High-Quality Protection: Embeddedness, Process Standards, and Reputational Entrepreneurship in the Global South

• In Event: 20459 - New Frontiers of Globalization

Abstract

A substantial body of literature addresses proliferation of “process standards” that are designed to protect workers, consumers, and the environment in the Global South. Why would developing country firms adopt standards that are costly, complicated, and controversial? While first movers in countries like China and Mexico allegedly adopted standards at the behest or insistence of northern corporations and clients, who worried about the reliability of low-cost, offshore production, their successors are allegedly catering to the demands of domestic consumers by embracing process standards of their own—and some observers have portrayed process standardization as a symptom of market and middle-class development in the Global South. Is their account plausible? I address the question with a combination of firm-level data on pharmaceutical manufacturers and interviews with industry stakeholders in the “least likely” case of the Dominican Republic and find the evidence mixed. While Dominican drugmakers are indeed embracing “good manufacturing practices” (GMP) more rapidly than their multinational counterparts, they complicate the contemporary portrait in several ways: first, they’re embracing a northern model of GMP rather than indigenous standards; second, they’re not imitating but anticipating MNCs with the support of local allies and associations; and third, they’re motivated less by a desire to meet existing demand for high-quality medicine than a desire to generate new demand for their own products by bolstering their own reputations and discrediting firms and countries that lack certification and/or propagate different standards. The same firms that are investing millions of dollars in their plants and personnel are therefore developing costly marketing campaigns and calling the integrity of their Asian rivals into question at the same time. The results are doubly important, for they not only highlight the role of embedded ties—i.e., the non-standard bases of standardization—but speak to the multivocality of process standards more generally.

Author

• Andrew Schrank, Brown University