A market for worker rights: explaining business support for international private labour regulation

Why do companies choose the private labour regulations that they do? Scholars know plenty about why companies might accept private regulators to oversee and protect labour standards. But they know very little about why companies choose one rather than another private regulatory approach when several are available, differing in terms of stringency. This paper explores the conditions under which companies in the clothing industry choose private labour-standards regulation with more rather than less stringent regulation. It does so based on qualitative and quantitative analysis of clothing companies in Europe. It argues that business preference for more stringent private labour regulation is positively affected by societal pressure, and that this societal pressure is predominantly orchestrated by activist groups. This not only entails campaigns, but also can be a combination of public and informal efforts to influence companies, together with pressures from consumers and media. This research also shows that national and industrial factors play a role. In particular, the position of the firm in the value chain and its distance to consumers and manufacturers affect preference for more or less stringent private regulation. Societal pressure is therefore important but not the only source of business preferences for private regulation.