Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain

The Institute for Operations Research and the Management Sciences
2017

This study tests the hypothesis that lean manufacturing improves the social performance of manufacturers in emerging markets. We analyze an intervention by Nike, Inc., to promote the adoption of lean manufacturing in its apparel supply chain across 11 developing countries. Using difference-in-differences estimates from a panel of more than 300 factories, we find that lean adoption was associated with a 15 percentage point reduction in noncompliance with labor standards that primarily reflect factory wage and work hour practices. However, we find a null effect on factory health and safety standards. This pattern is consistent with a causal mechanism that links lean to improved social performance through changes in labor relations, rather than improved management systems. These findings offer evidence that capability-building interventions may reduce social harm in global supply chains.

Media

Harvard Business Review

Insights by Stanford Business

Authors

  • Greg Distelhorst
  • J. Hainmueller
  • R.M. Locke

Publication Type

Journal Name

Management Science

Volume Number

63

Issue Number

3