Stakeholder Perceptions of the Legitimacy of Corporate Advocacy: A case study of H&M Hennes & Mauritz Group’s corporate advocacy for improved wage levels and industrial relations in the Bangladeshi ready-­made garments industry

Marie Serup

Student thesis: Master thesis

Abstract

Bangladesh’s ready-made garments industry, manufacturing garments for export to predominantly Western buyers, has been heralded as the country’s most remarkable economic development of in the past two decades. Today, the sector constitutes 75% of total exports and contributes with 13% of GDP. Nonetheless, the sector is characterized by low wages, poor health and safety regulation, and confrontational – and even violent – relations between workers, labor unions, factory owners, trade associations and government institutions. Regular unrest among workers has threatened the industry by leading to temporary closure of several factories, and local and international organizations report severe abuse at the workplace, where many workers are victims of harassment, verbal threats, labor exploitation, and physical abuse. The research presented here takes a point of departure in the argument that conflicts in the industry have underlying structural causes. Safety hazards and worker exploitation occur because workers are unaware of their rights and fail to negotiate fair standards and practices in the workplace, and low minimum wage levels and poor public safety regulation and enforcement are sustained because elite interests disrupt the inclusive participation of industry stakeholders in the political process. Consequently, public debate in both Bangladesh and the global West increasingly focuses on the extent to which responsibility for these issues can – and should – be assigned to Western brands. In response, Western brands increasingly engage with corporate advocacy activities with a view to influencing economic, social and political development in the industry beyond their conventional supply chain relationships. The Swedish highstreet fashion retailer H&M Hennes & Mauritz Group is chosen as the case company for this research project, which examines how different stakeholders in the industry – at both the global and the local level – perceive the legitimacy of such corporate advocacy activities with particular emphasis on wage levels and industrial relations. In order to do so, an eclectic theoretical framework for analysis is developed. This framework is informed by multiple academic fields and thus constitutes a holistic and inclusive tool for understanding what frames stakeholder perceptions of legitimate corporate advocacy. Based on semi-structured qualitative interviews with a number of identified key stakeholders, the research uncovers stakeholder perceptions and discusses them with reference to the institutional context in which they occur. The key finding of PAGE 3 this analysis is that stakeholders perceive corporate advocacy to be more legitimate when explicitly tied to core business operations and leveraged through relationships between multinationals and their individual suppliers than when designed as non-core activities targeted at the structural level. There is, nonetheless, general support for the notion that legitimate corporate advocacy has a political dimension inasmuch as corporations have an ethical responsibility to protect – and, to some extent, realize – social and civil rights. Further, discrepancies between stakeholder perceptions are identified and explained with reference to the institutional incentive structures within which each stakeholder is situated. As such, stakeholders with Northern European backgrounds are more supportive of multi-stakeholder engagement across industry actors, while Bangladeshi stakeholders emphasize the importance of inter-company collaboration for alignment of activities and impact. This difference may be explained with reference to a strong tradition in many Northern European business systems for intimate relations and constructive collaboration between market, civil society and state actors as opposed to Bangladesh, where such relations are significantly more adverse. The main implication of these findings for H&M – and other companies engaged with or contemplating corporate advocacy – is that understanding in more detail the implications of different approaches to corporate advocacy for perceptions of legitimacy among stakeholders at the global and local levels will allow the company to strategize more effectively by winning general support for activities within areas of stakeholder perceptions alignment while ensuring the local embeddedness of activities within areas of divergence of such perceptions.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2014
Number of pages92