Why Do Companies Use Sweatshops And What Are The Impacts Of That For Business And For Society?

Presentation of Views from Literature

The aim of the research report is to develop skills required to investigate different sources of information about one specific issue, and to critically select and analyse primary and secondary data to support your arguments in response to a research question.

The research report uses primary data/information (what the person/business says about themselves), secondary research data/information (interpretations from others on the case or the issue) and refereed papers to answer one of the assigned research questions, drawn from the six issues covered in Module 3. In the course of your investigation, you will source and create one specific case example (i.e. one corporation and issue) to illustrate the interaction between the B, S and G sectors, in relation to the issue selected.

The preparation of the research report assignment involves:

1. Your reflective analysis of the literature about the problem. You should address different perspectives and the arguments used in the literature to interpret the problem.

2. Analysis of the data collected from the various web pages (from the corporation, NGOs and critics). It is important to critically evaluate the statements - you should not simply take for granted what is said as the ’truth’. Be critical and analytical. For example, look for contradictions in the texts, compare different texts about the same events and look for different points of view inside the web source.

3. Using your sociological imagination and ethical reasoning to question the different arguments.

4. When writing the assignment, remember that, although you are the author, if you refer to the ideas of other scholars or commentators, these should be adequately acknowledged. The most important ideas are those that you develop from your interpretation of the literature and your analysis of the data. You can write in the first person if you like, but do not forget to substantiate your views. It is not compulsory to use first person.

5. The research assignment is the outcome of a complex and extensive research process and, because it is only 2000 words, it is expected that you will synthesise the main ideas, arguments and data from the case.

6. Thepresentationof thecaseisnot adescriptionof thecompany; neitherisit simply areproductionof theway the company represents itself. It is the presentation of your analysis of theinitiatives the company has taken in relation to the specific research question (the corporation’s discourse as well as its actions). Including the history of the corporation is only appropriate if that history is relevant for an understanding of the practices developed by the corporation in relation to the problem under investigation.

7. The conclusion is not a repetition of what you have already said; it is a synthesis of the main ideas from your findings and your proposals out of your reflection on the case.

Question: Why do companies use sweatshops and what are the impacts of that for business and for society?

The above question has different conflicting arguments depending on the perspectives in every context. Business bodies will deny the exploitation imposed on the third world countries (cases where most sweatshop stem), claiming that they significantly contribute to the third world countries economy (Soule 2018). The business continues to argue that as much as they will make significant profits. Individuals working in the business sector are happy; to get their regular salaries that improves their living standard. In line with the definition created developed by the US General Accounting Office, a sweatshop is “an employer that violates more than one federal state labor, industrial housework, occupational safety and health, workers’ compensation or industrial regulation.

Concerning the definition above, the term sweatshop in a global environment is very sensitive. Over the years, sweatshop has become a global issue with its problem in the industries. In the last decade, it is so apparent that the use of sweatshop is somehow a universal occurrence. Companies with vast significance in the worldwide economy, for instance, K-mart, Reebok, the Gap, Nike, and Phillips have each undergone inspection in the past years due to their unethical activities of manufacturing products in industries using sweatshop work practices (Marti, 2018). As a result of these conflicting headlines, there has been an emergence of several activists, who aim to air the outcry against such unethical practices. The international labor right forum came up with an innovative measure that spots any unethical activity within an organization and writes articles which bring to light clothing and textile industries that use sweatshop. The document suitably named 2010 sweatshop Hall of Shame, featuring enterprises like Fitch, IKEA, Wal-Mart and Abercrombie. Many recent debates concerning sweatshops stem from an easy question like, ‘what is the issue with sweatshops.’ The prevalent disagreements against sweatshops upon analyzing different articles, responds to the topic that sweatshop perpetuates essential human rights with individuals exploitation labor wise.

Nonetheless, when viewed from a perspective of business, individuals can have different opinions about a subject of concern. In most cases, the company will accept the cultural idea whereby definition revolves around an individual's beliefs, and that what may be considered unethical in a particular country, may not apply to another country (Marens 2018). According to the perspective of an outsider, I cannot disagree with the philosophy mentioned above. On the other hand, I am not subscribing my loyalty to the accusations surrounding the sweatshop. I much appreciate the main business aim of profit generation. If that involves moving jobs offshore to the areas with less fortune in the world with significantly cheaper labor, therefore, with every effort I comprehend the process.

Presentation of Original Case: ‘Why Sweatshops Won’t Go Away’

What elevates me to the use of sweatshop in the third world countries is the idea that the employees have a slightly standardized salary (about three times in Indonesians sweatshop) than the national average. There is an increase in number of recent sweatshop conforming to international labor organization standards of work, the recent sweatshops are different from the past. However, based on the perspective of capitalist indicates lack of restrictions from the government, which, according to me, leads to the loss of justice concerning wealth distribution and production, the reason why sweatshop will not fade according to the original case.

The above-mentioned case revolves around a company, which is presently unpopular for workers’ rights’ violation and exploration through the utilization of sweatshops. As an unswerving effect of the regular violation of ethical business practices, Nike has been subjected to extensive inspection by the world social movement that has condemned the practices and protested severely against its practices. In this specific case, the worry is that very less has been done to challenge the central challenges because the violation of human rights through sweatshops appeared in the headline.

Business: The journey of Nike through this sweatshop issue stays extensive. Beginning year 1997, when the original case was presented against Nike, various scenarios took place. The first incident was the denial of sweatshop condition by Nike across their factory. Nike went ahead to deny the responsibility. Afterwards, Nike admitted the issue in 1998 and acknowledged the responsibility. From that time, Nike realized the importance of restoring its public image and commenced implementing measures aimed at public image restoration and improvement of its objectives for corporate responsibility (Powel 2018). Nike took measures to improve their public image/reputation including extending its corporate responsibility (CR) department to nearly one hundred workers, participation in schemes for third party factory monitoring like the Fair Labour Association (FLA and even emerging as the first major corporation globally to release the identities of its more than seven hundred suppliers factories. Surprisingly, over a decade later, we still have a Yes/No response when asked whether enough has been done to solve the underlying issues with sweatshops. As much as Nike emerges to be the largest executor when it comes to the use of sweatshop, they are simultaneously spearheading the movements towards the full implementation of fairer work practices in the entire factories within the corporate world.

Society: The anti-sweatshop movement came as a result of Nike's unethical practices. Activist and students around the world participated in a full-day protest against Nike on July 19^th 2017, a revolution that was organized by united students against sweatshop. The demonstration experienced in United States cities like San Pedro Sula in Honduras and Boston. A monitoring group, classified as Worker Right Consortium (WRC), was founded by international labour rights experts together with students to improve access to the workshop environment of the sweatshop. The constant surveillance by WRC made Nike felt the pressure thereby strategizing a better decision in the Business direction.

Business

Government: Several societies know the existence of sweatshop but are unwilling to take measures to curb its presence within a society. They assume malpractices make our community look more materialistic. Rooks (2017) emphasizes the ethical considerations of sweatshops and how the government relates in the sweatshop practices in societies. Rooks (2017) also revealed that in the year 2013, a collapsed manufacturing establishment in Bangladesh, killed over a thousand workers. Many people believed that the government was aware of the weakening infrastructure but refused to get involved and made sure they did not provide a solution to the problem (Bauer and Sahan 2019). The Bangladesh manufacturing organization stopped employees from communicating their concern, and the result was reduced safety concern and ignorance.

Lately, Nike has increasingly opened up to the public concerning its offshore activities in business. This remains apparent in its issuance of CR Reports in which forthright and transparent descriptions of situations within its supply chain are provided.  For instance, in its CR report published in the year 2005, key figures were outlined by Nike that would play the role of raising an eyebrow to the general public. Amongst those figures were fifty to a hundred percent of supplier factories surpassing work hour limit as stated in the Company’s code of conduct (with twenty-five to fifty percent beating the legal limits in the United States. About twenty-five to fifty percent encountered sexual and physical violence, while ten to twenty-five percent of the factories remain situated in the economies where freedom to associate including union formation remains forbidden by legal requirements (Sethi and Rovenpor 2016). On the basis of these figures only, it is rational to hold that Nike remains far much short of tackling its challenges. Nonetheless, as compared to the 1990s when Nike faced protests and becoming the first-ever poster child for corporate ethical predominance, these figures subsequent indicate that Nike has apparently made significant strides towards being be socially responsible corporate.

Nike’s Vision remains clear: The vision is to assist Nike Inc. alongside its consumers to flourish in a sustainable economy whereby the balance between people, profit and planet remains apparent. To achieve that, Nike is increasingly incorporating practices and sustainability principles into everything it does: design; rethinking processes; sustainable material development; change advocacy in the industry. Nike has set an aspiring lasting target helpful in measuring its progress and subsequently report on its performance. From the corporate responsibility report and the above statement, it would appear that Nike has pledged its commitment to the environment through sustainable development and ethical trade achievable through adherence to fair trade principles. In my view, even though business like Nike has a right seek and engage in legitimate business practices that enhance profit, it must be lost that such business only have a social corporate responsibility for sustainable practices without harming the society (Rubin and Carmichael 2018). It is rational to hold that Nike is on the right track towards based on its current efforts. Nonetheless, various challenges still stand on Nike’s way to succeed in Corporate Social Responsibility (CSR) activities going by the findings in this report. Thus, Nike still needs to engage in more desirable practices to truly realize a better managed corporate responsibility framework.

Society

Possibly, the outstanding challenge mentioned is the fact that the government of the third world countries with a frailer economies could be in dire need of development. The need for such economic growth and development might make such developing economies to subscribe to sweatshop conditions so that they maintain a transnational corporation (Sethi and Rovenpor 2016). Following the fact that these countries could be having a lot of debts, they depend majorly on foreign investment to assist in loan repayment. Aware of the vulnerability of these economies, the MNCs will increasingly abuse these developing countries through such manipulative strategies as tax breaks alongside incentives (Sollars and Englander 2018). The MNC further threaten to re-locate to other developing economies whose countries would easily accommodate their demands whenever such manipulative demands are not provided by the host country. In my opinion, it is such power abuses coupled with MNCs’ greed that culminate in the extinction of social conditions globally, leaving many people with absolute poverty (Rubin and Carmichael 2018).  

Conclusion

Solving these ethical dilemmas that consume the developing world may not have a quick fix. Nevertheless, I still believe there are vital steps that can be brought into consideration to deliver better results.

Number one major step to consider is transparency level where TNCs are not encouraged to hide behind a veil of trade secrets. Nike being part of the few multinational that has managed to employ this measure, permitting access to the names of its suppliers, this measure should be in a position to encourage TNCs accountability towards their actions. A similar standard emerges as a way of empowering workers. Ideally, employees are the most important here and the major stakeholders and enabling them would minimize unfair labor practices (Marti 2018).

By putting in place a consequentiality driven ethics approach, employees will be undergoing training maintaining correct procedures concerning safety practices within a work environment, reporting accidents and inspection. The above will give them encouragements that improve the morale to work within an organization. Lastly, companies should not use and abuse, but they should be able to make a more meaningful contribution that will help their third world countries to pursue business interests (Bauer and Sahan 2019). The introducing resource and technical assistance will help in reducing debts hence minimize the rate at which the developing countries are desperate for the multinational support.

The use of sweatshop is uncertain in connection to the ethical evaluation. Following the societal perspective, sweatshops have unpleasant characteristics such as dreadful, inhuman and with no justice. These unsuitable conditions in connection with sweatshop require solution through the assistance of NGO organizations and various protests (Powel 2018). However, businesses have the opinion of the sweatshop being an economy friendly investment. Because outsourced work is affordable, and can serve a financial function concerning their business. We have experienced many forms of abuse, and unjust labor practices in Nike organization, that requires a solution to assist in mending the company's destroyed image.

References

Balsiger, P., 2018. Explaining dynamic strategies for defending company legitimacy: The changing outcomes of anti-sweatshop campaigns in France and Switzerland. Business & Society, 57(4), pp.676-705.

Bauer, J. and Sahan, E., 2019. 14 Business, development, and human rights. Business and Development Studies: Issues and Perspectives.

Marens, R., 2018. Laying the foundation: Preparing the field of business and society for investigating the relationship between business and inequality. Business & Society, 57(6), 1252-1285.

Martí, I. 2018. Transformational business models, grand challenges, and social impact. Journal of Business Ethics, 152(4), 965-976.

Powell, B., 2018. Sweatshop regulation: Tradeoffs and welfare judgments. Journal of Business Ethics, 151(1), 29-36.

Rubin, J. and Carmichael, B., 2018. Reset Business and Society in the New Social Landscape. Columbia University Press.

Sethi, S. P., & Rovenpor, J. L., 2016. The role of NGOs in ameliorating sweatshop?like conditions in the global supply chain: The case of fair labour association (FLA), and social accountability international (SAI). Business and Society Review, 121(1), 5-36.

Sollars, G.G. and Englander, F., 2018. Sweatshops: Economic analysis and exploitation as unfairness. Journal of Business Ethics, 149(1), pp.15-29.

Soule, S. A., 2018. Social Movements and Their Impact on Business and Management. In Oxford Research Encyclopedia of Business and Management.