How does a multinational enterprise (MNE) monitor and regulate the working conditions of a multi-tiered global value chain? Literature based on internalization theory focuses on the role of an MNE as the sole regulator, assuming the passivity of suppliers within the chain. We challenge this approach as it is not feasible for a single firm to monitor and regulate hundreds of independent suppliers. We expand on this literature, particularly the cascading governance thesis, by considering suppliers as regulatory intermediaries and addressing the issue of regulatory quality. Through a case study of two Korean multinational first-tier suppliers in the apparel and electronics industries, we find that an MNE, as a lead firm, engages in a more prudent form of cascading governance than originally theorized, maintaining direct audits of sub-suppliers. First-tier suppliers exercised intermediary competence in facilitating the lead firm's cascading governance. However, faced with inconsistent lead firm demands and challenging host country environments, these suppliers had to compromise on regulatory quality and settle on “good-enough” compliance—a level of compliance that poses minimal risk to the firm while allowing them to prioritize production goals—over perfect compliance.

中文翻译：

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称职的供应商是缺失的一环：以供应商为中心的全球价值链中级联私人劳工治理的观点


跨国企业 （MNE） 如何监控和监管多层全球价值链的工作条件？基于内部化理论的文献侧重于跨国企业作为唯一监管机构的作用，假设供应链中的供应商是被动的。我们质疑这种方法，因为一家公司无法监控和监管数百家独立供应商。我们通过将供应商视为监管中介并解决监管质量问题，扩展了这些文献，特别是级联治理理论。通过对服装和电子行业的两家韩国跨国一级供应商的案例研究，我们发现，跨国企业作为牵头公司，采取了比最初理论上更审慎的级联治理形式，即对次级供应商进行直接审计。一级供应商在促进牵头公司的级联治理方面发挥了中介能力。然而，面对不一致的领导公司需求和具有挑战性的东道国环境，这些供应商不得不在监管质量上妥协，并决定“足够好”的合规性，即对公司构成最小风险的合规水平，同时允许他们优先考虑生产目标，而不是完美的合规性。