While no one advocates for labor abuses, poor working conditions are often seen as an inevitable consequence of global trade, where producers in less-developed countries compete by keeping costs low.
Our research suggests an alternative to this race to the bottom. It involves replacing traditional mass manufacturing with “lean manufacturing” principles. In addition to improved product quality and delivery times, the lean approach has been linked to improved terms of employment. Workers tend to earn more and report higher engagement with their jobs.
Could lean manufacturing have a similar positive impact on jobs in the developing world? To examine this possibility, I conducted research on recent developments in Nike Inc’s apparel supply chain with Jens Hainmueller of Stanford University and Richard M. Locke of Brown University.
Examining lean’s impact across eleven developing countries, we found that factories that adopted lean manufacturing improved compliance with labor standards. On average, serious violations of labor standards fell by fifteen percentage points, from 40% of factories to 25%.