Responsibility and Neglect in Global Production Networks: The Uneven Significance of Codes of Conduct in Indonesian Factories

Key Insights for Managers

Do Indonesian supplier factories serving multinational companies (MNCs) with supplier codes of conduct provide better working conditions than domestic producers and factories serving MNCs that do not impose such codes? In their study of unionized factories, authors Tim Bartley and Niklas Egels-Zandén find that export factories subjected to buyers’ codes of conduct are more likely to have health and safety oversight committees, fewer health and safety problems, and adequate fire safety. 

These exporting factories subject to supplier codes of conduct are also less likely to delay paying workers their wages, and are more likely to provide their permanent workers with a written copy of their contract, as required by Indonesian law. 

The study finds no significant differences between factories subject to codes of conduct and other factories in their number of minimum wage violations, their discrimination practices, or their respect for collective bargaining agreements. The analyses are based on regression analysis of survey and interview data on 192 unionized factories in Indonesia in the apparel/textiles, electronics, and footwear sectors.