The Operational and Signaling Benefits of Voluntary Labor Code Adoption: Reconceptualizing the Scope of Human Resource Management in Emerging Economies

Labor codes have been voluntarily adopted and used by manufacturers in emerging economies for the past two decades as a means of ensuring minimally acceptable or core labor standards for workers. However, far too little is known of the potential benefits from the voluntary adoption of labor codes to the manufacturer, and prior human resource management research has been virtually silent on the business implications of their use for emerging economy manufacturers participating in global supply chains. Drawing on previous work across multiple disciplines and proposing a framework that extends human resource management theory more explicitly and rigorously to the context of emerging economy manufacturing, I theorize and demonstrate that the voluntary adoption of a labor code can constitute an effective human resource investment in emerging economies in improving establishment-level employee outcomes and operational and financial performance. The hypotheses are tested using longitudinal data on a sample of apparel manufacturing plants in Sri Lanka. Implications of this study include providing insight into how to expand the scope and relevance of human resource management theory to better understand research and practice in emerging economies.