(Walsh and Greenhouse 2012). Shortly before the fire
broke out, the factory complex also had been certified with
a SA8000 label—a seal of legitimacy for factories that
comply with international labor standards (AFL-CIO
2013). In Nov 2012, another 112 workers died in a factory
fire in Dhaka, the capital of Bangladesh, when they found
themselves trapped on the upper floors of a factory and the
fire spread from the bottom to the top floors. This factory
supplied Wal-Mart and Sears, both of which (along with
other international retailers) claimed they had not been
aware that their products were being produced in the Dhaka
factory, despite the extensive social and environmental
auditing programs they had in place for their suppliers
(Yardley 2012).
Such recent events, including the massive collapse of
Bangladesh’s Rana Plaza factory in May 2013 that killed
more than 1,100 workers, have sparked renewed concerns
about the lack of national labor regulations and the inad-
equacy of existing private social auditing schemes that seek
to ensure a basic level of safety and decent work conditions
for laborers in export-oriented industries located in devel-
oping countries (Locke 2013). In this article, we seek to
advance the debate over private social auditing schemes in
global value chains. We trace the development of social
auditing back to the early 1990s, when international
retailers and supermarkets came under public scrutiny for
P. Lund-Thomsen
Center for Corporate Social Responsibility, Copenhagen
Business School, Porcelænshaven 18A, 2000 Frederiksberg,
Denmark
e-mail: plt.ikl@cbs.dk
A. Lindgreen (&)
Cardiff Business School, Cardiff University, Aberconway
Building, Colum Drive, Cardiff CF10 3EU, UK
e-mail: LindgreenA@cardiff.ac.uk
123
J Bus Ethics (2014) 123:11–22
DOI 10.1007/s10551-013-1796-x
their sourcing practices, after revelations that workers in
developing countries were laboring under highly exploit-
ative conditions. Private social auditing—also known as
the compliance model—emerged in response to these
criticisms. However, during the 2000s and early 2010s,
impact assessments of corporate codes of conducts have
shown that social auditing schemes (or corporate codes of
conduct) at best have brought about limited improvements
in workers’ conditions, especially in developing country
export industries. A broad-based coalition of leading
international retailers, private consultants, academics, and
nongovernmental organizations (NGOs) thus has started
advocating a new cooperative policy paradigm for insti-
tuting corporate social responsibility (CSR) in global value
chains.
For the purposes of this article, we use Blowfield and
Frynas’ (2005, p. 503) definition of CSR, ‘‘an umbrella
term for a variety of theories and practices all of which
recognize the following: (a) that companies have a
responsibility for their impact on society and the natural
environment, sometimes beyond legal compliance and the
liability of individuals; (b) that companies have a respon-
sibility for the behavior of others with whom they do
business (e.g., within supply chains); and (c) that business
needs to manage its relationship with wider society, whe-
ther for reasons of commercial viability or to add value to
society.’’
This article is not the first to review criticisms of com-
pliance-based models (e.g., AFL-CIO 2013; De Neve
2009; Locke et al. 2007,2009; Locke and Romis 2007;
Lund-Thomsen 2008; Ruwanpura and Wrigley 2011) but it
is the first, to the best of our knowledge, to assess critically
the potential of and limits to an alternative model, namely,
the cooperation paradigm for working with CSR in global
value chains. We argue that the measures proposed by this
paradigm are unlikely to alter power relationships in global
value chains fundamentally. Despite the good intentions of
its advocates, it cannot deliver sustained improvements in
working conditions across developing country export
industries, according to our analysis. Drawing on a critical
review of the cooperation paradigm, we conclude by sug-
gesting other avenues for research on CSR in global value
chains.
Compliance-Based Paradigm
Drivers
Since the fall of the Berlin Wall in 1989, capitalism has
dominated economic activity across the globe (Khara and
Lund-Thomsen 2012). In the 1980s and 1990s, privatiza-
tion of state-owned enterprises, deregulation of national
economies, and liberalization of international trade com-
bined to create an environment in which it was highly
attractive for multinational companies to conduct business
in developing countries (Utting 2005). The arrival of new
communication technologies such as the Internet and the
facsimile, reduced costs for international air travel, and
better transportation infrastructure also made it possible for
international retailers and supermarkets to source products
from countries in Asia, Africa, and Latin America (Haufler
2001). These countries promised abundant labor supplies,
necessary skills and manufacturing capabilities, and much
lower wages, such that international buyers reduced their
cost structures through extensive outsourcing (Tokatli et al.
2008).
However, the rise of global value chains, through which
Western retailers and supermarkets controlled vast net-
works of suppliers dispersed throughout the world, also
raised substantial concerns about the social and environ-
mental conditions in which the goods and services were
being manufactured (Seidman 2007). Campaigns initiated
by NGOs, trade unions, student organizations, and the
media highlighted the use of child and slave labor, as well
as the existence of sweatshops that produced items destined
for Western markets (Klein 2000). Initially, the campaigns
largely focused on reforming international policy actors,
such as the World Trade Organization (Locke 2013). As it
became increasingly clear that efforts to introduce uni-
versal minimum labor and environmental standards would
not succeed, due to resistance by developing country
governments (AFL-CIO 2013), labor rights and environ-
mental activists turned their attention to campaigning
against Western retailers and supermarkets (Bair and Pal-
paceur 2012). These campaigns prompted what we call the
‘‘compliance-based model’’ for working with CSR in glo-
bal value chains (Locke et al. 2009).
Main Features
The compliance-based model assumes that NGOs, trade
unions, and the media could bring sufficient pressure on
international supermarkets and retailers, whether with
naming and shaming campaigns in the public media or by
mobilizing consumer boycotts of corporations that failed to
ensure safe, hygienic work conditions in their supplier
factories in developing countries (Locke et al. 2009). Such
pressure then should force international companies to
develop corporate codes of conduct or ethical guidelines,
stipulating the social and environmental conditions in
which their products and services were to be produced in
developing countries. Compliance with these guidelines
could be checked through social and environmental audits
undertaken by first-, second-, or third-party monitors to
confirm compliance with international buyers’ codes of
12 P. Lund-Thomsen, A. Lindgreen
123
conduct (O’Rourke 2003,2006). In theory, factories that
displayed a high level of compliance with a buyer’s code of
conduct would be rewarded with longer term trading
relationships and more orders. Factories that did not
attempt to comply with codes of conduct instead would
have their orders reduced or even be completely excluded
from global supply chains (AFL-CIO 2013). Our emphasis
on ‘‘in theory’’ is deliberate. In practice, we find limited
evidence that international buyers systematically cut ties
with factories in response to their low social or environ-
mental compliance levels. Nor is there evidence to suggest
that suppliers that display high levels of social and envi-
ronmental compliance receive rewards in the form of more
orders (Ruwanpura and Wrigley 2011).
This description of the compliance-based model is ide-
alized; in reality, various formulations and implementa-
tions have emerged across different geographical contexts.
As Hughes et al. (2007) observe, some companies and
multistakeholder initiatives have focused less strictly on
auditing than others. For example, the UK-based ethical
trading initiative and some of its NGO and company
members adopt more aspirational, developmentally ori-
ented approaches, with a focus on long-term improvements
in labor conditions in global value chains. Multistakeholder
initiatives and corporations in the United States instead
tend to adopt a more short-term, compliance-oriented
approach. Nevertheless, in both the United States and
Europe, widespread agreement admits that the compliance-
based model has brought about limited improvements in
work conditions in developing country export industries
(AFL-CIO 2013; Locke 2013; Locke et al. 2007,2009;
Lund-Thomsen et al. 2012; Ruwanpura 2012).
Throughout the 2000s and into the early 2010s, impact
assessment studies showed that codes of conduct improved
tangible work conditions, such as the payment of minimum
wages, occupational health and safety, and the reduction of
overtime work (Barrientos and Smith 2007; Egels-Zande
´n,
forthcoming; ETI 2006). Although not directly framed as a
impact assessment study, a recent article by Raj-Reichert
(2013) indicates that it may not be clear whether measures
used in the implementation of corporate codes of conduct
(such as indicators, benchmarks, and audits) have any
effect on the health and safety of workers.
But codes of conduct had little effect on less tangible
issues, such as freedom of association and the right to
collective bargaining (Barrientos and Smith 2007; McIn-
tyre 2008; Oxfam 2013). In some cases, it was unclear
whether improvements in work conditions resulted from
code implementations or other factors, such as a predis-
position among supplier managers to treat the workforce
well, or broader environmental factors, such as changes in
national legislation (Nelson et al. 2007). Such studies also
noted inherent problems with this compliance model. First,
discrepancies often arose between the commercial prac-
tices of international buyers (e.g., demand for lower prices,
seasonal products, completion of orders within a short time
span) and their insistence on compliance with their codes
of conduct (Barrientos 2013). To meet price points, sup-
pliers could not pay their workers the minimum wage; to
address seasonal demand, they could not provide stable
employment year round; and they often were compelled to
make workers engage in overtime work to meet last-minute
orders (or changes) (Oxfam 2004; Ruwanpura and Wrigley
2011; Tokatli et al. 2008). The incoherence between
international buyers’ purchasing practices and their codes
of conduct even became institutionalized in their separate
purchasing and CSR departments (Harney 2008). These
distinct departments would visit supplier factories at dif-
ferent times and make contradictory demands, such that the
purchasing department might require price cuts a week
before the CSR compliance staff insisted on higher wages
for workers in supplier factories (Khara and Lund-Thom-
sen 2012; Ruwanpura and Wrigley 2011).
Second, this lack of consistency across buyers’ pur-
chasing and social auditing practices pushed some local
suppliers to engage in auditing fraud—a practice that
became particularly widespread in China (Egels-Zande
´n,
forthcoming; Oxfam 2013). These suppliers trained work-
ers to provide ‘‘correct’’ answers to auditors and used tai-
lored computer programs to falsify worker records. Thus,
they met the commercial requirements of international
buyers while maintaining the appearance of compliance
with corporate codes of conduct (Harney 2008). When
third-party monitors discovered such auditing fraud, they
often lacked sufficient incentives to ‘‘rock the boat’’ by
demanding significant changes in work conditions, from
either buyers or suppliers. These monitors usually were
commercial auditing firms, so their continued business
depended on maintaining good relations with either buyers
or suppliers—that is, the clients that paid for the audits to
take place. Thus, doubts arose regarding whether the rarely
publicized third-party audits could really generate credible
evidence about work conditions inside supplier factories
(O’Rourke 2003,2006). Even more recently, dangerous
factory conditions that have caused the deaths of hundreds
or thousands of garment workers raised serious concerns
about the validity of social auditing, considering that the
Karachi-based factory and some of the buildings in Rana
Plaza had been certified as compliant with international
standards shortly before the deadly incidents (AFL-CIO
2013; Clean Clothes Campaign/SOMO 2013).
Conceptual Underpinnings
Many assumptions inherent to the compliance paradigm are
reminiscent of those in the global value chain framework. For
Corporate Social Responsibility in Global Value Chains 13
123
example, Gereffi (1994) proposes that ‘‘lead firms,’’ such as
European and North American supermarkets and retailers,
drive global value chains. Their role is to ‘‘govern’’ the global
value chain,by determining what kinds of products/services to
produce, in which quantity, when, where, and at what price,
using dispersed networks of suppliers across the developing
world. According to this perspective, suppliers are generally
‘‘powerless,’’ with few or limited options for influencing the
governance of the chain by the lead firms. Gereffi et al. (2005)
add nuance to this view by proposing a theory to explain the
nature of value chain relationships among international buyers
and their first-tier suppliers in the developing world. These
relationships can range from arm’s-length, market-based
relationships (buyers have full control over suppliers) to
hierarchies (buyers own suppliers). In between, modular or
relational value chains might be characterized by more equal
power relationships between buyers and suppliers.
The compliance-based paradigm similarly assumed that
lead firms had the power to dictate and control how products
were produced by supplier factories in the developing world.
This assumption further indicated that international super-
markets and retailers could control both working and envi-
ronmental conditions in export-oriented industries. Although
this compliance-based paradigm avoided the assumption that
all lead firms owned their suppliers (hierarchy), power rela-
tionships in the chain were regarded as highly unequal, with
first-tier suppliers held ‘‘captive’’ to the social and environ-
mental requirements of buyers.
Gereffi’s (1994) original conceptualization of global
value chain analysis mentions the role of institutional
contexts, as part of the global value chain framework.
However, this element remained generally underdeveloped
until relatively recently, when authors began elaborating on
the institutional part of the framework (Neilson and Prit-
chard 2009,2010). In this view, the functioning of global
value chains can be understood only in relation to vertical
and horizontal dimensions. The vertical dimension refers to
the question of who determines the kinds of products that
are to be purchased, when, and at what price in global value
chains (Gibbon and Ponte 2005). The horizontal dimension
instead entails local socio-economic contexts of work and
employment affected by global value chains. These local
institutional contexts include both formal rules of the
game, such as economic, social, and environmental laws,
and the enforcement agencies charged with implementing
such laws (De Neve, forthcoming).
Institutions also refer to the informal rules of the game
or norms and values that various actors hold in relation to
what constitutes global value governance (Neilson and
Pritchard 2010). For example, there may be sharply con-
trasting ideas about ‘‘local’’ and ‘‘global’’ perceptions of
whether child labor should be allowed. International
NGOs, trade unions, supermarkets, and retailers often insist
on prohibitions of child labor; domestic producers may
take the view that child labor constitutes a form of job
training for children that will enable them to earn a live-
lihood, particularly if formal schooling options are either
nonexistent or of very poor quality (Lund-Thomsen 2008).
As Neilson and Pritchard (2009) argue, the interaction of
global value chains and local institutional contexts thus
creates struggles over which norms and values should
guide export-oriented production in developing countries.
The compliance-based paradigm focused primarily on
vertical relations (i.e., trading relationship between inter-
national buyers and their suppliers). It has not paid much
explicit attention to how horizontal relations (i.e., local
socio-economic and socio-cultural contexts of employment
in which global value chains are embedded) affect social
and environmental compliance levels in developing coun-
try export industries. Drawing on Hess (2004), we assert
that the compliance-based paradigm tends to ignore the
societal embeddedness of global value chain participants
(i.e., actors’ origins and the influences on their actions
without or outside of their societies of origin), as well as
their territorial embeddedness (i.e., extent to which indi-
vidual actors are anchored in places that facilitate or con-
strain their actions). Instead, the main focus has been on
how the value chain could improve social and environ-
mental conditions in developing country export industries.
Implicitly at least, the compliance-based approach seems to
have been developed as a response to territorial embedd-
edness. For example, NGOs and trade unions started
campaigning against international lead firms after they
realized that many developing country governments were
failing to safeguard workers’ rights and control environ-
mental pollution levels (Locke 2013). Thus, they turned to
multinational companies to control the social and envi-
ronmental side effects of outsourcing production to sup-
pliers in developing countries (AFL-CIO 2013). At the
same time, there was perhaps an implicit recognition of the
need to ensure the societal embeddedness of corporate
codes of conduct. Multinational companies designed codes
of conduct to ensure that local suppliers abided by their
national laws, such as those dictating how old a person had
to be before she or he could be legally employed in a
company. These codes of conduct deferred to national
laws, even if they also stipulated tougher requirements than
those ensconced in national laws (Kolk and Tulder 2004).
Cooperation Paradigm
Drivers
In light of these limitations of the compliance-based par-
adigm, a broad-based coalition of actors began pushing for
14 P. Lund-Thomsen, A. Lindgreen
123
the adoption of what we call a more cooperative policy
paradigm to working with CSR in global value chains
(Lund-Thomsen et al. 2012). First, academic researchers
have actively cooperated with large multinational compa-
nies to research the limitations of the compliance-based
paradigm and document alternative ways that international
brands might cooperate with suppliers to achieve sustained
improvements in work conditions (Locke 2013; Locke
et al. 2007,2009; Locke and Romis 2007).
Second, multistakeholder initiatives, such as the UK
Ethical Trading Initiative (ETI), Dutch Sustainable Trade
Initiative, Danish Ethical Trade Initiative, and Norwegian
Sustainable Trade Initiative cooperate across members to
find ‘‘development-oriented’’ approaches for improving
ethical trade (DIEH 2013). To some extent, their work has
been informed by results from prior impact studies of codes
of conduct (e.g., ETI 2006). These initiatives continue
‘‘learning by doing,’’ developing and trying new approa-
ches through projects and working groups, with the aim of
establishing best practices for ethical trade. The constant
search for new and improved methods of improving CSR
in global value chains thus is compatible with the organi-
zational mandates of these initiatives. Various NGOs
similarly have participated in broad-based coalitions of
actors, pushing for a more cooperative approach to working
with CSR in global value chains (IDH 2009). Oxfam-UK
asserts that business can serve an important function for
poverty reduction in developing countries (Clay 2005), so
it supports the development of various reports and briefings
that document the impact of businesses on society but also
how companies—and multinationals in particular—con-
tribute to improving these impacts (Oxfam 2013). In 2010,
Oxfam-UK published a briefing, ‘‘Better Jobs in Better
Supply Chains,’’ to document how improved labor stan-
dards in developing country factories might help boost
sales and improve staff recruitment and retention.
Third, private-sector consultants have pioneered a new,
cooperation-based approach to CSR in global value chains.
For example, the London-based consultancy IMPACTT
describes itself as ‘‘leading consultancy company in the
area of ethical trade, human rights, labor rights, and
international development’’ (IMPACTT 2013). In its 2011
report, it detailed how international brands and supermar-
kets have tried to persuade and instruct suppliers to comply
with national labor laws and international labor standards
but also why their efforts have made little difference for the
conditions of workers at the bottom of global value chains.
This report contains several case studies that highlight
ways for international brands, suppliers, and workers to
identify the ‘‘sweet spot’’ at which their interests intersect.
Thus, international brands and suppliers could compete in
‘‘an increasingly uncertain world by harnessing the power
of the workforces to produce better products more
efficiently’’ (IMPACTT 2011). In short, various actors—
including international buyers, academics with an interest
in CSR in global value chains, consultancy companies, and
NGOs—have pushed for the adoption of a new paradigm to
working with CSR in global value chains.
Main Features
In a somewhat stylized fashion, we can identify the main
characteristics of the new cooperative paradigm to working
with CSR in global value chains. First, international buyers
need to review their purchasing practices and provide
better prices to their suppliers so that the latter can afford to
pay workers higher wages. These buyers also might
introduce better production planning, to provide business to
suppliers throughout the year and avoid last-minute orders
(Barrientos 2013). Maintaining long-term trading rela-
tionships with suppliers, instead of shopping around for the
cheapest deal, thus becomes crucial for securing better
work conditions at the bottom of global value chains
(Oxfam 2010). In addition, coordination between pur-
chasing and CSR departments could enhance the consis-
tency of the demands that these buyers place on suppliers
(IDH 2009).
Second, instead of expecting suppliers to shoulder all of
the costs of compliance with codes of conduct, buyers
might invest in capacity development, for both local sup-
plier managers and workers employed in the factories
(Oxfam 2010). Local factory managers should receive
training in human resources management, product quality,
and production processes. Instead of seeing workers as a
costly input factor, local factory managers need to be
trained to understand them as an important company
resource (Nike 2010). Improving worker–management
relations also could help reduce the high turnover rates at
supplier factories (IMPACTT 2011). By involving workers
more actively in decision-making processes while pro-
moting teamwork and fault-finding on factory floors, such
tactics could increase productivity (Locke et al. 2009).
Moreover, some recommendations include offering work-
ers training in their basic rights and responsibilities in the
workplace. Then traditional code implementation and
auditing could provide top–down pressures on manufac-
turers to improve conditions, while workers aware of their
rights apply a simultaneous bottom–up pressure to receive
safe working conditions (Lund-Thomsen and Coe 2013).
However, a prerequisite for these initiatives was closer
cooperation and frequent interactions between the sourcing
and CSR personnel of international brands and local fac-
tory management. Without such interactions, it would not
be possible to secure the simultaneous objectives of
enhancing factory competitiveness and work conditions
(Locke and Romis 2007).
Corporate Social Responsibility in Global Value Chains 15
123
Third, considering the poor track record of mainstream
social auditing methods, a new range of policy measures
has aimed to transform standard-setting and auditing in
global value chains. With participatory social auditing,
auditors would need to be knowledgeable of the local
contexts and able communicate in the native languages of
workers (Auret and Barrientos 2004). These auditors then
could move beyond a tick-box approach and short fly in–fly
out visits, which rarely revealed fundamental violations.
Instead, they would have opportunities to be creative, such
as leaving their own contact information with workers, who
then could call after the visit if they wanted to convey
something outside the usual working hours (Harney 2008).
Some companies started experimenting with off-site visits
to interview workers in their homes, where they might feel
less pressured to provide particular answers to an auditor’s
questions. Moreover, cooperation between corporations
and local resources, such as NGOs and trade unions, would
enable closer, more independent, year-round monitoring of
work conditions (Oxfam 2010). Working with such local
resources provided a means to discover unauthorized out-
sourcing of production to local subcontractors, which
otherwise would be difficult to discover through normal
snapshot audits.
Conceptual Underpinnings
In conceptual terms, the shift to the cooperation-based
paradigm marks a change in the nature of value chain
governance between international buyers and first-tier
suppliers. With its emphasis on long-term, trust-based
relationships and close collaboration between international
buyers and suppliers, this paradigm mirrors relational value
chains, which are characterized by high degrees of mutual
dependency in the design, production, and marketing of
products/services between buyers and suppliers. Similarly,
the cooperation paradigm envisages close collaboration by
buyers and first-tier suppliers related to issues such as the
introduction of new production techniques or the reorga-
nization of work processes on the factory floor.
The original global value chain approach considered
how local suppliers could improve their position in global
value chains, with the aim of extracting greater financial
benefits from their participation in the global economy
(Schmitz 1999,2006). The global value chain approach
assumed local suppliers could learn from their interactions
with global buyers, such as how to improve their products
(product upgrading) and production processes (process
upgrading). In addition, by learning production skills dur-
ing interactions with global buyers in one industry, sup-
pliers might transfer these skills and become more
competitive in other industries (intersectoral upgrading)
(Humphrey and Schmitz 2002; Schmitz and Nadvi 1999).
Yet for suppliers to move up the value chain, they also
would have to adopt higher level functions, such as
designing and branding their own products (functional
upgrading). A consensus emerged that lead firms likely
would bar suppliers’ functional upgrading, because this
step would encroach on their own core competence and
turn the suppliers into competitors or new lead firms
(Schmitz 2006). The compliance-based paradigm basically
ignored the potential benefits that developing country
suppliers might obtain from engaging in social and envi-
ronmental upgrades to their factories. Instead, they became
the ‘‘culprits’’ who failed to address social and environ-
mental concerns, whereas more powerful, international
buyers would develop codes of conduct and enforce them
rigorously.
In contrast, the cooperation-based paradigm places more
emphasis on creating opportunities for product and process
upgrading. It emphasizes the business case for social
compliance, such that building suppliers’ human resources
management and production organization capabilities
enhance worker productivity and ensure consistent manu-
facturing of high quality products (IMPACTT 2011). Such
cooperation also implies a commitment to social upgrad-
ing, including increasing the quality and conditions of work
by training of workers about their legal rights and the
relevant codes of conduct (Lund-Thomsen and Coe 2013).
This stylized account of the cooperation paradigm does not
place much emphasis on local institutional contexts, par-
ticularly the territorial embeddedness of global value
chains, but some early signs suggest that this issue is
gaining in importance. For example, the ETI (2012)
recently announced that its future work would focus on a
limited number of value chains (food and farming, hard
goods and household, and apparel/textiles), instead of
concentrating on thematic issues such as child labor or
homework per se (though work continues on these issues).
Therefore, the ETI can concentrate on mapping workers’
rights violations in specific value chains that entail distinct
societal contexts (e.g., southern India). According to this
initiative (ETI 2012, p. 3), ‘‘Addressing workers’ issues in
the context in which they occur will enable us to develop
models for wider change that are rooted in reality.’’
This new approach seems to fit well with insights gained
in research highlighting the importance of a good under-
standing of how CSR becomes embedded in national
institutional contexts, in both developed and developing
countries (Jamali and Neville 2011; Matten and Moon
2008). Institutional perspectives on CSR focus on
explaining how and why CSR differs across national or
institutional contexts (Brammer et al. 2012; Gond et al.
2011), as well as the potential role of CSR as a global
homogenizing force. In this sense, Western conceptions of
CSR might spread across the globe as various organizations
16 P. Lund-Thomsen, A. Lindgreen
123
(and private companies in particular) seek to achieve
legitimacy with external stakeholders and respond to
mimetic, coercive, and normative pressures (Jamali and
Neville 2011). This search for legitimacy informs the new
cooperation-based paradigm, with its focus on international
buyers cooperating with local resources, such as NGOs and
trade unions that theoretically can provide independent,
year-round monitoring of work and environmental condi-
tions at local supplier factory sites. These local resources
should provide insights into local work conditions at the
bottom of global value chains. From this perspective, the
cooperation-based paradigm encompasses a global pro-
duction networks approach (Henderson et al. 2002). In the
global production networks approach, the starting point is
the network metaphor, which appears better able to capture
global economic organizations than a chain metaphor (Coe
et al. 2008).
In practice, lead firms cannot govern their value chains
completely. Instead, the governance of global production
networks is ‘‘spread out,’’ and diverse actors, such as
international organizations, national governments, NGOs,
trade unions, business associations, workers, and commu-
nities, help determine which products to produce, when,
where, in what quantities, and at what price (Henderson
et al. 2002). The emphasis in the global production net-
works approach includes all relevant actors in the pro-
duction network, not just the direct relationship between
international buyers and first-tier suppliers, to understand
how such networks are governed (Coe et al. 2004). This
line of thinking is reflected in the cooperation-based par-
adigm, in which the effective monitoring of work and
environmental conditions at supplier factories cannot be
limited to lead firms and suppliers. A wider set of actors is
necessary to govern the value chain effectively, including
local, place-based NGOs, and trade unions with the nec-
essary expertise to assist lead firms in monitoring work
conditions in export-oriented industries in developing
countries.
The New Cooperation Paradigm: A Critical Assessment
Can this new paradigm for CSR in global value chains
deliver sustained improvements in workers’ conditions, as
its many advocates hope and believe? We briefly examine
some of the main tensions that exist for the new paradigm.
First, just how widespread is the new cooperation-based
paradigm for working with CSR in global value chains? In
other words, is this new paradigm being taken up by
international retailers and supermarkets, or is it mostly an
ideal, preached rather than practiced in global value
chains? Despite the dearth of research into the actual
practices of the new cooperation paradigm, there are
several reasons to question just how widespread it is at the
moment. Locke et al. (2009) document the cooperation
between Nike and some of its suppliers in Central America
and Asia, which brought about improvements in workers’
conditions. Barrientos (2013) and Lund-Thomsen and Coe
(2013) also detail how international brands, NGOs, and
trade unions have sought to collaborate on issues such as
improving purchasing practices and year-round capacity
building. However, Barrientos (2013) also notes that
international buyers resist the adoption of responsible
practices, and Lund-Thomsen and Coe (2013) describe
how the global financial crisis and stakeholder politics
partly undermined Nike’s attempts to link better supplier
incentives, factory management training, and awareness-
raising activities among the workers employed at a Paki-
stani supplier. These important examples suggest how the
new cooperation paradigm may work in practice, but we
find little evidence to suggest that international brands have
fundamentally revised their purchasing practices, engaged
in long-term capacity building with suppliers, or cooper-
ated with local NGOs and trade unions to train workers and
undertake constant factory monitoring. Both Barrientos
(2013) and Lund-Thomsen and Coe (2013) instead offer
examples of how the measures advocated by the coopera-
tion paradigm might fail. Moreover, Locke et al.’s (2009)
examples do not necessarily reflect the general approach
Nike takes to working with its suppliers. The rhetoric
surrounding cooperation sounds valid, but it is difficult to
imagine how vast corporations such as Nike can realisti-
cally engage in close cooperation with more than 800 first-
tier suppliers. Collaboration might be feasible with a few
selected suppliers, engaged in pilot projects; it appears
nearly impossible to replicate such close cooperation
across hundreds of suppliers, considering just the logistical
challenges. Instead, traditional forms of compliance mon-
itoring likely will continue to offer the dominant approach
to working with CSR in global value chains, supplemented
with occasional pilot projects that seek to develop func-
tional alternatives.
Second, the cooperation-based paradigm emphasizes
long-term relationships and investments in capacity build-
ing, but few ‘‘Southern’’ voices have taken part in defining
this new paradigm. Rather, it appears advocated mainly by
international brands, Northern-based consultants, academ-
ics, and NGOs. The voices of developing country suppliers,
workers, and communities have remained largely silent.
This is hardly a new critique of CSR approaches that
originate in Europe and North America (Blowfield and
Frynas 2005; Prieto-Carron et al. 2006), but the absence of
Southern voices in advocating this change to working with
CSR in global value chains can reinforce existing
inequalities in global value chain governance. The new
cooperation paradigm thus appears to do little to change the
Corporate Social Responsibility in Global Value Chains 17
123
basic status quo, in which only certain actors (i.e., inter-
national retailers) dictate the terms of their trade with local
suppliers. From this perspective, the cooperation paradigm
can do little to alter suppliers’ perceptions that CSR in
global value chains is a form of economic and cultural
imperialism (Khan and Lund-Thomsen 2011). In economic
terms, some actors demand that workers be hired as per-
manent, full-time employees and paid compensation after
layoffs, but if they cannot guarantee sufficient work
throughout the year—or at least not in the same quantity—
it becomes financially impossible for local suppliers to
keep a permanent workforce employed at factories (Lund-
Thomsen 2008). These same corporations often insist that
local suppliers pay the costs associated with upgrading
factories; that is, they demand improvements but are not
willing to share the costs of achieving them (Ruwanpura
and Wrigley 2011). In cultural terms, the norms and values
underlying CSR rhetoric often represent impositions on
developing country suppliers that operate in diverse con-
texts (Nadvi 2008), distinct from those that determine the
norms of Western Europe or North America. For example,
whereas child labor is a social evil in Western views of the
world, it offers a means of informal education and family
support in some areas of South Asia (Khan 2007). This
‘‘education’’ not only helps support the family but also
enables children to learn a profession that will sustain them
later in life. In contexts characterized by desperate poverty
and unavailable schooling, child labor may be part of
broader livelihood strategies, used to stay alive (Khan
2007; Ruwanpura and Roncolata 2006).
Another question pertains to whether the cooperation-
based approach even is feasible in the context of wider
capitalist competition. For example, international con-
sumers seemingly dictate the price and quality require-
ments for particular goods and services (Gibbon and Ponte
2005). International corporations respond to these con-
sumer demands by designing products with matching price
and quality ranges. Then they place orders reflecting the
quantity, quality, and price ranges demanded by consum-
ers, across vast networks of suppliers in developing coun-
tries that engage in fierce competition to attract and sustain
this business (Gereffi 1994). In response to supply chain
pressures, local suppliers structure networks of contractors,
contractors, and workers to obtain the required inputs at the
lowest possible price. In this competitive context, there is
very little scope for cooperation, beyond the limits set by
international consumer markets that demand simulta-
neously constant price decreases, shorter lead times, and
maintenance of product quality (Khara and Lund-Thomsen
2012; Tokatli et al. 2008). Even were improved coopera-
tion between buyers and suppliers to arise, nothing in the
new paradigm ensures a revised sharing of the benefits
across the value chain participants. As Kaplinsky (2000)
illustrates, securing effective returns on value chain par-
ticipation depends on the kinds of rents that value chain
participants can obtain. Economic rents may be attained
through differential productivity (among enterprises or
workers) and the erection of barriers to entry (Kaplinsky
2005). To the extent that international buyers still com-
mand the most rents in the value chain, through their
control of the design, branding, market, and distribution of
consumer products and services, shifting to a cooperation
paradigm is unlikely to increase supplier incomes sub-
stantially enough to sustain improvements in work condi-
tions and living standards. That is, the cooperation
paradigm does not fundamentally challenge the inequality
inherent in global value chains. Drawing on Lund-Thom-
sen (2008), if a local worker is paid 60 cents for stitching a
football in Pakistan, the management of the local supplier
might be paid 5 dollars for selling that ball to an interna-
tional brand, before it is sold in an outlet store in Europe or
North America at a price of US$100. In other words,
international retailers continue to capture most of the value
from global value chain participation; suppliers and
workers in developing countries obtain marginal shares of
the overall value generated. Nor does the new paradigm do
anything to alter the basic system of ‘‘sweating’’ (Miller
2012). Garment manufacturing had already taken on a
pyramid shape in the early twentieth century in the United
States and Germany: At the top sat so-called jobbers that
had developed their own designs (and sometimes manu-
facturing capabilities). They increasingly used production
mediators (‘‘sweaters’’) that could ‘‘extract[] the most
labour…at the lowest possible price from manufacturing
units with the most vulnerable workers that could be
found’’ (Miller 2012, p. 1). In reference to Blackburn
(2007), Miller argues that this system works in contexts
marked by an oversupply of labor and no union organiza-
tion, varying or seasonal demand, and a lack of proper
management. The discourse in the cooperation paradigm
aims to address root causes of poor working conditions at
the bottom of global value chains, but it does little, if
anything, to change the pyramid-shaped, unequal,
exploitative (global) production system. Perhaps the
strongest critique of the cooperation paradigm is that it fails
to grant workers sufficient agency in governing the global
value chains. An emerging body of literature notes local
workers in export-oriented industries, who prefer not to
work in CSR-compliant factories (De Neve 2009; Lund-
Thomsen 2013). The main point is to show the diversity of
lived experiences among workers engaged in export-ori-
ented manufacturing, particularly in South Asia. Workers
are not a uniform input factor; they are living, sentient
beings with great diversity in their sex, age, family, eco-
nomic, cultural, and caste backgrounds. Such diversity
influences their preferences to opt into or out of different
18 P. Lund-Thomsen, A. Lindgreen
123
work practices and places. Carswell and De Neve (2013)
demonstrate that young, unmarried, female migrant work-
ers appear content working in formalized, export-oriented
factories in Tiruppur, Tamil Nadu, India, because this type
of work helps them maximize their earnings and savings,
which will help them later in their lives. Once these
workers marry, they often are expected to adopt primary
child rearing and domestic household responsibilities, such
that full-time factory-based work in the city may no longer
be feasible for them. Instead, home-based work likely
offers a more appealing option, enabling them to earn some
income, even if relatively meager, while balancing their
domestic duties with income-generating means (see also
Lund-Thomsen 2013).
Conclusions
With this article, we have argued that leading retailers,
consultants, NGOs, and academics recognize the limita-
tions of traditional compliance-based models of working
with CSR in global value chains. With this model, inter-
national NGOs, trade unions, student organizations, and the
media pressured multinational companies to adopt volun-
tary social and environmental guidelines for the perfor-
mance of their supplier factories in developing countries. In
theory (but rarely in practice), this approach would reward
CSR-compliant factories and punish those that did not
comply. In practice, the compliance model induced rela-
tively modest improvements in work conditions for labor-
ers in export-oriented industries in developing countries.
Therefore, a coalition of academics, consultants, leading
retailers, and NGOs has advocated a new, cooperation-
based paradigm to rectify the shortcomings of the com-
pliance-based paradigm. In the new paradigm, international
buyers revise their purchasing practices, help build the
capacity of local factory management and workers, and
cooperate with local resources (e.g., NGOs, trade unions)
to improve factory monitoring and thus labor standard
compliance.
By critically assessing the potential and limitations of
this new paradigm, we argue that it is unlikely to alter the
power relations of international buyers, suppliers, and
workers in global value chains. In particular, the new
paradigm seems unable to secure significantly higher
incomes or improved conditions for workers, considering
the constraints imposed by worldwide competition among
suppliers. International markets instead appear likely to
remain volatile, ever-changing, and demanding, such that
suppliers realistically cannot undertake significant
upgrades in the conditions of employment for workers
without the threat that corporations will relocate their
production to other capable, cheaper (and less compliant)
suppliers elsewhere in the developing world. Furthermore,
the verdict is still out, regarding whether this cooperative
paradigm will receive wider recognition and uptake among
international brands. Several themes could guide important
investigations into the effects of this new paradigm,
including (a) the link between buyer purchasing practices
and labor standard (non)compliance in developing country
factories, (b) efforts to develop the capacity of local sup-
plier management in the area of human resources man-
agement, and (c) cooperation between international buyers
and local resources.
Purchasing Practices and Labor Standard
Noncompliance
Multiple NGO reports and academic articles have pointed
to the potentially adverse consequences of corporate pur-
chasing practices on labor standard compliance in devel-
oping country factories (Barrientos and Smith 2007; Oxfam
2004; Traidcraft 2006), yet the topic lacks sufficient
insights from CSR research in global value chains (cf.
Barrientos 2013). Further investigations of the new CSR
paradigm should fill this gap by linking the hitherto
unconnected literature streams related to supply chain/
operations management and labor standards/codes of con-
duct in global value chains. In the former, the focus has
been mainly on how to optimize processes for sourcing
products from domestic or overseas suppliers and pay the
lowest possible price for the best possible product, deliv-
ered in the shortest possible time frame. Labor research in
global value chains instead has addressed how workers
(a) benefit from participation in global value chains, (b) are
affected by corporations’ ethical guidelines and economic
upgrading or downgrading processes by local supplier
firms, and (c) actively exert their agency to influence their
work conditions (Barrientos et al. 2011; Nadvi 2004; Ri-
isgaard 2009; Riisgaard and Hammer 2011). Investigations
of the effects of the new cooperative paradigm on CSR in
global value chains thus could help build a bridge between
operations and supply chain management studies and
research into labor standards in global value chains by
theorizing and empirically investigating how corporate
purchasing practices affect labor standard compliance
levels, whether positively or negatively, in developing
country export industries.
Another research focus could detail the performance
systems in which purchasing managers operate, to deter-
mine how different policies reward and/or punish decision
making that integrates economic, social, and environmental
criteria in purchasing practices. Such investigations would
require more in-depth analyses or interviews with pur-
chasing managers and personnel regarding pricing, lead
times, product quality, the use of particular production
Corporate Social Responsibility in Global Value Chains 19
123
technologies, and management systems. An important
theme in this direction might consider how purchasing
managers deal with the multiple sustainability dilemmas
they face when executing purchasing/sourcing/CSR activ-
ities. Researchers would need to ask when and why
‘‘classical’’ purchasing practices seem compatible or con-
flict with social and environmental sustainability criteria.
Research attention also might address resolutions to the
sustainability dilemma, including the strategies that pur-
chasing managers already employ when they face multiple
requirements. For example, what decision-making pro-
cesses do managers adopt when they must choose between
responding to price pressures by buyers or devoting
resources to improving their social/environmental perfor-
mance? On the other side, how do buyers decide whether to
shop around for the cheapest possible bargain or else
engage in long-term cooperation with their suppliers?
CSR Capacity Building Among Local Suppliers
Research into the effects of the new cooperative paradigm
on CSR should investigate whether pilot projects that have
attempted to improve human resources management
capacity at local supplier factories have been successful.
The new cooperation paradigm predicts that improved
human resources management leads to greater labor stan-
dard compliance (IMPACTT 2011). Theoretically, this
assumption is reminiscent of Grimshaw and Rubery’s
(2005) mutual gains approach, according to which the
formal employment relationship provides guarantees to
workers (e.g., formal contracts, limits to overtime work,
health insurance), in return for workers’ cooperation, such
that both parties gain. That is, employers gain access to a
skilled and committed workforce, turnover declines, and
productivity increases, while workers enjoy stable work,
income, and productive employment. Empirically, the
question is whether such an approach is feasible or realistic
in competitive international environments marked by
declining piece rates, shorter lead times, increasing quality
demands, and demands for buyers and suppliers to main-
tain flexibility to respond quickly to changing market needs
(Tokatli et al. 2008).
We thus call for studies that empirically investigate
whether attempts at building suppliers’ capacity, such as in
human resources management, really improve relations
between management and workers, despite the broader
competitive pressures that global value chain participation
entails. Research attention also should consider how power
relationships in the value chain affect possibilities for
sustaining upgrades. For example, there may be differences
in the ways large retailers and small or medium-sized
importers engage in capacity building. For large retailers
with hundreds or thousands of suppliers, long-term
capacity building measures may be infeasible beyond a few
select suppliers, chosen specifically for this benefit. Smal-
ler importers with fewer suppliers instead may be better
positioned to engage in long-term cooperation, such that a
mutual gains approach could be more applicable. If small-
and medium-sized importers depend on single suppliers in
relational chains, their incentives to invest in long-term
CSR upgrading efforts at local factories in the developing
world likely are greater.
Improved CSR Monitoring by Local Resources
The third part of a research agenda related to the new
cooperation paradigm should consider the use of local
resources that act as the eyes and ears of international
retailers and supermarkets on the ground, offering year-
round monitoring of work conditions in supplier factories
(Oxfam 2010). Similar to the issue with capacity building,
this theme has important implications for power relations.
According to the cooperation paradigm, local resources
might extend the power of international retailers and
supermarkets to control social and environmental condi-
tions in supplier factories—but at a price. For example,
local NGOs risk becoming financially dependent on inter-
national corporations, creating questions about their ability
to assess work conditions independently (Baur and Schmitz
2012). Such cooperation with international firms also cre-
ates the risk that the more radical advocacy agendas of
NGOs might get toned down, in favor of maintaining
cooperative relationships (Newell 2001).
Similarly, local trade unions would confront challenges
were they to engage in year-round monitoring of work
conditions in local export industries. Traditionally, unions
have cited freedom of association and the right to collec-
tive bargaining as the most important labor rights and the
best means to facilitate improved working conditions in
factory-based work settings. Without the right to organize
collectively and negotiate for improved work conditions,
real changes in compliance with labor standards may be
unlikely (AFL-CIO 2013). From this point of view, serving
as a local resource that monitors work conditions at local
supplier factories for international corporations might
dilute the very raison d’etre of trade unions. Instead of
taking a seat at the table and engaging in collective bar-
gaining, unions might suddenly find themselves part of the
private regulatory efforts of Western companies, whose
standards have been determined unilaterally. Further
investigations of the new cooperation paradigm for CSR in
global value chains thus should attend carefully to both the
possibilities and the challenges that such forms of coop-
eration present, not only for international firms but also for
the freedom and independence of local NGOs and trade
unions.
20 P. Lund-Thomsen, A. Lindgreen
123
Acknowledgments We thank Jennifer Bair, Alexandra Hughes, and
Kanchana Ruwanpura, as well as the members of the CBS sustainable
sourcing alumni group, for commenting on a previous version of this
article. Alex Michalos served as editor for this manuscript.
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