Working Conditions and Factory Survival: Evidence from Better Factories Cambodia
Key Insights for Managers
This study evaluates whether improving working conditions in developing countries increases their risk of plant closure, studying apparel factories in Cambodia enrolled in the Better Factories Cambodia program. The authors Raymond Robertson, Drusilla Brown and Rajeeva Deheja find that factories were less likely to close when their compliance improved between their first and second audit, along a host of compliance areas. These areas include compensation (e.g., wage payments, contracting practices) and occupational health and safety (e.g., health and first aid, sanitation, and occupational health and safety assessment). They found no evidence that improved compliance increased the likelihood of plant closure.
The conclusions are based on the analysis of factory monitoring reports of 2,113 visits during 2001 – 2011 of 446 apparel plants enrolled in the Better Factories Cambodia program.