International buyers vary in their sourcing strategies, with some adopting “relational” strategies that entail sourcing from fewer suppliers and providing higher rents (Cajal-Grossi, Macchiavello, and Noguera, 2023), and others adopting more "spot" strategies that entail sourcing from many suppliers and providing lower rents. We hypothesize that exposure to relational buyers causes exporters to invest in capabilities to build stronger relationships with their workers (Gibbons and Henderson, 2012) and in better working conditions. This may be because relational buyers care more about working conditions or because performance in the relational contract requires or induces better conditions. We document that workers employed by Bangladeshi garment exporters that supply to relational buyers experience better working conditions and have longer tenure. Using exposure and responses to the 2013 Rana Plaza disaster, we show that relational buyers do not appear to select suppliers with ex ante better conditions, nor do they appear to care more about working conditions. Instead, relational buyers' investment in trading relationships appears to causally improve conditions.
