In many developing countries, the private sector lacks monitoring systems to provide firms with incentives for good behavior. In part, this problem is due to weak, sometimes corrupt state institutions (Dal Bó and Finan, 2016). In part, it may also be due to principal-agent problems within the firm and to limited organizational capacity (Bloom et al., 2014; Boudreau, 2019). In principle, external whistleblowing systems (e.g., implemented by regulatory agencies) could support employees to inform state or other entities about employer misconduct. But while theoretical literatures on principal-agent-monitor problems and on secure survey design generate predictions on how the design and implementation of whistleblowing systems affect information transmission and misbehavior (Chassang and Padró i Miquel, 2018; Chassang and Zehnder, 2019), Little is known about how these predictions perform in practice.
In the proposed research, the research team study how the design and the introduction of a whistleblowing system affects information transmission by employees, misconduct by firm owners or by managers, and ultimately workers’ wellbeing and relations with management. Our setting is Bangladesh’s garments sector, where weak state institutions offer little to no legal protections to whistleblowers. In response, multinational apparel buyers introduced their own whistleblowing system in the form of an anonymous, toll-free helpline managed by a reliable third-party. They collaborate with the helpline, named Amader Kotha (AK), or “our voice” in Bangla, to implement a field experiment. Theytest how varying the resolution protocol affects workers’ incentives to report, the actual incidence of labor issues, and workers’ wellbeing and relations with management. They hypothesize that lack of plausible deniability and coordination problems lead employees to underreport certain types of employer misbehavior. Further, the study hypothesizes that women, who comprise the majority of workers in this setting, are both more subject to mistreatment by their largely male managers and face higher costs of reporting.
The project team will conduct a field experiment with 158 garments factories that participate in the AK Helpline. They will randomly assign half of these factories to treatment and half to control and compare their outcomesat baseline and 9 months after the intervention. Factories that are treated will experience a change in the AK Helpline’s resolution system, namely, an increase plausible deniability for callers and/or a reduction in coordination problems among workers by providing an information escrow2. The control condition is the status quo AK Helpline resolution system. They will test for effects on four main outcomes: (1) worker incentives to report sensitive issues, (2) actual occurrence of labor issues, (3) worker wellbeing, and (4) worker-manager relations. In addition, The team will explore potential effects on collective action by workers3. They will test for heterogeneous treatment effects on these outcomes by gender. To measure these outcomes, they will use a combination of individual survey data, helpline call data, as well as an anonymous voting system to get at the actual incidence of employer misbehavior.
Our research contributes to three main strands of literature: A growing literature on labor standards and economic development, and in particular, their interaction with global trade; an extensive theoretical literature on contract theory and collusion in organizations, and specifically in relation to the design of whistleblowing mechanisms; and to literature advancing the design of survey instruments to elicit sensitive behaviors. This project provides, to our knowledge, with the first field-based experimental evidence on the design of whistleblowing mechanisms under fear of retaliation. The project team is also the first to study the incidence of harassment at the workplace in a randomized controlled trial.
This research is highly policy-relevant. There is a great deal of interest among policymakers and multinational buyers in how to design whistleblowing and grievance resolution systems to provide employers and their managers with incentives for good behavior. This research also responds to interest in gender equality, highlighting the role of internal reporting and grievance mechanism to improve conditions for women at the workplace. This research is part of a research agenda on labor conditions and productivity in developing countries (Boudreau et al, 2019, Boudreau 2019) and information mechanisms in affecting development outcomes (González-Torres, 2019). Our research team’s ability to partner with critical stakeholders in the global apparel supply chain, such as the Alliance for Bangladesh Worker Safety (a coalition of multinational buyers that formed in the aftermath of the 2013 Rana Plaza collapse in Bangladesh to improve their suppliers’ safety), is possible, demonstrates stakeholders’ interest in this research agenda.