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PRIVATE REGULATION

NETWORKS | TREES | RAILWAYS
Madelon Vriesendorp, Animation background from Flagrant Délit (In the Act), 1979
REGULATING SUPPLY CHAINS

Millions of workers in global supply chains have lost their jobs as a result of the pandemic. The impact has been especially acute in the garment industry; in Bangladesh, more than 70% of apparel workers were sent home without pay in the early days of the pandemic.

These practices, along with the working conditions in many major industries, violate firms' regulatory standards. In a recent article, SAROSH KURUVILLA, MINGWEI LIU, CHUNYUN LI, AND WANSI CHEN consider the structural impediments to effective supply chain reform.

From the piece: 

"Why is there a gap between the policies of private regulation and the labor standards of global supply chains? Two general explanations have been advanced. The first has focused on 'symbolic adoption,' whereby companies adopt private regulation primarily as a strategy to minimize reputational risk without seriously implementing it. A second explanation points to faulty assumptions underlying the model's design and implementation.

Our argument is that actor heterogeneity in private labor standard regulation generates opacity that decouples practice from outcomes. We develop three propositions demonstrating how heterogenous actors contribute towards field opacity: practice multiplicity (the diversity of practices adopted by actors across sociopolitical and geographic spaces), behavioral invisibility (the difficulty in assessing the behavior of suppliers) and causal complexity, whereby a 'multitude of interconnected actors and factors interacting in non-linear ways creates uncertainty about cause-effect relations.' Our contribution to the private regulation literature is to outline an alternative, systemic explanation for the performance gap; the complex ways in which actors interact play an important role."

Link to the text.

+   "The voluntary private model likely displaces government and trade ­ union interventions and is designed not to protect­ labor rights, but to limit ­legal liability and protect brand value. But thus far, governments have yet to actively enforce legislation in supplier countries." In his new book, Kuruvilla delves into the history and effectiveness of corporate supply chain regulation. Link.

+   A recent article by Tim Bartley politicizes the discussion: "Theories of transnational governance remain focused on emergence, design, or legitimation. This paper argues that some simple facts about intersecting expressions of power can help us make sense of the concrete practices of private regulation." Link.

+   "Public governance has evolved beyond its traditional focus on enforceable rules directed to actors within national jurisdiction. Increasingly, states seek to have impact beyond their national territory." Guillaume Delautre, Elizabeth Echeverría Manrique and Colin Fenwick introduce a new ILO report on hybrid institutional and legal regulatory frameworks. Link.

‡    agriculture  trade 
 
NEW RESEARCHERS
Economies of Scale in the Auto Industry

In his job market paper, PhD candidate in economics at Yale University JIAN ZIN HENG looks at firm-firm relationships among automobile manufacturers and their suppliers after the Great Recession. 

From the paper:

"A concern during the Great Recession was the collapse of American automobile producers hurting other firms in their industry. Central to this fear was the industry’s network of manufacturer-supplier relationships. This paper studies how economies of scale and product differentiation affect manufacturer-supplier relationships. When manufacturers differentiate their products, they typically sell sophisticated goods with narrow market segments. Hence, they may not realize economies of scale. However, if their inputs remain simple and homogeneous, their suppliers can achieve scale economies by supplying multiple firms. From this viewpoint, highly connected production networks are desirable, since they reduce production costs. This paper introduces a simple model of manufacturer-supplier relationship formation. The data shows auto producers sharing more suppliers after the Great Recession. The simple model predicts more relationship investment when manufacturers face greater demand. The empirical results indicate overinvestment dominates relationships. Hence, subsidizing US automakers during 2008-16 may only increase relationship formation to more inefficient levels."

Link to the paper, link to Zin Heng's website. 

‡    networks  manufacturing  new_researchers


Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org.
+ + + 

+   "In response to the economic downturn of 1937-8, the RFC moved into industrial policy, providing working capital directly to corporations. It wasn’t just providing liquidity—it was socializing investment." New on Phenomenal World, Nic Johnson resurrects the Reconstruction Finance Corporation. Link. 

+   "Why are the east sides of formerly industrial cities more deprived?" Stephan Heblich, Alex Trew, and Yanos Zylberberg on past pollution and neighborhood segregation. Link. 

+   Taylor Shelton examines "gameday homes," which emerge through speculative real estate proximate to college football stadiums in the American South. Link. 

+   "New international enrollment (including those online) decreased by 43 percent." John Bound, Breno Braga, Gaurav Khanna, and Sarah Turner on international students in US higher education and the Covid-19 enrollment drop. Link. 

+   Nick Krachler, Ian Greer, and Charles Umney on healthcare marketization in five countries. Link. 

+   "The existence of structural causes of citation gaps means that certain attempts to make academic communities more efficient (e.g. by eliminating pre-publication peer review) have the potential to create feedback loops, where initial inequities feed back into greater inequities over time." By Hannah Rubin. Link.  

+   Max Krahé on what defines a sustainable investment. Link. 

+   "Far from addressing climate change, California’s forest offsets appear to be adding tens of millions of tons of CO2 into the atmosphere on balance." By Lisa Song and James Temple. Link. And in Bloomberg, Max de Haldevang on deforestation as an unintended effect of AMLO's tree-planting program. Link. 

+   "Railway companies in the UK were a popular investment choice among the middle classes and had been a major asset class since the first railway boom of the mid-1830s. The railways, therefore, make an interesting case study through which to examine women investors. An analysis of 500,000 shareholder address books reveals the growing importance of women shareholders from 1843, when they made up about 11 per cent of the GWR shareholder base, to 1920, when they constituted about 40 per cent of primary shareholders. We find that women were much more likely to be solo shareholders than men, with 70 to 80 per cent of women investing on their own, compared to just 30 to 40 per cent of men." By Graeme G. Acheson, Gareth Campbell, Áine Gallagher, and John D. Turner. Link. 
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