CASE STUDY

Nike: Managing Ethical Missteps - Sweatshops to Leadership in Employment Practices

Nike: Managing Ethical Missteps - Sweatshops to Leadership in Employment Practices

1. Why did Nike fail to address corporate social responsibility earlier?

Corporate social responsibility is an evolving concept that does not currently have a universally accepted definition. It frequently overlaps with similar terms, such as corporate sustainability, corporate sustainable development, and corporate citizenship. Whether or not or to what extent businesses must implement CSR has been a heated topic of discussion through the years, but was particularly vociferous during the debate about conducting business like in the case of Nike.

The management of Nike maintained that their responsibility extended only to their shareholders, which is the wrong concept as the corporate social responsibility also includes the labors. The working conditions for the workers of Nike factories have been debated by many critics. As various assertions has been made against the Nike factories. These allegations include poor conditions, child labor, widespread harassment and abuse. For the reason that the Asian factories have further subcontracted out the work, therefore, it has become increasingly difficult for Nike to regulate the working environment and wages in the factories (Arnold & Bowie, 2008).

Sweatshop Labor

Nike was failed to address the corporate social responsibility is the past as the company was focusing on the low-cost production. This low-cost product was being done through manufacturing in the Asian countries that include China, Pakistan, Indonesia, Vietnam and Bangladesh. As in these countries the labor is cheap, due to which the company was focusing on these countries. In addition to this, the labor laws is also not strong in these counties, due to which child labor, excessive work hours, hostile work environments, inappropriate payment, or other unethical actions were common practices (Ballinger, 2010). Therefore, Nike failed to address this issue, but when the international laws came across, the Nike was forced to change its strategy as the products of Nike started to boycott in the European countries.

With an increasing focus on cross-border trade, multinational corporations like Nike faced increased demand to adopt CSR policies detailing their approaches to human resource management practices, environmental protection, health and safety, and sustainable economically development in their foreign operations, which was not adopted by the Nike earlier. As the urgency to respond to the challenge of global change has become apparent, many convinced the scope of CSR should be expanded by Nike to eliminate the issue of Sweatshop labor practices by Nike. Social and Ethical Issues in Stakeholders' Relationship Nike's business model incorporates heavy outsourcing of its production to factories overseas. This is due to the availability of cheap labor in countries like China, Indonesia and Vietnam. However, this opens the path for exploitation of human rights, which caused the, issue in the first instance (Ballinger, 2010). Since, it is the Korean and Taiwanese subcontractors who are managing production, with little or no monitoring by Nike; it has led to operations that employ labor to work in harsh/ unsafe conditions for very little remuneration, often ...