Obfuscating Social Responsibility in Global Production Networks

• In Event: Social Responsibility and International Economic Policy

Abstract

Previous studies in political science have explained the diffusion of social norms (e.g., labor and environmental norms) by focusing on trade-based compliance at the state level. However, such binary thinking—compliance or violation—overlooks variations in compliance within a state where we often observe a discrepancy between de jure compliance (i.e., regulations and law enforced by states) and de facto compliance (i.e., policy outcomes and workers’ lived experiences in the labor market). Furthermore, it does not explain why some norms have improved, while the other norms have not. In order to unravel this puzzle, I propose to shift the focus from the state-level to the firm-level and suggest a theory of firms’ obfuscation, where firms superficially comply and obfuscate their social responsibility. Strategic firms improve environmental norms over labor norms or individual labor standards over collective labor rights. Such obfuscation is possible for two reasons: (1) international norms are bundled and measured imprecisely by Global Performance Indicators (GPIs), and (2) firms cannot improve multiple norms simultaneously due to limited resources. When pressured by material and reputational costs simultaneously, firms strengthen only a subset of social norms that do not essentially threaten their profits because they still want to elevate their overall rankings. I combine the corporate social responsibility index and global production network data to test my claim. Using the two-stage least squares (2SLS) regression and structural topic model (STM), this paper presents systematic evidence of the gap between de jure and de factor compliance with labor norms, shedding light on the role of firms as political actors and the unintended consequences of norm diffusion via global production networks.

Author

• Soohyun Cho, Ohio State University