Institutional and regulatory framework

Contextual factors of the institutional and regulatory environment play a decisive role when analysing the GPN of second-hand clothes. By widening the research beyond only focusing on actors of the production chain, to all actors operating within the social and institutional context that is surrounding and influencing the GPN, a more holistic analysis is possible (Henderson et al. 2002). The institutional and regulatory environment determines patterns and processes as well as the role of actors involved in the trade with used clothes. Ultimately, it influences the extent to which actors are able to extract value out of discarded clothes. In a broader sense, those contextual factors influence how trade with discarded clothes connects the Global North and the Global South (Brooks 2012a; Crang et al. 2013). For this study, the institutional and regulatory framework of the GPN of second-hand clothes is analysed by focusing on three dimensions that shape the framework on a local, national as well as international level, namely political, economic, and social contextual factors. It has to be noted however, that those factors are all intertwined.

The political context that shapes the GPN of second-hand clothes can be differentiated in the local and the global political framework. The local political framework considers collection activities of actors, state support, or local and national waste policies. This can be influenced by governments in various ways, such as through new regulations with regards to textile waste management such as EPR, which holds producers or sourcing companies responsible for their goods after use. Another way would be through monetary benefits in the form of tax exemptions, or education and awareness programs, which can increase information about textile waste and its separation, consequently promoting proper disposal practices. On a local level, municipalities play a crucial role in the promotion of collection of used textiles. The global political framework on the other hand takes contextual factors on a broader level into account, such as conditions and policies that consider the trade of textile waste between nations. Among others, those are classification of materials and their standards, which can prohibit the movement of waste or can determine waste as a resource (Crang et al. 2013). In this context, Brooks (2012a) outlines the impact of import bans on the second-hand clothing trade, which have been implemented in various countries in the

Global South, such as Nigeria and South Africa, in order to protect domestic industries.

Summing up, while the global political framework considers contextual factors that affect processes and activities between countries, and also influences the connection between the Global North and South, the local political framework analyses conditions and policies, which concern the handling of a product’s end of life on a municipal level.

The economic context is shaped by contextual factors regarding demand and supply of second-hand clothes, such as prices, export markets or fast fashion dynamics.

Economic activities and the role and behaviour of actors within GPNs are greatly influenced by the social context in which they operate. “GPNs do not only connect firms functionally and territorially, but also they connect aspects of the social and spatial arrangements in which those firms are embedded and which influence their strategies and values, priorities and expectation of managers, workers and communities alike”

(Henderson et al. 2002: 451). Hence, economic factors are strongly influenced by the social context in which the GPN of second-hand clothes is embedded in. The social context is shaped by factors relating to awareness of environmental and social concerns with regards to textile waste, social relations between actors and the perception of second-hand clothes within a society. Driven by growing environmental and social concerns, topics related to increased consumption and discard of clothes are slowly moving up the political agenda in the Global North. The value of second-hand clothes is conceptualized in the Global North through a positive environmental framing, the concept of charitable donations and a provision of a marked-based solution of the management of the textile waste stream (Norris 2012). Analysing factors that shape the economic and social context in which the second-hand clothing trade is embedded in, gives closer insights into the institutional and regulatory framework of second-hand clothing GPNs, which influences the role of actors involved and the extent to which they are able to extract value out of discarded clothes.

2.3.2 Actors

The second-hand clothing trade connects a variety of different actors in the Global North and the Global South. Those actors can be divided into two broad categories, namely charitable and commercial actors.

A charity is defined as any organization established for and giving effect to charitable purposes, as defined by the Preamble to the Statute of Charitable Uses 1601, also known as the Statute of Elizabeth, of the Parliament of England, which formed the

basis for the definition of charitable purposes (O’Halloran 2012). O’Halloran (2012) defines charitable actors and highlights that traditionally, charitable actors occupied the space between the public and the for-profit sector on the basis that they provide supplementary services and socioeconomic contributions to the core public service provision. According to the author, charitable actors build up trust and specialized knowledge in acting as an intermediary between the giver and the recipient place, hence occupying a strategic position between state and market. For the services they provide, they are often granted tax-exempt status or get governmental subsidies.

Therefore, there is a connection between the state and charities. In addition, charities are connected to society through donations. Altruism lays at the basis of this relationship. According to the author, donors have a sense of awareness of belonging to a community and of social responsibility when donating to charities. The author portrays that this “gift connection” between charities and the state on the one hand, and donors on the other hand, is the reason why “in essence, “profit” and “charity” were worlds apart” (O’Halloran 2012: 4). However, in recent years, there was an increasing need for charitable actors to generate income in order to respond to diminishing flows of governmental funding. Consequently, charities increasingly entered into commercial for-profit activities (O’Halloran 2012).

These developments led to more complex structures in the GPN of second-hand clothes and changed the actor level. While in the 1960s and 1970s the second-hand clothing market was controlled by charities, starting in the 1980s, profit oriented actors started to appear (Yalcin-Enis et al. 2019). The emergence of commercial actors with new forms of embeddedness and value capture in the trade with second-hand clothes, led to a greater complexity as well as commercialization of activities in the GPN of used clothes (Paras et al. 2018a, Norris 2012).

Against this background, the differentiation between charitable and commercial actors in the second-hand clothing trade is difficult. For the purpose of this thesis however, the following broad framework (Table 1) was chosen to differentiate between actors.

Throughout this paper, charitable and commercial actors are classified based on prevailing characteristics in the following broad categories;

Table 1 Differentiation charitable and commercial actors

Charitable Actors Commercial Actors

Mission Non-profit For-profit

Main Value Captured Social Value Economic Value Funding Donations and grants Market rate capital

Labour Volunteers and subsidized

jobs

Employees at market-based compensation

Main supply of goods Donations Through suppliers who charge market rate Source: own representation

Empirical research shows that there are mixed forms and interlinkages between actors, which often entail different degrees of dependence. Hence, analysing the power position and embeddedness of actors within the production network of second-hand clothes gives closer insights on the structure and composition of the actor level.