Corporate Strategy and the Management of Ethical Trade: The Case of the UK Food and Clothing Retailers

Abstract

Ethical trade, involving codes of conduct for worker welfare, has recently emerged as a form of corporate self-regulation for global commodity chains in the context of a neoliberal trading environment. I present a particular critique of ethical trade based on its embeddedness in corporate strategies and management systems. The ethical trading strategies of leading UK food and clothing retailers form the empirical focus of inquiry, and theories found in the literature on economic geography concerning corporate strategy and interfirm organisation are used to gain critical insight into the management systems used by these retailers when they attempt to put ethical trading principles into practice in their global supply chains. Variations are observed between retailers in terms of their commitment to ethical trade, which are shaped by issues of corporate culture, financial management, and corporate restructuring. Varying levels of commitment to ethical trading strategy are argued in turn to influence organisational approaches to social auditing in the supply chain. Three contrasting modes of organisation for ethical monitoring are suggested to be used by retail companies—the arm's-length approach, the coordinated approach, and the developmental approach—each of which holds contrasting implications for suppliers and workers at production sites. I argue that corporate approaches to ethical trade vary markedly and that these variations have the capacity to shape the regulation of labour conditions at sites of export production.