In a small, rural village in Masoro, Rwanda, more than 150 women make high quality handbags that end up on the shelves of one of the biggest names in fashion: Kate Spade & Company.
The artisans in Masoro are employees of Abahizi Dushyigikirane, Ltd. (ADC), the supplier of Kate Spade & Company’s on purpose label, an initiative launched in 2013 as a new and innovative value chain approach to empowering women. on purpose, a fully integrated commercial division of Kate Spade & Company, is uniquely positioned to empower women through their “social enterprise supplier model.”
ADC is a Rwandan-owned for-profit social enterprise that provides high-quality products to the global fashion industry with a social commitment to empower its employees and transform its community.
Three professors from Georgetown’s McDonough School of Business conducted research on ADC and the on purpose initiative for the past 23 months. They wanted to understand the viability of its business model and the feasibility to supply a global brand from a base in rural Rwanda. Also, the professors wanted to document ADC’s human impact – the extent to which the company’s employment experience is economically and psychologically empowering.
The project was a collaborative effort among Georgetown University’s McDonough School of Business, the Georgetown Institute for Women, Peace and Security, and the Georgetown University Women’s Leadership Institute.
Their findings are included in a research report, “A Social Enterprise Link in a Global Value Chain: Performance and Potential of a New Supplier Model.” Although it is unrealistic to expect one’s job to be the sole source of empowerment, the ADC employment experience has consistently provided vital resources for the artisans so that they might flourish economically, socially, and psychologically.
The opportunities for women to gain full-time employment are close to non-existent in this community. Employment at ADC not only provides consistent employment for women, but also it ensures healthcare, paid vacation, maternity leave, and access to education programs. In addition, the lowest artisan salary is considerably higher than the median salary for private sector jobs in Rwanda, and it exceeds the salary of comparable jobs in Masoro. The steady income has allowed artisans to increase spending both on the consumption of necessities and investments for the future. However, to focus exclusively on their steady wages is to miss other important components of the ADC work experience, such as the employee development programs and the humane, respectful style of management.
“If a brand really wants to raise the bar on corporate social responsibility and make a difference in the lives of the people who make the merchandise, then I believe that much can be learned from ADC,” said report co-author Edward Soule, associate professor of corporate ethics. “Systematically measuring how employees are doing can be a powerful feedback mechanism and a guide in transforming lives.”
Results have found that the metrics speak for themselves. Aside from simple economic gains, artisans report high levels on several indicators of psychological well-being. Relative to the average member of a Masoro-area control group, the average artisan reports higher levels of physical health, social standing, power, and confidence; as well as lower levels of anxiety. Moreover, relative to the average female community member of the Masoro area, the average female artisan reported higher levels of discretion in decisions related to personal finances, family finances, and family healthcare.
“The changes to these women have a permanence about them. Not only is there more investment in land or household infrastructure, the fact that women report having higher social standing or decision power suggests they have experienced an internal shift in their sense of self. Self-redefinitions may be key to making changes stick,” said report co-author Catherine Tinsley, professor of management and director of the Georgetown University Women’s Leadership Institute. “Moreover, we found no evidence that these changes that empowered women were disruptive to the society.”
“There are few matters as critically important as the economic empowerment of women, particularly in difficult situations,” said Ambassador Melanne Verveer, executive director of the Georgetown Institute for Women, Peace and Security. “We believe this purpose-filled business initiative on the part of Kate Spade & Company can serve as an inspiration for other companies.”
While it is premature to draw any conclusions regarding ADC’s sustainability, the study confirms that a financially viable business model is taking shape. ADC has the elements of a sustainable business and has a realistic prospect of achieving its commercial purpose, which is to prosper as a supplier to multiple fashion brands.
“Slicing up global value chains by multinational corporations can bring promise or peril, depending on how it is done,” said report co-author Pietra Rivoli, professor of finance and international business. “Small fair trade-type initiatives have long prioritized the well-being of workers in poor countries, but the supply chains of large multinational corporations also have been associated with problematic labor practices and poor outcomes for workers. Our research shows that intentional targeting by multinational corporations of broad aspects of worker well-being can enhance the promise and reduce the peril for both global brands and workers.”
The study demonstrates that production costs can be offset by two competitive advantages of operating in Rwanda: relatively lower labor costs and favorable trade provisions with the United States. At a time when Africa is being considered as the next hub for fashion sourcing, ADC warrants attention. The company illustrates what is possible when the lead firm of a global value chain intentionally targets social outcomes. ADC is the test case and additional iterations are under consideration.
This project was supported by the Georgetown University Program for Research of Complex Moral Problems, the Georgetown Institute for the Study of Markets and Ethics, Marriott International, the Georgetown University Reflective Engagement Program, the Ludwig Family Foundation, and the Smart Family Foundation.
A full copy of the report and a summary of the research findings can be found on the Georgetown University Women’s Leadership Institute website.