Nike's sweatshop labor practices and corporate social responsibility

Unethical Business Practices: Nike Case Study

In the 1990s, Nike faced accusations of using sweatshops in Indonesia and other cheap labor countries in Asia to manufacture its products. As depicted in the video, workers were subjected to utterly inhuman conditions that denied them their dignity as human beings. Workers grappled with low pay, long working hours, violent abuses, and exposure to toxic materials. This made it difficult for the workers to afford decent food, housing, health care, and education for their families. Nike\'s ignorance of employees\' working conditions at overseas factories saw the company become the subject of protests and activism by consumers, institutions of higher learning, and advocacy groups throughout the U.S. Whereas it was unethical for Nike to contract manufacturers with a poor record of labor practices, the Indonesian society is largely to blame. The society has historically been characterized by little or no concern for Western values. Issues to do with integrity, social responsibility, and business ethics have rarely received the attention they deserve, making it easy for multinationals such as Nike to exploit workers. Due to high poverty levels, people undertake work regardless of the conditions they have to endure while doing the work. It would, therefore, be imperative for the Indonesian society to embrace Western values. Without doing so, Western multinationals are likely to continue exploiting them.

The case of Nike and the ethical issues surrounding it is not isolated. Many multinational organizations have often been caught up in the trap of balancing between social responsibility and profitability. They rush to developing countries to take advantage of cheap labor and weak unionization. In fact, Nike was not the first Western multinational to use sweatshops -- many others in diverse sectors and industries have also contracted cheap manufacturers in Asia. Without doubt, business organizations primarily exist to make money. They are driven by the desire to maximize shareholder wealth. Nonetheless, as they do not exist in an island, businesses have an obligation to promote the wellbeing of the environment and communities they operate in. Unfortunately, despite loud pronouncements of their commitment to ethics and social responsibility, most business organizations (especially multinational corporations) evidently give little or no attention to the welfare of their employees and the communities in which they do business. This was particularly true for Nike in the 1990s and the preceding decades. In an effort to reduce production costs, the company outsourced Asian manufacturers. Whereas this move significantly improved the company\'s financial performance, it came at a great cost to workers employed at the factories. In essence, the company failed to balance between its economic motive and responsibility to the society.

Since the accusations, Nike has undertaken a number of measures to improve its ethical behavior and public reputation. In 1996, the company established a department aimed at improving the working conditions of factory workers (Nisen, 2013). Two years later, the company announced an increase in minimum wage and the incorporation of U.S. Occupational Safety and Health Administration (OSHA) air standards in each of its factories (Nisen, 2013). The company also established an independent unit to develop and implement an ethical code of conduct in its factories as well as monitor working conditions (Lutz, 2015). Between 2002 and 2004, the company carried out 600 factory audits to examine the effectiveness of its measures to reform its tainted image. The audits revealed a significant improvement in working conditions in the company\'s factories (Nisen, 2013). In 2005, the company took its commitment to ethics a notch higher by publicly revealing all overseas manufacturers it had contracted (Nisen, 2013). This transparency has remained a key feature of the company\'s commitment to social responsibility to date (Lutz, 2015). Though instances of abuses are still reported, the efforts have substantially restored the company\'s reputation.