Nike sweatshop
Case study: Nike: the Sweatshop Debate
1) Should Nike be held responsible for working condition in factories that it does not own, but where sub-contractors make products for Nike?
Nike doesn’t own any manufacturing facilities and outsource its production. Therefore, it can’t be directly blamed for terrible working conditions. Nike can influence indirectly on working conditions at contracting factories thorough refusing to work with sweatshop factories. However, Nike, like any other capitalistic enterprise, is looking for economy of scales and making more money for its shareholders, so each dollar counts. In this case, Nike business ethics is being questioned. From another point of view, workers and employers have a voluntarily contract engagement and working conditions are on the same level as at other local enterprises. However, if Nike claims to be a social responsible corporate citizen, it has to maintain business practices accordingly. They have to influence their partners to provide better working conditions and avoid long hours for child labor. Otherwise, they should be like everybody else and benefit from prevailing business practices in the third world countries.
2) What labor standards regarding safety, working conditions, overtime, and the like, should Nike hold foreign factories to: those prevailing in that country, or those prevailing in the United States.
Nike has to follow traditional labor standards prevailing in the supplying countries due to the absence of ownership for production facilities. It will be almost impossible to impose American labor standards regarding safety, working conditions and overtime into a foreign country, because they all have their own authorities that regulate these issues. Cheap labor is their only competitive advantage to attract foreign direct investments. Changing labor standards in compliance with the US regulations will lead to factory overhead expenses increase and lose of economies of scale.
1) Should Nike be held responsible for working condition in factories that it does not own, but where sub-contractors make products for Nike?
Nike doesn’t own any manufacturing facilities and outsource its production. Therefore, it can’t be directly blamed for terrible working conditions. Nike can influence indirectly on working conditions at contracting factories thorough refusing to work with sweatshop factories. However, Nike, like any other capitalistic enterprise, is looking for economy of scales and making more money for its shareholders, so each dollar counts. In this case, Nike business ethics is being questioned. From another point of view, workers and employers have a voluntarily contract engagement and working conditions are on the same level as at other local enterprises. However, if Nike claims to be a social responsible corporate citizen, it has to maintain business practices accordingly. They have to influence their partners to provide better working conditions and avoid long hours for child labor. Otherwise, they should be like everybody else and benefit from prevailing business practices in the third world countries.
2) What labor standards regarding safety, working conditions, overtime, and the like, should Nike hold foreign factories to: those prevailing in that country, or those prevailing in the United States.
Nike has to follow traditional labor standards prevailing in the supplying countries due to the absence of ownership for production facilities. It will be almost impossible to impose American labor standards regarding safety, working conditions and overtime into a foreign country, because they all have their own authorities that regulate these issues. Cheap labor is their only competitive advantage to attract foreign direct investments. Changing labor standards in compliance with the US regulations will lead to factory overhead expenses increase and lose of economies of scale.