Whistleblowing Mechanisms for Employer Misbehavior: Evidence from the Bangladeshi Garments Sector

In many developing countries, the private sector lacks monitoring systems to provide firms with incentives for good behavior. 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 affects 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 this project, Laura Boudreau and Ada Gonzalez-Torres study how the design and introduction of a whistleblowing system affect information transmission by employees and misconduct by firm owners or by managers. They plan to first implement a lab-in-the-field experiment to identify the primary deterrents to employees to reporting different types of issues and to test different information elicitation mechanisms. They will then implement a complementary field experiment to test to what extent the presence of an external whistleblowing system, in the form of a reliable third-party grievance resolution mechanism, provides incentives for employers to reduce misbehavior.

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. While previous literature has provided theoretical predictions on the effects of whistleblowing systems, this project will contribute evidence on how to design these systems to maximize reporting of bad behavior, to protect whistleblowers, and to minimize the incidence of bad behavior. In doing so, it will directly inform the approach of the Amader Kotha Helpline, an external grievance resolution mechanism supported by multinational buyers that covers a large share of Bangladesh's garments sector. Despite the project's focus on labor practices, working conditions and misconduct therein that all directly affect employees, this research also has releveance for other types of employer misconduct (e.g., non-compliance with environmental, tax, or other laws).

Authors

Laura Boudreau

University of California, Berkeley

Ada Gonzalez-Torres

Ben-Gurion University of the Negev