Impact of factory certifications on firm resources: a quantitative content analysis of the Bangladeshi readymade garments (RMG) industry
| Date | 18 June 2024 |
| Pages | 93-111 |
| DOI | https://doi.org/10.1108/JCEFTS-01-2024-0005 |
| Published date | 18 June 2024 |
| Subject Matter | Economics,International economics |
| Author | Sudipta Das,Debanjan Das |
Impact of factory certifications on
firm resources: a quantitative
content analysis of the
Bangladeshi readymade garments
(RMG) industry
Sudipta Das and Debanjan Das
Department of Fashion, Dress and Merchandising, West Virginia University,
Morgantown, West Virginia, USA
Abstract
Purpose –This study aims to investigate the association between certifications in the Bangladeshi readymade
garment (RMG) sector and diverse firm resources, contributing to Bangladesh’s competitive advantage.
Design/methodology/approach –The study conducted a quantitative content analysis of 366
Bangladeshi RMG firm websites, using Barney’s (1991) resource-based theory (RBT) framework. Pearson
correlationand linear regression analyses were used to explorethe research questions.
Findings –The findings reveal significantpositive impacts of certifications on all firm resource categories
(physical, human, organizational knowledge and learning, general organizational and financial) under the
RBT framework. Certifications correlate positively with resources, from small to medium,and with various
factors,though some negative correlations were identified.
Research limitations/implications –The study improves comprehension of apparel manufacturers’
certifications and their association withfirm resources, offering valuable insights for stakeholders on long-
term competitive advantages.Yet, limitations should be considered, including size-dependent variations and
relianceon self-reported website data.
Originality/value –This study represents a pioneering effort, concentrating on Bangladesh’s RMG sector and
offering a unique perspective on the implications of certificationsfor firm resources within emerging economies.
Keywords Firm resources, Certification, Bangladeshi fashion industry, Rana plaza, Correlation
Paper type Research paper
Introduction
Bangladesh’s readymade garment (RMG) industryhas experienced substantial growth and
has become a significant player in the global apparel market.In 2023, the sector contributed
10.35% of the country’s gross domestic product (Star Business Report, 2024). In this sector
of Bangladesh has over 4,600 factories, making it the country’s most significant industrial
sector. It uses over 4 million workers; over 80% are women, contributing 36% to total
manufacturing employment and 6.5% market share in the globalapparel trade (Hasan and
Das, 2024). It boosts the country’s foreign exchange reserves and improves its standing in
the worldwide economy. In 2023, Bangladesh’sapparel exports reached nearly $47bn, which
is 84.58% of the country’s total exports (Star Business Report, 2024). This immense
contribution also enhances Bangladesh’s foreign exchange reserves, stabilizing its position
in the global economy. The industry’s resilience and adaptability, especially during the
Impact of
factory
certifications
93
Journalof Chinese Economic and
ForeignTrade Studies
Vol.17 No. 2/3, 2024
pp. 93-111
© Emerald Publishing Limited
1754-4408
DOI 10.1108/JCEFTS-01-2024-0005
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1754-4408.htm
COVID-19 pandemic, have highlighted its importance as a critical driver of Bangladesh’s
economy (Das et al., 2024a). The RMG industry’s growth has been fueled by its ability to
operate with relatively low capital investment, modest resources, harmonious combination
of trade agreements, preferential marketaccess and the advantage of low-cost skilled labor
(Das et al., 2024b). However, this industry has seen a lot of challenges due to concerns about
its environmental impact and social issues, such as a lack of adequate working conditions,
hazardous chemicals, workersafety and fair wages (Monamy and Das, 2022). This industry
is often associated with labor disputes, building collapses and fire accidents (Das and Das,
2024). The significant turning point was the fire accident at Tazreen Fashions in 2012, and
the building collapse of Rana Plaza in 2013 brought substantial attention to the industry’s
poor working conditions and labor relations (Monamy and Das, 2022). These imbalances
lead to unsafe working conditions and numerous factory accidents and injuries,
underscoring the pressing need for enhanced safety measures. As a result of these
difficulties, United States buyers are also increasingly discerning in their purchasing
choices, seeking sustainably produced and socially responsible high-quality products.
Accordingly, Accord on Fire and Building Safety in Bangladesh (the ACCORD) was
established due to a legally enforceable agreement between international retailers and trade
unions in 2013 to enhance safety in apparel and textile factories. (Monamy and Das, 2022).
To win back buyers’trust, certifications havebecome a popular way to provide checks and
balances in the globalsupply chain (Monamy and Das, 2024).
Certification programs offer a structured approach to ensuring safer workplaces, fair
compensation and enhanced worker protection while promoting sustainability and ethical
practices. Some of the most commonly sought-after certifications by Bangladeshi apparel
businesses include the International Organization for Standardization (ISO), Fair Trade,
Global Organic Textile Standard (GOTS), B-Corp, Better Cotton Initiative (BCI) and Social
AccountabilityInternational (SA8000) (Mottaleb and Sonobe, 2011;ProthomAlo,2023).
The RMG sector relies heavily on its firm resources to navigate the challenges and
heightened scrutiny. The adoption of certifications emerges as a strategic avenue for firms to
strengthen and enhance these resources. Companies pursue certifications not only for their
sustainability benefits but also to differentiate themselves from their competitors. This
differentiation leads to tangible advantages such as increased market share and enhanced
brand loyalty, which are crucial for overall performance and establishing industry leadership.
Numerous studies have highlighted the significant impact of certifications on the
performance of manufacturing firms. For instance, Wen and Lee (2020) found that Chinese
firms experienced substantial financial performance and productivity improvements after
obtaining environmental labeling certifications. Similarly, Ullah et al. (2014) observed a
positive association between ISO accreditation and firm size and age in Latin America and
the Caribbean. Moreover, Gallego and Guti
errez Ramírez (2021) demonstrated that
implementing ISO 9001 certification increased innovation, labor productivity and sales for
manufacturingfirms in Colombia.
This study uses the resource-based theory (RBT) framework to elucidate the connection
between certification and firm resources. While previous research on Bangladesh’s apparel
export firms has highlighted export experience, the ability to provide high-quality products,
physical infrastructure, skilled employees and competitive pricing as crucial resources for
competitive advantages (Swazan and Das, 2021),theroleofcertifications in shaping these
resources has not been explored. To bridge this gap, this study investigates the firm resources
of the Bangladesh RMG business and assesses their relationship with certifications to
determine whether certifications truly boost firmresources or are simply used as a promotional
tool. This study significantly contributes to understanding RBT by recognizing the export
JCEFTS
17,2/3
94
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
