Corporate Social Responsibility and Freedom of Association Rights

• Date: 01 December 2012
• DOI: 10.1177/0032329212460983
• Published date: 01 December 2012
• Author: Mark Anner
• Subject Matter: Articles

Politics & Society

40(4) 609 –644

© 2012 SAGE Publications

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DOI: 10.1177/0032329212460983

http://pas.sagepub.com

460983PAS40410.1177/00323

29212460983Politics & SocietyAnner

1The Pennsylvania State University, University Park, PA, USA

Corresponding Author:

Mark Anner, The Pennsylvania State University, 3 Keller Building, University Park, PA 16802, USA

Email: msa10@psu.edu

Corporate Social

Responsibility and Freedom

of Association Rights:

The Precarious Quest for

Legitimacy and Control in

Global Supply Chains

Mark Anner1

Abstract

Corporations have increasingly turned to voluntary, multi-stakeholder governance

programs to monitor workers’ rights and standards in global supply chains. This

article argues that the emphasis of these programs varies significantly depending on

stakeholder involvement and issue areas under examination. Corporate-influenced

programs are more likely to emphasize detection of violations of minimal standards

in the areas of wages, hours, and occupational safety and health because focusing on

these issues provides corporations with legitimacy and reduces the risks of uncertainty

created by activist campaigns. In contrast, these programs are less likely to emphasize

workers’ rights to form democratic and independent unions, bargain, and strike because

these rights are perceived as lessening managerial control without providing firms with

significant reputational value. This argument is explored by coding 805 factory audits of

the Fair Labor Association between 2002 and 2010, followed by case studies of Russell

Athletic in Honduras, Apple in China, and worker rights monitoring in Vietnam.

Keywords

apparel industry, corporate social responsibility, workers’ rights, global supply chains,

voluntary governance

610 Politics & Society 40(4)

In January 2012, Apple became the latest major corporation to contract the services of a

private monitoring organization to inspect the employment relations practices at one of its

global suppliers, Foxconn in China. As such, Apple joined the likes of Nike, Adidas, and

Liz Claiborne, which had, for well over a decade, turned to voluntary, privatized systems

of workplace inspection to oversee workplace conditions at their suppliers. Today, gar-

ment and electronic factories from Vietnam to Honduras are often more likely to be

inspected by private social auditing firms than government workplace inspectors.

These Corporate Social Responsibility (CSR) initiatives are a response to new chal-

lenges presented by economic globalization, notably corporate efforts to oversee the

operations of increasingly complex global supply chains. As media exposés and social

movement activists highlight extreme labor abuses in factories producing for well-

known global brands, corporations have been pushed to monitor their employment

relations practices through multi-stakeholder programs.1

Yet the debate remains whether CSR is a step forward or a step backward for labor

rights in the global economy. Some scholars argue that CSR contributes to greater

respect for labor standards by providing a flexible way for corporations to take greater

responsibility for the conduct of their contractors.2 CSR has also been seen as a mecha-

nism to expand multinational corporation (MNC) best practices throughout their global

operations,3 and an effective response by corporations to a perceived market for stan-

dards.4 Critics counter that CSR is, at best, a public relations ploy by corporations and,

at worst, part of a larger effort to weaken state regulation and displace labor unions.5

This article suggests that what CSR programs do depends on how and whether

different social actors participate in the establishment and implementation of the pro-

gram.6 In some CSR programs, corporations are excluded while progressive nongov-

ernmental organizations (NGOs) and labor unions maintain influence. In most CSR

programs, however, corporations play a significant role in program design and over-

sight. It is argued here that corporate-influenced programs are more likely to focus on

the monitoring of minimal labor standards to gain legitimacy and reduce the risks of

media exposés and activist campaigns. However, they fall short when it comes to

monitoring the rights of workers to form independent trade unions, bargain collec-

tively and strike—what I will refer to as freedom of association (FoA) rights—because

these rights potentially weaken corporate control over their supply chains.

The distinction between FoA and other issue areas is fundamentally a difference

between rights and standards. A working age of sixteen, a minimum wage of USD

1 per hour, and an overtime wage of 1.5 times the base wage are standards and can be

modified as a result of government decisions or stakeholder negotiations. The forma-

tion of a union, good faith collective bargaining, and withholding one’s labor to

improve terms and conditions of employment are enabling rights. They do not dictate

outcomes but guarantee procedures that mitigate the inherent power imbalance in the

employment relationship.7 The attempt by CSR programs to monitor not only stan-

dards but also rights raises questions about the interests of CSR program participants,

the power relations among the participants, and the sources of their authority.

Anner 611

Precisely because FoA is a right and not a standard, its lack of enforcement is per-

haps the most noteworthy. No doubt, there are technical reasons that complicate FoA

detection and remediation. Verification of FoA rights cannot be ascertained by auditing

payroll and employee records or by using the equivalent of a handheld device that mea-

sures air quality or noise levels.8 There are countless ways for employers to prevent

unionization, ranging from the harassment and intimidation of union activists to the

offering of promotions and generous pay increases to would-be union leaders. Detecting

and documenting such actions are complex tasks. Short “social audits” are particularly

ineffective since the challenge is to determine if there has been a history and pattern of

employer actions which, taken together, have been used to create an antiunion atmo-

sphere in the factory.9 And worker trust in the people monitoring factories is crucial and

takes time to acquire.

CSR programs can remedy this problem by turning to FoA experts who employ a

more appropriate verification system. Yet it is argued here that corporate members of

CSR programs will not give their full support to more effective FoA monitoring out of

concern that greater compliance with FoA rights will lessen managerial control over

supply chain operations. It is not necessary that such blockage be direct or forceful.

These CSR programs depend financially on their dues-paying corporate members. And

just like there is an emerging market for ethically produced goods, so too is there a

market for CSR programs. Corporations are able to quit CSR programs that are too

rigorous and go elsewhere, which puts pressure on the executive staff of CSR programs

to avoid actions or procedures that might lead to corporate defection. This threat-of-

defection dynamic is present, by definition, in all voluntary governance programs, and

is a cause for their limited effectiveness in the area of freedom of association.

CSR programs are thus vulnerable to “regulatory capture,” a term used by public

choice theorists to describe the process by which interest groups “capture” the agencies

designed to regulate them. The theory observes that capture is possible because interest

group stakes in the policy outcome are strong while the general public’s concern is more

dispersed, especially over time, as the original “supportive constituency” dissipates as

participants focus their energy elsewhere.10 The possibility for regulatory capture is even

greater in CSR programs for several reasons: First, they lack the authority of the state to

mitigate powerful corporate interest (indeed, corporate members sit directly on the exec-

utive boards of these programs). Second, most multi-stakeholder CSR programs depend

economically on corporate support. Third, the proliferation of private CSR governance

schemes allows corporations to threaten to leave a given program and go elsewhere if the

program is not to its liking. And fourth, while there was some initial interest on the part

of labor unions in participating in CSR programs, this interest declined, thus removing a

major countervailing force to corporate influence.

This does not mean that corporations do whatever they please. NGO stakeholders,

activist pressure, and media exposés are mitigating factors, as are corporations’ desire

to increase their legitimacy and reduce the risks of reputational damage. Corporations

have a strong interest in preventing embarrassing violations of minimum wage laws

and basic health and safety standards. Compliance with minimal standards provides