Nora Lohmeyer: ‘We need to start thinking beyond the limits of the dominant market logic’
Research by Assistant Professor Nora Lohmeyer shows that despite market forces in the global economy, multinational companies are able to tackle major societal challenges through responsible management. In a paper published in the Academy of Management Journal Nora Lohmeyer, Elke Schuessler (Johannes Kepler University Linz, Austria), and Sarah Ashwin (London School of Economics, UK) theorize the concept of ‘market-protected spaces’.
Created through collective regulation, market-protected spaces provide a mechanism through which companies that usually compete with each other are enabled to collaborate on addressing systemic global issues, such as human rights violations in global supply chains.
Lohmeyer, Schuessler, and Ashwin studied multinational garment firms from Germany and the UK, analyzing their approaches to managing corporate social responsibility since the deadly 2013 Rana Plaza factory collapse in Bangladesh, where more than 1000 people died and at least 2500 people got injured. Lohmeyer: ‘The collapse created a big scandal in the garment industry all over the world. This led to renewed criticism of firms’ voluntary corporate social responsibility (CSR) efforts that had failed to effectively protect workers from this tragedy. New regulatory approaches for companies followed, such as supply chain due diligence laws and collective agreements. What we were interested in with this study was how multinationals are able to effectively address worker rights issues in the context of a highly competitive market environment.’
Binding agreements without competition
The researchers saw that corporations differ in how far they have come in terms of their responsibility efforts. Lohmeyer: ‘Most organizations still rely on voluntary CSR policies and practices implemented within the organization, but we also observed a number of companies that treated their employees' rights as a collective issue and sought to tackle responsibility in their supply chains differently. They began to collaborate with other ambitious companies and global union federations and created binding collective agreements. Agreements where global union federations act as independent co-signatories to ensure agreements they are binding and therefore go beyond voluntary CSR. We saw that such level playing fields create less competition, equal opportunities, and a whole new space for collaboration. And because systemic, industry issues like employee safety or fair wages can only be tackled collectively, we saw that these market-protected spaces could be real gamechangers.’
A sustainable solution to global problems
According to the researchers, market-protected spaces could potentially be applicable to other issues and industries, such as climate change, healthcare, and education. However, relevant questions remain. ‘In the garment industry, the role of unions as legitimate representatives of workers was important to create market-protected spaces around labor standards concerns. When it comes to climate change, it is less clear who can legitimately represent and make legal claims on behalf of ‘the climate’. Further research is thus needed when it comes to transferring this governance model to other areas.
What is certain is that if we want to tackle the huge problems we are currently facing, we need to start thinking beyond the limits of the dominant market logic.’
More about Nora Lohmeyer’s research in the garment industry can be found here: https://journals.aom.org/doi/pdf/10.5465/amj.2020.1614