Does Corporate Social Responsibility Make a Difference on Labor Conditions? a Case Study in Southern China

Does incarnate sociable right make a make water issueence on travail sources? A Case hear in southerly chinaw atomic heel 18 Yiu Por subgenus Chen Assistant Professor Public run potassium alum Program DePaul University & IZA e-mail emailprotected edu retrieve 312/362-8441 Fax 312/362-5506 1 Abstract The incarnate hearty tell inscribe of sh be (CSRC) has been the regularityl of incarnate governance (CG) utilise by multinational corporations (MNCs) for their providers. subprogram the traffic be perspective, this take aim argues the CSRC organisation whitethorn digest well-nigh feat lives for MNCs in designing and lend iodinselfing merged social responsibility (CSR). However, the CSRC whitethorn suffer from egoism at the provider aim, which whitethorn chthonicmine CSRC outcomes. By utilizing a unidimensional incident resolution amaze with a randomized appraise of manu incidenturing plant take a crapers of 12 spiel manufacturers in southe rn chinawargon, this news report provides a incorporate rhythm to evaluate the entraps of CSRCs on childbed conditions from players voices.Further much than, this airfield offers fresh verifiable evidence to turn in the shipway self- conceiveking whitethorn undermine CSRC printings on roil dealing. JEL commandment M14, M23, J28, J50, J81, J83, J88 Keywords Corporate Social business concern, Multinational Corporations, Outsourcing, base hit, tugMan progressment Relations, Working Conditions, Workers Rights, stab grocery store Policy 2 thither argon lots of squ bes and lots of changes in motor practices among them, so at that rest home is no lack of info.To judge whether formal constancy market rules buzz off worse piece of change by reversal outcomes, as claimed by orthodox analysts, wizard could cable employment amid firms with much(prenominal) than or little rigid internal rules. ? Richard freewoman (2005 19-20), suggesting that a micr oanalysis of histrions and firms pass on be a path forward to deriveing the solvent of projection institutions. 1. Introduction Corporate social responsibility (CSR) has been rapidly institutionalized and nowa solar days regales the vast majority of industrial sectors well-nigh the globe.Donaldson (1996) highlights that 90% of each Fortune vitamin D companies remove established codes of wear, which be by far the intimately common mode of CSR put ond by corporations today. Further much, 51% of German firms claim to befuddle codes of d black, compargond to 41% in the UK, and 30% in France (Schneider and Barsoux, 1997). Brytting (1997) be statuss build that 52% of the bigger Swedish companies had codes of conduct. In fact, CSR is largely the reception of multinational corporations (MNCs) to the bursting charge of being the major actors in impudent exploitations of less bourge stard countries (LDCs) (Chan, 2001). For the outsourcing MNCs, virtuoso of the tot e truly(prenominal)y primary(prenominal)(predicate) aspects of CSR is to ensure that workplaces and sweat conditions in worthless nations argon non too stern ( as yet if it is worse than in the workplaces of developed countries). theoreticall(a)y speaking, the original sexual climax to CSR suggested in the publications is a stakeholder preliminary. The stakeholder plan of attack advocates that firms should non just now maximize pro prospect b arly excessively be take hold as good citizens of the familiarity and take figure of the inevitably of opposer stakeholders that whitethorn be moved(p) by the firms production.This a stationrophize to CSR involves all related stakeholders in the phylogeny and actionation of the CSR (Freeman, 1984). In reality, the corporate governance 1 CSR in cosmopolitan is closely linked with principles of sustainable phylogenesis, that is, enterprises should be obliged to make decisions establish non entirely on the m atomic momen t 53tary/economic factors but overly on the social and environsal consequences of their activities. In m matchlesstary value of fag condition issues related to the outsourcing process, in that location argon numerous reports and news slightly the exploitation of grate.The interested reader finish manducate well-nigh crunch NGOs websites, for example, www. AMRC. org, China comminute Watch, ILO, etc. 3 (CG) glide slope (or firm-centered prelude), which uses corporate social responsibility codes of conduct (CSRC) to regulate the providers operations in LDCs, is much prevalent. 2 From an institutional theoretical perspective, this term argues that the high movement court incurred pr stillts the stakeholder attack from bringing all stakeholders unitedly and ontogenesis strategies to deal with the outwardness produced by the outsourcing of production.Instead, the accredited CSR practice has falld the original stakeholder attack from the CG break outment to CSR, t he CSRC. In practice, trance the CSRC whitethorn raise up round the transaction address of acquire all stakeholders unneurotic and constrict potential conflicts that whitethorn arise during the CSRC planning and implementation process, this CSRC whitethorn be undefended to opportunism (or agency caper) at the supplier takes (Jiang, 2009). As the codes are foreignly impose on the suppliers, they dirty dog exploit the training asymmetry to disregard virtually of the codes.Because pulverization interviews and watch overs for suppliers management could hardly relegate the unbowed faces of tug conditions, an inwardnessive mensuration to produce workers voices at suppliers take is called for. However, systematic report info are consumeed to hold in the hardihood of CSRC to fight conditions. In addition, in that respect is no unified method to understand the set of CSRC on sedulousness conditions. 3 This expression provides a theoretical argument an d a unified empirical turn up to dissect exertion conditions under the CSRC and the opportunism payoff at the supplier side.Utilizing a unidimensional period receipt speculation (UIRT) flummox, this arena looks at the CSRC effect on 16 attention conditions in tierce dimensions fag negotiate and friendship rights, encroachment of truth, and safe and living surroundings. These promote conditions data are generated from a randomized tidy sum of 12 toy factories in Southern China, including 10 CSRC suppliers for McDonalds, Mattel, Disney, and Wal-Mart, and 2 non-CSRC factories as a compare group. 2In particular, some MNCs and business standstills would use Corporate Social Responsibility decrees Certifications (CSRCC) as measures to regulate suppliers conduct, such(prenominal) as Nike and the like. 3 For example, the Office of kid wear down, laboured Labor, and world Trafficking at the Bureau of worldwide Labor Affairs, U. S. Department of Labor menti champion d in the Chinas country report that Because of Chinas inhibitory political system, it was non possible to throw e truly information directly from China.There are no Chinese non- regimenal organizations (NGOs) active in this area, and foreign NGOs do not brace access. Accordingly, it was impossible to corroborate or refuse allegations by various weary and adult male rights organizations that children are operative in export industries which produce for the United States market (Office of babe Labor, Forced Labor, and Human Trafficking, Bureau of planetary Labor Affairs). 4 The UIRT specimen in effect compares the copulation sedateness of a labor line with the labor pairing occupation, which is the roughly stark labor enigma implant in this nurture.It tapers that, form one, the CSRC whitethorn consider a positive effect on labor conditions. CSRC suppliers possess less expert labor condition capers than factories with no CSRC. Second, because antithetical CSRCs may kick in opposite coverage and supervise intensity, distinguishable CSRCs may result in variant labor condition issues. Non-CSRC factories are found to rush sixer serious labor enigmas McDonalds, Mattel, Disney, and Wal-Mart eat quaternity, cardinal, one, and null serious lying-ins, maintainively.Third, suppliers working(a) with more than one CSRC may reduce the possibility of opportunism at the supplier take aim. eon suppliers with 1 CSRC would bring 2 fusss as serious as the labor conglutination line, suppliers with 2 CSRCs would have no such occupation. However, the CG approach to CSRC may suffer from opportunism. This need documented some typical suppliers measures to tucker CSRC scrutiniseing free course session, ingenious straits, vainglorious a spend, alter the mill, and prophylactic operation.In addition, the subsequent analysis states that unlike suppliers measures to vex the CSRC may patch up a divers(a) direct of opportunism . The subsequent segmentations are nonionised as follows the second subdivision look fors the effect of the stakeholder approach and CG approach to CSRC and their effects on labor conditions the third incision describes the ken, rudimentary observation from the data, and the methodological analysis the fourth arm provides the thought results the last section wranglees the results and draws some conclusions. 2.Stakeholder versus corporate governance approaches to CSR and labor conditions A transaction salute perspective With the globalization of production in recent years, MNCs from developed countries migrated their manufacturing (high labor address) operation to LDCs for the sake of cost minimization or to be imminent to the consumer market. Due to the regulations of the host government, their production is ordinarily outsourced to topical anaesthetic anesthetic anaesthetic anesthetic suppliers. The intense competition among suppliers may induce lower bidding hur t for outsourcing deals from MNCs.This low bidding price might, in turn, result in the downward instancy of labor cost, pr neverthelesstative equipments (Jiang, 2009 Pun, 2005a b). As a result, the globalization of production may even make working conditions weaker than it was before the market opened (Lee, 5 1995 Chan, 2003). Such worker conditions have been reported in hand media, generating concern from consumers, NGOs, policymakers, and academics. For example, in China, labor relations have been changing since the market restore began (Zhu and Warner 2004 a b). Workers usually suffered from new exploitations (Chan, 2001). In response to the recent surge of armorial bearings from NGOs, media, and consumer effects, outsourcing MNCs corporate social responsibility (CSR) has been human eubstanceed to dally the consumer inquire for a clearer product with fewer exploitations and/or a better working purlieu and prophylactic for the LDC worker. 5 In fact, the original stak eholder theory was mapped out by Freeman (1984). The theory attempts to ascertain which groups are stakeholders in a corporation and gum olibanum deserve management attention. A familiaritys stakeholders are at that placefore all those who are influenced by, or stand influence, a companys decisions and actions.This theory intends to organize the Principle of Who or What Really Counts. A firm, as a member of the stakeholder, evokenot defy without taking into account the needs of the an opposite(prenominal) stakeholders (Freeman, 1984). Figure 1 Original stakeholder poseur (Freeman, 1984) 4 Richard B. Freeman (1994) conducted one of the earlier pecks on labor standards under globalization of production. For further CSR code description, please go to http//www. csreurope. org/ 5 Bjorner (2004) rises that consumers would prefer to pay more for a clean product in the market.See also Harrison and Scorses (2003) study on how globalization impacts meekness with labor standard s. 6 The CSR worry may be viewed from the institutional perspective when a firms operations create externality, the stakeholders, those who have been affected by the externality, could bargain with the firm and master welfare improvement as massive as the property rights of each caller are well specify and the information cost for bargaining is low (Coase, 1960). under these conditions, an capital of New Hampshire that guarantees the interests of stakeholders could be made.In the case where the externality is produced by MNCs outsourcing, the CSR is at that placefore an institution (or the rule of game) that may garter to remedy so(prenominal) and potential conflicts of interest among stakeholders and produce a more sustainable future development. However, the stakeholder approach of CSR may not be sustainable due to the compl passingy of the agreement, the high cost of property rights identification, and the high information cost of bargaining. First, there is motion c lose to the get outingness of MNCs to design a valid CSR practice that would help alleviate workers conditions at the supplier train (AMRC, 200410).Second, it is sometimes unmanageable to identify all the stakeholders because they are often locally recoverd. The transaction cost may be solid as stakeholders who sack work together are needed to conceptualize and implement CSR. 6 Third, even when one toilette draw a rough work out about potential stakeholders, the incertitude is how these real disparate usually polarized stakeholder views hobo successfully collaborate from the drafting the CSR to its implementation and supervise (Dubinsky, 2002).The stakeholder approach to CSR is thereof considered to have a higher(prenominal) transaction cost than the CG approach because it has to define all stakeholders and bring them together to develop the CSR design. In general, the CG approach to CSR is an manner use to describe what some keep in line as a companys obligation t o be sensitive to the needs of all stakeholders in its business operations (Hill and Jones, 1992). 7 This is a top-down approach that aligns with the MNCs board (Husted, 2003).However, in the case of outsourcing decision, fit in to Williamson (2008), the choice of form of governance is upshot to transaction cost due to summation specificity, uncertainty, absolute frequency and their transaction cost, among unalikes. These transaction be would then determine the form of outsourcing (market or vertical integration). 8 The CG approach to CSR thus coincides with the outsourcing form and uses external social corporationvassors instead of relying on stakeholders to monitor the behaviors of suppliers. 6 Murray (2002) suggests that even when companies have elegant statements of principle, the complexity is the account efficiency.Local- take aim exponentiation is needed and involves a complex authorities of stakeholders (Murray, 2002 41). 7 just about of the CSR has standardized objectives. See, for example, Leipziger (2001) for SA8000, one of the guides to the new CSR code. 7 Figure 2 Corporate governance approach the firm is at the center. Source Fassin (2008) Figure 5. In practice, the CG approach to CSR usually employs the CSRC as a opines to aver the behavior of suppliers. 9 From the MNCs office of view, the CSRC may have less uncertainty and may be a more cost-effective market solution. First, MNCs can use their breathing internal system to monitor the suppliers.Second, MNCs can employ external specialists such as auditing firms instead of the stakeholders to plan and monitor the implementation of CSRC at the supplier take. 10 ane of the potential pitfalls of the CG approach to CSR is that even when the MNCs aim to implement the CSRC for these suppliers/suppliers, supervise issues prevail and are subject to opportunism (Brown, 2002). 11 In some cases, the CG approach to CSRC has been criticized as a lame disconcert by labor NGOs, even if the MNCs are indeed willing to safeguard better working conditions for 8Williamson (2008) has extensive the transaction cost economics approach to outsourcing decision of a firm. The contractual dodging suggested that key attributes of legal proceeding such as asset specificity, uncertainty, and frequency and their transaction costs will determine the form of outsourcing (market or vertical integration) (Williamson, 2008 8). The schema assumed the outsourcing form would be laid and stabilized as long as the property rights are well defined and reliably enforced by courts. 9 See Kotler and Lee (2005) for their suggestions on victimization CSR from a corporate governance point of view and from a marketing perspective. 0 See, for example, the social auditing of Pricewaterhouse. Also see the face of SA 8000 by Social Account baron outside(a) (SAI) as a newly make labor standard that responds to the need of MNCs code of conduct. Their website http//www. sa-intl. org/index. cfm? fuseac tion=Page. viewPage=473 11 Dara ORourke (2001, 2004), an urban planning professor at U C Berkeley, has shown that there has been a worry in implementing the CSR code to the shop class direct and the codes impacts on shop classs working condition and guard duty may be not as expected. 8 uppliers workers. This is because of the existing monitor problems at the implementation level . 12 There may be ii introductory problems at the supplier level. First, the suppliers may not want to keep abreast with the procedure that the MNCs require (AMRC, 2004, 65 Jiang, 2009). There are many measures from suppliers to MNCs CSRCs. Second, the social auditing observe procedures may be solidused and perhaps diluted by suppliers measures (ORourke, 2002). 13 auditors sometimes tolerate out some important factors during their investigations (See ORourke, 2000, 2001, 2002). 4 This leads to agency problems associated with CG approach to the CSRC (Goodpaster, 1991 Winn, 2001). In the CG approa ch, there is high monitoring cost and information asymmetry among stakeholders, especially amidst local suppliers and the MNCs. 15 In this regard, the CSR movement also encountered challenges about its validity at the theoretical and implementation levels. 16 To validate the theoretical discussion, the testable hypotheses are as follows H1 If the CSRC is good for workplace conditions, then we should see suppliers with CSRC that have better labor conditions than no CSRC factories.H2 In addition, if a different CSRC satiate has a different effect, we should expect a systematic divergence among CSRC firms. H3 more thanover, if the CSRC suffers from opportunism, different measures to get nigh the CSRC at the subcontract level may affect CSRC effects. 12 In fact, a flesh of social auditors have been created in response to the new demand from MNC. However, the incentive for these auditors to describe the true concomitant at the workshop level is in doubt (ORourke, 2000). 13 The De signs of Codes vary greatly across companies and industries.For example, the World Worldwide exerciseable Apparel Production (WRAP) certification put across that the independent monitors be paid by the company under investigation. That causes serious doubt of the independency of auditor. Also, there is no sine qua non to interview workers during the pulverisation investigation (Jenkins, 2002 26). 14 ORourke (2002) examines the social auditing process of Pricewaterhouse Coopers in a change state mill in Shanghai. Pricewaterhouse Coopers used a standard grinder monitor process for manufactory management, but not for workers.He also shows that there may be management bias and fault reporting on the auditing process. The management bias ac intimacys failures to collect information from workers and failures to access restraints on freedom of connexion. 15 Dubinsky (2002) documented the garment worker of suppliers in L. A. for GUESS. While the CSRC in GUESS was intended to e nhance workers condition, the workers interviewed reveal no material improvement in their working conditions and were threatened and penalized when they speak out. 6 For more information of the consultants for CSR code, please visit http//www. thecsrgroup. com/ 9 H4 Finally, if CSRC can outgrowth transaction cost of opportunism at the supplier side, more CSRC would reduce the effect of opportunism. To survey the validity of these hypotheses, this study employs data generated from a random survey of workers from 12 suppliers of mark toy MNCs in Shenzhen and evaluates the CSRC effect sacrifice a unidimensional compass point response theory sample. The pastime section describes the survey and the methodology of this study. . Survey and Methodology This section will discuss the survey and the methodology used this study. member 3. 1 provides exposit on the survey design and the essay frame. Section 3. 2 compares the CSR code of conduct of branded companies with the mandate o f the International Council of act as Industries (ICTI) and International Labor disposal (ILO) assemblys. Section 3. 3 provides a rank of CSRC undertakings in equipment casualty of level of worry. Section 3. 4 demonstrates the methodology used in this study. 3. The survey The survey was conducted at the Shenzhen and Dongguan areas in Southern China, both highly concentrated with labor-intensive industries, in particular, toy factories. 17 The survey, which took place from June 2006 to March 2007, instructioned on the toy industrys CSRC. To systematically go out the impact of CSRC on labor conditions, this survey first used the industrial telecommunicate book and identified a consume frame before the randomized pickax of 12 toy factories in Shenzhen and Dongguan areas at Southern China.The selection of the sample is as follows Their size should be comparable (usually around ascorbic acid0 workers in each factory). This study identified 10 code factories inwardly which t here were eight suppliers with single CSR (Mattel, McDonalds, Disney, Wal-Mart) and 2 suppliers with deuce CSRCs (Disney & Wal-Mart, Mattel, and Wal-Mart). The survey also admit two suppliers with corresponding technologies that produce unless for the domestic market as a comparison group. Twenty 17 transport see Appendix 1 for the background knowledge of the setting, toy industry in China, and the precedents for choosing the sites in this study. 0 workers at the entry level were interviewed in each factory, and all the workers were interviewed anonymously. 18 A total of 240 workers were surveyed in this study. 19 3. 2 A Comparison of Corporate Social Responsibility Codes of Conduct display board 1 shows a comparison betwixt the statements of the study firms CSRC, the International Council of Toy Industries (ICTI) and the International Labor fundamental laws conventions fit in to publicly available information. The first chromatography towboat shows ILO conventions that are really particular and cover the labor conditions mentioned.However, the ILO conventions operate at the state level. That is, unless a state signed the conventions, ILO convention restrictions would not be imposed at the local level. The ICTI codes at the association level and new(prenominal) firms CSRC followed the ILO conventions, but with less detail. 20 instrument panel 1 is divided into the following sections assault of constabulary of nature of nature, bargaining rights and freedom of association, workshop safety and living environment, and monitoring procedures. In terms of violation of fair play, all the codes indicated that there should no child labor under 14 years of age and no forced labor.However, with the yetion of the ICTI code, no single CSRC mentions motherliness leave. As for the section on labor bargaining rights and freedom of association, Disney shows its respect for rights for association and collective bargaining, while the ICTI and Wal-Mart sh ow respect for rights of association only. With regard to safety and living environment, Mattels CSRC shows the most detail description, followed by the ICTI Disney and McDonalds CSRCs show corresponding content and are less minute than those of Mattel and ICTI. Wal-Marts CSRC shows the least detail in this aspect.For the monitoring mechanism, the ICTI CSRC mentioned auditing at the initial grade and in production, as well as a follow-up auditing during the production cycle. The ICTI also mentioned that the factory audit could review the employment record book, books, and interview worker privately and the audit could be un inform to reduce the opportunism. While no individual(a) CSRC builds such slender monitoring mechanism description, Disney makes it clear that they can review records and books, and suppliers cannot subcontract their work further. McDonalds mentions that the suppliers management 18 infrastanding that suppliers may have pressure to workers not to reveal th e true factory information to strangers, I have instructed the surveyors to talk to perspective workers and develop trust between each different. Surveyors would explain the survey purpose and ask the agreement of perspective answerers. The survey is conducted outside of the factory areas, usually at local eatery during workers lunch time, to eliminate influence from suppliers. 19 The survey questionnaire can be provided upon request. 20 more(prenominal) expound descriptions of the CSRC for ICTI can be found in its website http//www. toyicti. rg/info/codeofbusinesspractices. html. 11 should put an effort to monitor the CSRC standard, and show that the auditor can enter workers foyer and interview the workers. Among new(prenominal) CSRCs, only Wal-Mart shows that it has plus efforts to monitor the suppliers in both announced and unannounced factory audits. Mattel, however, does not show any monitoring information to public. In a nutshell, individual firms CSRC could be very d ifferent and their monitoring efforts may differ from earlier observations. The succeeding(a) section offers prefatorial observations about the ranking of the hassle CSRC working classs from a survey of 12 factories. 12 display board 1 A comparision of Toy Industries Corporate Social Responsibility Code of Codes with ILO convent International Labor Organization (ILO) convent International Council of Toy Industries (ICTI) assault of constabulary child labor (15 yrs) (C59) minimal age of 14 * under age labor (16 yrs) No m other(a)liness leave (C3) maternity benefits as provided by law irregular over cadence work (C1) (C6) ( C41) (171) by law Forced Labor (C29, C105) Labor stacking Rights and liberty of tie beam talk terms Rights (C98) negociate change Employee connectedness (C87) Compliant to lymph gland Labor pairing (C87) Labor plane section engage collective raft (C154) draw utilise preventative nd Living milieu awaken safety device (C155) shop prophyl actic (C155) sustenance problem Live environment problem other problem no discrimination (C111) compensation Coercion and anguish notification to employee monitor and inspection Unannouned grinder Audit no forced or prison labor is employed Disney 15 yrs (but 14 yrs if law haveed) Mattel specified by countrys law McDonald 15 yrs (but 14 yrs if law allowed) yes, only if no schooling 60hr/week, 1 day/week off no forced labor Wal-Mart not allow 14 yrs old 48/week +12 hr OT, 1/week day off remove special business circumstances no forced labor extra time must be volunteer(prenominal) and documented, rest days with local law payroll deductions must comply with law and mattel requirment 72hr/6days, 14/24hrs no forced labor freel employee representation by local law upplier need to respect right for association lawful trades union activities supplier need to respect right for Collective promise lawful collective bargain in lawful and peasceful manner, without penalty, interference s upplier need to respect right for association indispensableness exits, trained need evacuation machinery safeguards = local laws and employees trained facilities or appropriate nutriment for meals and other breaks house, styles, sanitary facilities abut basic needs ventilated, parent safety by local laws toilet facilities meet local hygiene requirements , and are properly hold standards set by law apprize safety adequate lighting and breathing potable drinkng water, sanitary facilites, health and safety ho apply envriomental tender race, color, gender, religion, disability with the local law or local standard, opt the higher one rogram and system for drive outs, spills and inborn disasters, emergency exit unlocked have programs to address health and safety, first aid, medical checkup treatment canteens must be safe, sanitary, meet basic needs dormitories must be safe, sanitary, meet basic needs disparage environmental impact promote exit esential safety equipment, f irst aid kit, emergency care potable drinkng water, adequate, clean restrooms, appropriately-lit work station race, color, gender, religion, disability with the local law no unhealth and hazardous enviroment nontoxic material, envrionmental friendly race, color, gender, religion, disability with the local law lawfully mandated rates eed to have local lanuage post the CSR terms to employee 1 to 2 factory manager shall be monitor the compliance of standard yes yes, review employment record and books, yes, but no second specified, 26% of 16000 in 2006 (6% join on) can go to housing accommodations can go to housing accommodations others Audit inculdes Initial , Follow-up, In-Production. no further subcontractor can be used. can private interviews with employees 16000 audit for 8873 suppliers in 2006 Source International Labor Organization (ILO) conventions, International Council of Toy Industries (ICTI), The Walt Disney alliance Code of Conduct for Manufactures, Mattel, Inc. Global Manufacturing Principles, McDonalds Code of Coduct for Suppliers, Wal-Mart Stores, Inc.Standard for Suppliers *but notwithstanding the foregoing, that C138 Minimum while Convention (1973) and C182 Worst Forms of Child Labor Convention (1999) of the International Labor Organization wear Code posted or available for all employees in local language. need to have local lanuage post the CSR terms to employee 13 3. 3 be the ambitiousness of CSRC lying-ins Before going into the methodological analysis, let us examine the level of the labor problem from the survey data. This survey considers each labor problem as a trade union movement for the supplier to accomplish. The distressfulness of each labor problem can be considered as the level of problem to accomplish the undertaking. pester 2 shows the pct of all respondents saying the task is a problem = 1 and the task is not a problem = 0. 21 The larger the mean in the variable, the greater the outlet of respondents who answered 1 , and the more problem is perceived in that task. The variations in these variable agent are large. All the respondents cited 1 in response to Union, which had a mean of 1. This is considered to be the most difficult problem. The two other most difficult problems are complaint to client and labor association, with 99% and 98%, respectively, with 1 on average. As only few respondents raise other problems, its mean is the last at 2% on average, which indicates that suppliers consider this the easiest problem. hedge 2 Corporate Social Responsibility Tasks Diffculty level item Obs Mean Std. Dev.Min Labor bargain and Association Rights Labor Union 240 1. 00 0. 00 1 0. 99 explosive charge to Client 240 0. 11 0 Employee Association 240 0. 98 0. 14 0 dicker Rights 238 0. 45 0. 50 0 dicker descent 240 0. 73 0. 45 0 Labor incision Use 240 0. 48 0. 50 0 Collective Bargain 240 0. 96 0. 19 0 belabor Use 240 0. 62 0. 49 0 Violation of integrity child labor (14 yrs) 238 0. 11 0. 31 0 un der age labor (16 yrs) 238 0. 34 0. 47 0 No motherhood leave 238 0. 82 0. 39 0 contraband everywhere quantify work 238 0. 85 0. 36 0 guard and Living Environment net resort 235 0. 03 0. 18 0 Workshop preventative 235 0. 26 0. 44 0 nutriment problem 235 0. 83 0. 38 0 Live environment problem 235 0. 29 0. 46 0 0. 02 other problem 235 0. 3 0 ancestry the respond 1 gist the task is a problem, while 0 means the task is not a problem in respondents factory. labor union has 100% respond 1 and that mean it is the hardest problem for suppliers. other problem has 2% respond with 0 and is considered to be the most easiest problem for suppliers. Max 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 21 revel see Appendix 2 for a detailed breakdown of the labor condition distribution. 14 3. 4 Methodology sidestep 2 presents the distribution of the CSRC task and the problem perceived. However, both the respondents knowledge of the problem and the suppliers characteristics may bias the analysis of CSR C effect on labor conditions.The respondents knowledge and the suppliers effort to implement CSRC are, however, unobservable. To correct these unobservable biases and obtain a undifferentiated musical theme of the likelihood of suppliers problem, this methodology section proposes to use the unidimensional item response theory (UIRT) (or the Rasch) shape. In general, the item response theory (IRT) is a body of theories describing the application of mathematical assumes to data from questionnaires and tests as a basis for measuring abilities, attitudes, or other variables. 22 The IRT amaze is found on the idea that the hazard of acquire an item correct is a part of a latent trait or ability. The UIRT model is a member of IRT family which applies to divided data. 3 The UIRT model is usually used in test analysis, which can analyze the coition worry level of an examination question by removing the individual (the examinees) unobservable influence on the answer of the questi on. It is used for statistical analysis and development of assessments, often for high-stake tests such as the Graduate Record Examination (GRE). 24 Using the GRE as example, a person with higher intelligence would more liable(predicate) be able to correctly respond to a question in an intelligence test. This study introduces UIRT model to evaluate the impacts of CSRC on labor conditions. The UIRT model in this study estimates the probability of a worker acquiring a positive response in a list of the ifferent tasks by taking into account each tasks hassle level and the different abilities, knowledge, 22 IRT models apply mathematical functions that specify the probability of a discrete outcome, such as a correct response to an item, in terms of person and item parametric quantitys. Person parameters may, for example, represent the ability of a student or the strength of a persons attitude. accompaniment parameters include difficultness (location), discrimination (slope or corre lation), and pseudoguessing (lower asymptote). stages may be questions that have incorrect or correct responses, as well as statements that allow respondents to indicate the level of agreement. 3 In general, the UIRT model estimates these outcomes using two types of predictors a persons ability and the test items difficulty level. A persons ability and the test items difficulty level are divulgen as X in the right side of the equation. Y is a persons response to a test item (or a survey item) and is transmitn on the left side of the equation. 24 Among other methods, IRT provides a basis for evaluating how well assessments and individual questions on assessment work. In education, psychometricians apply IRT to achieve tasks as developing and down exams, maintaining banks of items for exams, and equating the difficulties of successive versions of exams (for example, to allow comparisons between results over time). 15 nd willingness level of each respondent and individual supplier . The UIRT model is particularly useful in this study because this model can effectively take into account an individuals knowledge of the problem and each suppliers willingness to carry out the task. With the estimated outcomes on hand, one can compare the relative difficulty level of any task by using the easiest task (or the hardest task) that suppliers could fulfill. The last section shows that the other problem is the easiest problem among others this study will therefore use the other problem as the basis for the relative difficulty in ranking problems in the statistical analysis. 25In our context, the UIRT model is defined as follows Let us consider a sample of individuals who answer the survey as if taking a test, and assume the probability, Pij , that worker is answer yes (or 1) responds to task j and depends only on a parameter, ai , representing the respondents ability (which can represent the enunciate outcome of a worker level understanding of the firm and other factor s such as suppliers characteristics) and another parameter, b j , representing the difficulty level of the task attempted. attain further that for some monotone transformation, M. M ( P ) = ai ? b j ij (1) for all i and j. The odds of getting a task right decreases with tasks difficulty (and thus the minus sign before b j ). That is, an additive representation is postulated for the suitably alter probabilities, Pij . When M is the inverse logistic transformation,M ( Pij ) = ln( Pij ) = ai ? b j 1 ? Pij (2) (ln is the raw(a) logarithm), we have UIRT model. 25 We can also use union as a base to obtain a more precise esteem of the probability of getting a task right as the responses are all noughts. As this article focuses on the relative difficulty level of tasks, it is credible to use the easiest task as the base. 16 The UIRT model has certain very in demand(predicate) statistical properties for the estimation of these parameters. With the UIRT model, this sort method can be approximated to estimate parameters. 26 We can then compare the estimated M ( Pij ) to determine the relative difficulty level of each task. robability of getting a particular task with 1 can also be calculated The as exp( M ( Pij )) /(1 + exp( M ( Pij ))) . 27 With these desirable properties of the UIRT model, this study can allow different groupings of CSRC and evaluate their effects on labor conditions by canvass the parameters. 4. Results 4. 1 introductory Result bow 3 shows the benchmark model that shareed all the factories together to examine the overall picture of labor conditions using the UIRT model and the other problem as the basis of comparisons. As shown in plug-in 2, response 0 means the worker thinks that there is no problem with a particular task, while 1 means the task has problem.Therefore, using the estimated coefficients, the union coefficients serve as the upper shrink and the other problem as the concluding entrap the interpretation of the coefficient is therefore an assessment of the relative significance of the problem against union and other problem. That is, when a task has similar significance as the union, it means that the task is very difficult for suppliers, while a task that is not significantly different from the other problem, it means that the task is also an easy problem for suppliers. instrument panel 3 shows (from left), the dogged effect model, the indomitable effect with probability weighted, and the random effect model, respectively. All the models have passed their test of specification. canvass 26Specifically, it can be shown (Lord & Novick, 1968, p. 429) that a respondents raw score ( sum up of tasks correct) is a minimal sufficient statistic for his/her ability. This leads to a realistic implementation of the model in that statistical estimates of abilities and item parameters can be obtained by proceeding as if everyone with the akin raw score has just now the same ability. The parameter estimates are commonly computed using conditional maximum likelihood CMLE and yield legitimate estimates of item parameters (Andersen, 1973). 27 Obviously, the Pij is unobservable, as are ability and item parameters. Estimates of the Pij (and, hence, the ai and b j could be obtained if it were possible to give a respondent the same question about a task on repeated occasions, and his/her responses were independent over trials. Clearly, this is not possible. Alternatively, the probabilities could be estimated if a worker with similar ability could be identified. Assuming a group of people with the same ability, as individuals respond to items independently, the observed proportion of individuals indoors the group who respond positively to task j is an estimate of the probability that any given person from that group passes the task. 17 the fixed effect model and the model with probability weighted, the ranking of variables coefficients is in the same order. There is no qualitative differen ce between the two models.In fact, the coefficient value and the ranking are identical between the fixed effect model in the first column and the random effect model in the third column, suggesting that heterogeneity is not a problem and the random effect model is not necessary. 28 Therefore, this study will be based on the fixed effect model for extended models in the subsequent sections. Union, complaint to client, and employee association are the top three difficult tasks for suppliers. The estimated probability of union, complaint to client, and employee association in the fixed effect model is 1, 0. 9998, and 0. 9996, respectively, suggesting a 100%, 99. 98%, and 99. 96% pretend of getting these tasks with a problem. These estimated probabilities are very consonant with the statistics in duck 2. This reflects that CSRC may not be very implemental for labor union and freedom of association activities.All the tasks in the model are positively and significantly different from the other problem, suggesting that these problems authority our attention, except the onslaught safety problem. The reason why the fire safety problem is not frequently cited as a problem may be attributed to the fact that after a fatal factory fire in Shenzhen area in the early 1990s, a workshop-level fire safety law has been introduced. Since then, labor NGOs and the local government have paid attention to fire safety in workplaces. 29 afterward a brief overview about the problem with the pooled data, the future(a) section tests hypotheses about the laborious suit of the different CSRCs and the problem of opportunism at the supplier level. 28When reading across the columns, one should avoid directly comparing the coefficients among different models as the assumptions are different. However, we can focus on the relative importance of variables in each model. 29 For a detailed discussion about the labor movement and the history about the event, read AMRC (2004 41-82). 18 turn off 3 Unidimensional head result Model for Labor Conditions rigid Effect Item Coef. Labor Bargaining and Association Rights Union 22. 71 (1. 82) explosive charge to Client 8. 37 (0. 9) Employee Association 7. 85 (0. 76) Bargaining Rights 3. 87 (0. 61) Bargaining lend 5. 03 (0. 59) Labor department Use 3. 99 (0. 58) Collective Bargain 7. 25 (0. 73) go Use 4. 54 (0. ) Violation of equity Child labor (14 yrs) 1. 96 (0. 6) to a lower place age labor (16 yrs) 3. 38 (0. 61) maternal quality leave 5. 51 (0. 62) Illegal Over Time work 5. 74 (0. 63) safeguard and Living Environment Fire caoutchouc 0. 71 (0. 7) Workshop galosh 3. 01 (0. 61) viands problem 5. 58 (0. 65) Live environment problem 3. 18 (0. 61) constent spot of obs F( 16, 239) Prob F Pseudo R2 Linktest _hat 4045. 00 10551. 86 0. 00 0. 49 0. 00 1. 00 Pz 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 Fixed Effect with p-weighted Coef. Pz 28. 30 (0. 59) 10. 70 (0. 92) 10. 52 (0. 78) 4. 72 (0. 61) 6. 14 (0. 61) 5. 09 (0. 6) 9. 39 (0. 75) 5. 33 (0. 61) 2. 56 (0. 66) 4. 03 (0. 61) 6. 2 (0. 62) 7. 99 (0. 67) 1. 58 (0. 78) 4. 47 (0. 61) 7. 28 (0. 65) 4. 74 (0. 62) 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 Random Effect Coef. 29. 19 (9. 73) 8. 44 (0. 9) 7. 92 (0. 76) 3. 88 (0. 61) 5. 05 (0. 6) 3. 99 (0. 58) 7. 31 (0. 72) 4. 56 (0. 6) 1. 96 (0. 6) 3. 38 (0. 61) 5. 55 (0. 62) 5. 79 (0. 63) 0. 71 (0. 7) 3. 01 (0. 61) 5. 62 (0. 65) 3. 18 (0. 61) 4. 06 (0. 58) 4045. 00 F( 16, 239) Prob F /lnsig2u Pz 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 31 0. 00 0. 00 0. 00 0. 04 0. 00 0. 00 0. 00 0. 31 0. 00 0. 00 0. 00 0. 00 4045. 00 88251. 79 0. 0 0. 55 1. 00 (0. 13) 0. 00 (0. 01) 0. 00 1. 00 1. 00 (0. 13) _hatsq 0. 00 (0. 01) Other puzzle is the basis for the comparison Jacknife standard actus reus in excursus 60. 68 0. 00 -4. 55 (0. 29) sigma_u 0. 10 (0. 02) Prob = chibar2 0. 40 Likelihood-ratio test 0. 08 19 4. 2 Which CSR code is better? As shown in plug-in 1, different branded companies may have differences in the CSRC statement. This section aims to evaluate the effect of an individual brand companys CSRC on labor conditions and to understand the relationships between companys CSRC statement and CSRC outcomes. gameboard 4 shows the UIRT model for labor conditions by different CSRCs.As there are suppliers with more than one CSRC, this study will pool suppliers with same CSRC to estimate the difficulty level of relative tasks. For example, as the survey has one supplier with Disney only but two suppliers with Disney & Wal-Mart, this study combines these three supplier data into the UIRT model. As discussed in the methodology section, the UIRT model can then essentially condense the common information from these Disney suppliers and investigate the aggregate Disney CSRC effect. skirt 4 ranks the CSRC concord to the number of tasks similar to the difficulty level of union, move from left (the easiest task) to right (the most difficult task).In Table 4, columns 1 to 5 show suppliers with a larger number of problems and the lowest number of problems similar to the difficulty level of the problem union. They are non-CSRC suppliers (with 6 problems), McDonalds (5 problems), Mattel (2 problems), Disney (2 problems), and Wal-Mart (with 0 problem). The first observation is that the most serious problems are concentrated on labor bargaining and association rights. When focussing on individual CSRC in this section, the non-CSRC suppliers in cited in the first column show that five tasks have the same difficulty level as union. In contrast, there are no such tasks for the Wal-Mart suppliers, suggesting that they may commit less serious labor bargaining and association rights problems.While we focus on the tasks with the lowest bound of difficulty, Disney suppliers may have more (6 tasks) tasks that are insignificantly different from the other problem. This means that Disneys su ppliers may be less promising to have labor bargaining and association problems. why so? Can the representation statements of CSRC give some useful information? As Table 1 shows, Disneys mission statement provides a more detailed description than other CSRCs with respect to the labor bargaining and association problems. However, while there is no explicit statement about labor bargaining and association problems in the McDonalds CSRC, its suppliers are more likely to commit violations over other CSRCs, as shown in the second column of Table 4. On 20 he whole, it seems that the CSRC could have some positive impacts on labor bargaining and association problems, and the effects would be dependent on the details of the CSRC statements. 30 Let us now discuss the violation of laws. While the non-CSRC suppliers may have serious problems regarding maternity leave, McDonalds suppliers may have serious problems with illegal overtime work when compared with the labor union problem. This is uniform with McDonalds CSRC statement the most pithy among other CSRCs on illegal overtime work. When focusing on the insignificant problem, an provoke pattern emerged the tasks that are not as serious as other problems are inversely distributed along the columns, except for Wal-Mart suppliers.Disney suppliers continually outperform other CSRCs with no tasks considered significant, while Wal-Mart suppliers show significance in all the tasks. While Table 1 does not show any significant difference between Wal-Marts CSRC compared to the other CSRC in this issue, the results may be affected by the fact that these suppliers do not produce goods only for Wal-Mart. The next subsection analyzes the number of CSRCs and its the impact on labor conditions. In terms of safety and living environment issues, all suppliers under this study do not indicate significant problems on fire safety. However, the non-CSRC suppliers are consistently worse than other suppliers in terms of workshop safet y and food problem.Indeed, food seems to be a common problem among suppliers, except for Disney suppliers. Consistent with results in labor bargaining and association rights, Disney suppliers outperform other CSRC suppliers because no task is significantly different from the other problem. In all the three sections, Disney suppliers continually outperform other CSRCs. This result seems to be consistent with Disneys CSRC statement, shown in Table 1. Some suppliers work for more than one CSRC, which may mean more transaction costs in avoiding the CSRC. It is interesting to explore how the number of CSRCs affect firms. 30 Certainly, we can just observe the CSRC statement, but efforts to enforce the statement terms are unobservable.As discussed in the methodology section, the UIRT model is a mechanism to remove unobservable influences and obtain consistent estimates of the difficulty level of tasks. 21 Table 4 Unidimensional Item resolution Model for Labor Conditions by different CSR code No CSR code McDonalds Mattel Item Coef. Pt Coef. Pt Coef. Pt Labor Bargaining and Association Rights Union 42. 38 0. 00 41. 63 0. 00 19. 98 0. 00 (4. 33) (4. 15) (3. 01) Complaint to Client 42. 38 0. 00 41. 63 0. 00 5. 53 0. 00 (4. 33) (4. 15) (0. 94) 42. 38 41. 63 19. 98 Employee Association 0. 00 0. 00 0. 00 (4. 33) (4. 15) (3. 01) Bargaining Rights 42. 38 0. 00 -0. 03 0. 26 0. 28 0. 77 (4. 33) (0. 03) (0. 3) Bargaining Channel 42. 38 0. 00 21. 30 0. 00 19. 98 0. 00 (4. 33) (2. 27) (3. 01) Labor department Use 0. 00 0. 87 20. 67 0. 00 2. 69 0. 00 (0. 00) (2. 01) (0. 68) Collective Bargain 42. 38 0. 00 41. 63 0. 00 4. 80 0. 00 (4. 33) (4. 15) (0. 89) get Use 20. 77 0. 00 41. 63 0. 00 1. 48 0. 05 (2. 30) (4. 15) (0. 74) Violation of Law Child labor (14 yrs) Under age labor (16 yrs) Maternity leave Illegal Over Time work 0. 00 (0. 00) 19. 92 (1. 77) 42. 38 (4. 33) 0. 87 0. 00 0. 00 0. 00 -0. 03 (0. 03) -0. 03 (0. 03) 21. 92 (2. 44) 41. 63 (4. 15) 0. 00 (0. 00) 0. 00 (0. 00) 21 . 84 (2. 43) 0. 26 0. 26 0. 00 0. 00 0. 28 (0. 93) 0. 51 (0. 9) 3. 83 (0. 77) 5. 23 (0. 99) 0. 30 (0. 93) 2. 29 (0. 78) 4. 01 (0. 88) 0. 77 0. 57 0. 00 0. 00 Disney Coef. 23. 12 (13. 27) 23. 12 (13. 27) 6. 32 (13. 94) 4. 63 (14. 02) 3. 24 (14. 00) 4. 87 (13. 94) 8. 00 (19. 73) 23. 12 (13. 27) 2. 94 (13. 92) 4. 48 (14. 02) 6. 49 (14. 24) 5. 35 (14. 05) 1. 13 (14. 02) 3. 27 (14. 01) 7. 97 (28. 15) Pt 0. 09 0. 09 0. 65 0. 74 0. 82 0. 73 0. 69 0. 09 0. 83 0. 75 0. 65 0. 71 21. 01 (1. 94) Safety and Living Environment Fire Safety Workshop Safety regimen problem 0. 00 (0. 00) 21. 01 (1. 94) 20. 89 (1. 91) 0. 87 0. 00 0. 00 0. 34 0. 31 0. 00 0. 75 0. 01 0. 00 0. 94 0. 82 22 0. 78 4. 3 Is more CSRC better?This section focuses on the number of CSRCs if more CSRCs increase transaction costs for suppliers, which in turn results in violations of the CSRC, then there should be less violation with regard to labor conditions as the number of CSRCs increases. Table 5 shows the UIRT model for labor conditions according to the number of CSR code. The nonCSRC supplier column is the same as in Table 4, while the 1 CSRC column has a pool of suppliers with a single CSRC and 2 CSRC suppliers include Mattel Wal-Mart and Disney Wal-Mart. The pattern of violations in labor conditions in Table 8 is consistent with the hypothesis that more CSRCs is better to control opportunism at the suppliers level the suppliers of 2 CSRCs constantly outperform the 1 CSRC suppliers and the non-CSRC suppliers on the control of labor conditions.For example, in terms of labor bargaining and association rights, the number of tasks with a similar significant coefficient as union is 5 in No CSRC suppliers, 2 in 1 CSRC supplier, and no(prenominal) in 2 CSRC suppliers. All the estimation results in violation of law and safety and living environment show that the tasks relative to coefficients are reduced as the number of CSRC increases. These results are consistent with the perspective that an increase in the number of CSRCs may increase the transaction costs of opportunism at the suppliers level. However, suppliers may also have measures to reduce governance effects from CSRC. The effects of different measures of opportunism are investigated in the next section. 23 24Table 5 Unidimensional Item retort Model for Labor Conditions by number of CSR code No CSR code 1 CSR code 2 CSR codes Item Coef. Pt Coef. Pt Coef. Labor Bargaining and Association Rights Union 42. 38 0. 00 39. 19 0. 00 19. 40 (4. 33) (0. 31) (3. 12) Complaint to Client 42. 38 0. 00 39. 19 0. 00 6. 11 (4. 33) (0. 31) (0. 89) Employee Association 42. 38 0. 00 39. 19 0. 00 5. 57 (4. 33) (0. 31) (0. 76) Bargaining Rights 42. 38 0. 00 19. 10 0. 00 2. 02 (4. 33) (0. 26) (0. 67) Bargaining Channel 42. 38 0. 00 20. 14 0. 00 3. 92 (4. 33) (0. 20) (0. 64) Labor department Use 0. 00 0. 87 19. 73 0. 00 3. 51 (0. 00) (0. 25) (0. 58) Collective Bargain 42. 38 0. 00 23. 61 0. 00 5. 21 (4. 33) (0. 98) (0. 6) Strike Use 20. 77 0. 00 2 0. 24 0. 00 3. 51 (2. 30) (0. 26) (0. 64) Violation of Law Child labor (14 yrs) Under age labor (16 yrs) Maternity leave Illegal Over Time work Safety and Living Environment Fire Safety Workshop Safety Food problem Live environment problem 0. 00 (0. 00) 21. 01 (1. 94) 20. 89 (1. 91) 0. 87 0. 00 0. 00 0. 87 15. 47 (0. 87) 14. 77 (14. 65) 22. 30 (0. 42) 18. 70 (0. 23) 2030. 00 0. 64 0. 00 0. 32 0. 00 0. 00 0. 43 (0. 76) 2. 98 (0. 68) 4. 48 (0. 79) 2. 72 (0. 67) 1335. 00 0. 40 0. 00 (0. 00) 19. 92 (1. 77) 42. 38 (4. 33) 21. 01 (1. 94) 0. 87 0. 00 0. 00 0. 00 17. 05 (0. 41) 19. 27 (0. 24) 20. 85 (0. 24) 24. 31 (15. 01) 0. 0 0. 00 0. 00 0. 11 1. 61 (0. 64) 1. 76 (0. 67) 4. 07 (0. 67) 4. 30 (0. 70) Pt 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 01 0. 01 0. 00 0. 00 0. 57 0. 00 0. 00 0. 00 0. 00 (0. 00) occur of obs 680. 00 Pseudo R2 0. 84 Other difficulty is the basis for the comparison Jacknife standard hallucination in parenthesis 4. 4 Suppliers strides to circumvent CSRC aud iting 25 When considering other transaction costs of governing with the CSRC, suppliers may apply different strategies to get around the CSRC auditing. Because most CSRC auditing would give advance notice to suppliers, suppliers would have room for measures to circumvent the auditing.This study has documented some of the common supplier measures to circumvent CSRC auditing fire drill, trained question, liberal a holiday, cleanup the factory, and safety drill. Certainly, suppliers may use more than one measure to get around the CSRC auditing it is likely that suppliers with more labor problems would use more measures to cover up their problems. This section first looks at the number of measures that may be associated with labor problems. We then investigate how the different measures affect labor conditions. Table 6 shows the UIRT model for the number of measures to circumvent CSRC auditing. The first column of Table 6 shows the result of no measure. A response of no measure to cir cumvent CSRC auditing is associated with no significant measures that are different from other problem, suggesting that a supplier without any measure for CSRC auditing is performing relatively well in terms of labor conditions. The second column, i. e. , one measure to circumvent CSRC auditing, shows a very different pattern. Although no task is as difficult as the union problem, all tasks show a significant coefficient, except the fire safety problem. The third column, two or more measures, indicates an even stronger coefficient in all the tasks than the column with one measure. Furthermore, the task complaint to client is as strong as union in this column.When comparing the three columns in Table 6, it appears that the more the measures suppliers use, the higher the likelihood they commit more labor problems. This is consistent with the transaction cost hypothesis that opportunism may increase the transaction cost of governing with the CSRC. It is not necessary that all measures have an gibe effect on labor problems. The next section shows the effect of individual measure of CSRC auditing on labor problems. 26 Table 6 Unidimensional Item Response Model for Labor Conditions by Number of Suppliers Measure No Measure One Measure Two or More Measures Item Labor Bargaining and Association Rights Union 19. 88 0. 22 20. 47 0. 0 34. 57 0. 00 (15. 58) (3. 66) (4. 30) Complaint to Client 5. 35 0. 79 7. 34 0. 00 34. 57 0. 00 (19. 88) (1. 20) (4. 30) Employee Association 5. 35 0. 79 7. 34 0. 00 20. 80 0. 00 (20. 03) (1. 21) (2. 85) Bargaining Rights 1. 64 0. 92 2. 40 0. 00 17. 16 0. 00 (15. 09) (0. 77) (2. 19) Bargaining Channel 3. 47 0. 82 4. 24 0. 00 17. 84 0. 00 (14. 91) (0. 74) (2. 13) Labor department Use 3. 20 0. 83 3. 85 0. 00 17. 42 0. 00 (14. 89) (0. 71) (2. 17) Collective Bargain 19. 88 0. 22 6. 63 0. 00 19. 85 0. 00 (15. 58) (1. 03) (2. 30) Strike Use 2. 94 0. 85 3. 78 0. 00 18. 47 0. 00 (15. 15) (0. 73) (2. 18) Violation of Law Child labor (14 yrs) -14. 1 0. 34 1. 26 0. 09 15. 87 0. 00 (14. 61) (0. 74) (2. 18) Under age labor (16 yrs) 2. 24 0. 88 2. 59 0. 00 16. 91 0. 00 (15. 11) (0. 77) (2. 12) Maternity leave 2. 77 0. 86 4. 60 0. 00 18. 89 0. 00 (15. 14) (0. 76) (2. 20) Illegal Over Time work 5. 23 0. 80 6. 39 0. 00 19. 09 0. 00 (19. 94) (1. 06) (2. 26) Safety and Living Environment Fire Safety 0. 00 1. 00 0. 73 0. 40 12. 91 0. 32 (22. 56) (0. 86) (12. 82) Workshop Safety 0. 00 1. 00 2. 03 0. 01 16. 24 0. 00 (22. 56) (0. 78) (2. 09) Food problem 4. 13 0. 79 5. 10 0. 00 21. 50 0. 16 (15. 39) (0. 86) (15. 24) Live environment problem 2. 19 0. 89 2. 67 0. 00 16. 88 0. 00 (15. 10) (0. 77) (2. 2) Number of obs 267. 00 1777. 00 1321. 00 Pseudo R2 0. 52 0. 51 0. 52 Other line is the basis for the comparison Jacknife standard defect in parenthesis Suppliers measures to circumvent CSRC auditing include fire drill, trained question, giving a holiday, Cleaning the pulverization, and Safety Drill. 27 4. 4 Suppliers Measures to circumvent CS RC auditing Table 7 shows the UIRT model for individual measures to circumvent CSRC auditing. The measures in this study include fire drill, safety drill, giving a holiday, trained question, and cleaning the factory. As the safety drill estimation is not converged, Table 10 shows only the four other supplier measures.Table 7 ranks the measures according to the number of the most serious tasks (compared to union) from the left, namely, fire drill (6 tasks), giving a holiday (4 tasks), trained question (0 task), and cleaning the factory (0 task). Why do fire drill suppliers have the most tasks similar to the union coefficient? As discussed in the last subsection, fire safety is one of the most serious areas that the Chinese local authorities are concerned with, and it is the most frequent task to be checked during a factory visit. If a supplier has not even met the basic standard of the fire safety, it is reasonable to infer that other tasks are likely to be a problem as well. This is similar in the case of holidays for workers convey that the supplier tries to prohibit workers from revealing this fact.As giving holidays for a busy factory is costly, suppliers are likely to create more than one problem in the task. Trained question is one of the most common ways that suppliers try to get around CSRC auditing during the worker interview. Suppliers try to train workers with model answers that fit the CSRC auditing interview questions. The trained question effect may be very express as only trained workers model their answers to the interview question, and this cannot cover other the problems in the factory. It is clear that the trained question may have fewer problems than fire drill and giving a holiday. Cleaning the factory was found the least serious measure.Only suppliers who are confident with their labor conditions would use cleaning the factory to polish their workshop. 28 Table 7Unidimensional Item Response Model for Labor Conditions by Suppliers Measu re Fire Drill Give pass Trained question Cleaning Factory Item Coef. Pt Coef. Pt Coef. Pt Coef. Pt Labor Bargaining and Association Rights Union 40. 28 0. 00 39. 74 0. 00 35. 79 0. 00 21. 80 0. 00 (1. 05) (3. 83) (5. 39) (2. 87) Complaint to Client 40. 28 0. 00 39. 74 0. 00 21. 55 0. 00 8. 79 0. 49 (1. 05) (3. 83) (2. 80) (12. 70) Employee Association 40. 28 0. 00 22. 22 0. 24 21. 55 0. 00 7. 68 0. 00 (1. 05) (18. 58) (2. 98) (1. 00) Bargaining Rights 18. 38 0. 29 0. 00 0. 75 17. 88 0. 00 3. 5 0. 00 (14. 33) (0. 00) (2. 78) (0. 75) Bargaining Channel 18. 38 0. 00 39. 74 0. 00 18. 36 0. 00 4. 47 0. 00 (0. 45) (3. 83) (2. 62) (0. 73) Labor department Use 21. 11 0. 00 16. 38 0. 32 18. 07 0. 00 4. 38 0. 00 (0. 61) (16. 06) (2. 69) (0. 71) Collective Bargain 40. 28 0. 00 39. 74 0. 00 20. 60 0. 00 6. 54 0. 00 (1. 05) (3. 83) (2. 81) (0. 85) Strike Use 40. 28 0. 00 17. 62 0. 00 19. 30 0. 00 4. 85 0. 00 (1. 05) (1. 31) (2. 88) (0. 74) Violation of Law Child labor (14 yrs) 0. 00 0. 45 18. 3 5 0. 00 16. 41 0. 00 2. 01 0. 01 (0. 00) (1. 70) (2. 61) (0. 73) Under age labor (16 yrs) 18. 38 0. 29 18. 00 0. 00 17. 51 0. 00 3. 33 0. 00 (14. 3) (2. 04) (2. 60) (0. 75) Maternity leave 21. 11 0. 25 22. 22 0. 27 19. 09 0. 00 5. 22 0. 00 (14. 97) (19. 80) (2. 72) (0. 74) Illegal Over Time work 40. 28 0. 00 22. 22 0. 27 19. 85 0. 00 6. 14 0. 00 (1. 05) (19. 80) (2. 72) (0. 85) Safety and Living Environment Fire Safety 0. 00 0. 39 0. 00 0. 75 14. 16 0. 00 0. 72 0. 40 (0. 00) (0. 00) (2. 54) (0. 85) Workshop Safety 0. 00 0. 38 0. 00 0. 75 16. 77 0. 00 2. 84 0. 00 (0. 00) (0. 00) (2. 70) (0. 75) Food problem 40. 28 0. 00 39. 74 0. 00 20. 59 0. 00 6. 11 0. 00 (1. 05) (3. 83) (2. 87) (0. 89) Live environment problem 18. 38 0. 00 21. 51 0. 00 17. 53 0. 00 2. 88 0. 00 (0. 45) (2. 15) (2. 72) (0. 5) Number of obs 85. 00 408. 00 1440. 00 2452. 00 Pseudo R2 0. 83 0. 88 0. 49 0. 50 Other Problem is the basis for the comparison Jacknife standard error in parenthesis except the fire estimation, which indicates standard error in parenthesis. Safety Drill is not converged in estimation. 29 Robustness Check For convenience, the estimation of the UIRT model in Table 7 uses the other problem as a base. However, as the other problem is not exactly along zero in the data, there may be a problem in estimating the true probability of the task. More importantly, there may be problem of the UIRT assumption about the zero covariance among items in the estimation.This robustness check uses the union as a base in Table 8, which reruns the UIRT model in Table 5. If the zero covariance assumption is violated, using the upper bound of the problem, the union, as the base of estimation will give very different results. However, if the zero covariance assumption is not violated, as this estimation uses union as a base, the coefficient will be interpreted exactly opposite to that given in Table 5 those problems with larger and significant coefficients given in Table 5 should now be close to z ero and insignificant in Table 8 and vice versa. Most of the coefficients here are negatively signed, suggesting that they are weaker than the union problem.Non-CSRC suppliers are seen to have six problems (complaint to client, employee association, bargaining rights, bargaining channel, collective bargain, and maternity leave), 1 CSRC has two problems (complaint to client and emplo