As one attempts to assess the business ethics of Levi Strauss and Nike in this writing assignment, we are again compelled to revisit the critical distinction of conduct that is legal, yet still unethical. In both instances, Levi Strauss and Nike behaved with the parameters of legal conduct, yet few would argue that profiting from exploitive work conditions is an ethical behavior of any socially responsible organization (broad view social responsibility).
Obviously, it’s very tempting to just condense this argument to the point of “bad companies boosting profits from lower labor costs via exploiting foreign workers in sweatshops”. I am going to take a much broader approach here in my assessment, as complete fairness to the two corporations here requires a bit of an indictment of the legal, regulatory, political, and socioeconomic environment that they operate in. So, let’s start there … how is it that both of these large corporations are permitted (and driven) to outsource (with relative impunity) labor to countries with poor labor laws?
In order to fairly assess their conduct, one must first examine the system under which they operate. How has corporate America gone down this path? Why do so many large U. S. corporations outsource labor en masse, which costs the U. S. economy so many jobs domestically? Let’s start by looking in the mirror – and by that I mean you and I … the U. S. consumer. Our thirst for cheap merchandise made overseas knows no limits. Do any of us look at the country of origin for goods, and if it’s non-U. S. do we even pause for a second to consider boycotting said goods due to loss of American jobs?
CHAPTER 14 Collective Bargaining and Labor Relations Chapter Summary This chapter provides an overview of private-sector labor-management relations in the United States, with brief attention to public-sector differences and international labor relations. After a model of labor-management relations and a context for current relationships are provided, various aspects of the process of collective ...
Or boycott due to the nation of origin’s reputation for worker abuse? Of course we don’t. We want that Japanese high definition television from Wal-Mart that costs $100 less. We want the clothing from China or Indonesia that is 30% cheaper than similar brands made here. So, my first premise in this entire argument is that American consumers are NOT socially responsible in their purchasing habits. This lack of social responsibility on the demand side is a catalyst for Levi Strauss and Nike to seek cheaper labor overseas – for if they do not, their competitors assuredly will and they will be at a competitive disadvantage.
Now, let’s assess the legal and regulatory environment under which both entities operate in the United States. Has Congress made it illegal to outsource labor to countries that they know are abusing their labor forces? In general, of course not. Congress maintains a blind eye to the problem, debating it over the years here and there in a politically motivated, half-hearted effort to occasionally placate certain voting segments (labor unions; displaced workers).
Do they tougher their stance? Do they for one minute say to themselves, “this is really wrong, and socially irresponsible”?
By inaction Congress is tacitly approving this practice, which of course is what powerful corporate lobbyists want. The profit motive has large U. S. corporations addicted to cheap labor now; Pandora’s Box has been opened and no one has the political will to attempt to close it. So let’s recap so far: we’ve indicted the U. S. consumer and our lawmakers in the legislative branch of the U. S. government (Congress) as major cultivators of the pro-outsourcing environment for which Levi Strauss and Nike must successfully operate under. Next on our list of socially irresponsible contributing parties – the judicial branch of the U.S. government.
The process of outsourcing is defined as using the expertise and potentials of a third-party on contractual basis. The procedure is believed to accommodate various facets of societies on the basis of labor division as outlined by the doctrines of a free market economy and principles of globalization. As stated earlier it was during the 1980s that the process kicked off mainly due to the efforts of ...
When the U. S. Supreme Court found in 2010 that the formation of so called “Super PACs” for campaign donations was legal, this gave corporations new powers under the law to, in effect, buy our government via opulent and obscene campaign spend funneled to candidates. The end result of this ruling is that corporations that profit greatly from outsourced labor are now able to pay for the elections of our Congressmen – and gee, wonder how this economic “favor” will be repaid when attempts to rein in outsourcing come up in Congress?
Let’s move on to our two protagonists in this debate: Levi Strauss and Nike. Now that we’ve got the backdrop well in hand, and a reasonable person would agree that a massive systemic failure in the U. S. has allowed and promoted unchecked outsourcing of jobs, it’s time to discuss these two corporate giants and their respective behaviors here. Do these two corporations have a responsibility to monitor the conduct of the companies they do business with–in particular, their contractors and suppliers?
As a personal believer in the broader view of corporate social responsibility, I believe that they do. Notwithstanding the fact that all of this outsourcing is legal, and despite the mitigating factors that I’ve argued above that do alleviate these two companies of all of the blame – I still believe that they need to take the higher moral ground. Levi Strauss overall has conducted itself with far greater corporate social responsibility than Nike has, in my judgment. Strauss for many years withdrew from China due to their notoriety as a non-democratic country with abusive labor conditions.
Regrettably, it had to re-enter China eventually to keep pace with competitors. Also, witness the way that Strauss treated its displaced U. S. workers as it (with some remorse) eventually had to close all its U. S. plants due to competition from outsourcers. Strauss gave generous severance and retraining dollars to the affected workers. In my estimation, Strauss has had to compromise its socially responsible corporate culture due to pressures from the warped competitive environment that was designed around them.
The Benefits of Outsourcing One common view of outsourcing is that it will have a negative impact on the economy of the nation from which jobs are outsourced. Many believe that, in fact, outsourcing benefits only the companies that employ this policy while depriving workers of jobs. Each time the economy of a nation, such as the United States, has a downturn, the common cry is that the reverses ...
It became a matter of survival for their corporation; their management had to adapt or risk failure and loss of the shareholders’ investments in the company. That is why I authored the overview above – I think it’s highly relevant to assessing Strauss’s conduct here. The system failed Levi Strauss – they wanted to behave under the broad definition of corporate social responsibility, but the demand for cheaper outsourced goods by consumers and the legality of outsourcing jobs (Congressional oversight failure) forced an adaptive change against their moral grain.
Nike, however, is no apologist when it comes to their outsourcing. In fact, they are proud of it – even boasting that they pay outsourced workers higher than average wages for their region. To me, this is tantamount to bragging that “we don’t abuse those workers as badly as others do”. Frankly, that attitude offends my sensibilities and my personal set of ethical standards. I also deem it to be in direct conflict with the broader definition of corporate social responsibility. Lastly, I think that corporations have the obligation to take the ethical high ground and behave in a socially responsible manner (broad definition).
That said, however, I do not believe that it’s a fair expectation to demand that high standard if adhering to same places the company’s very existence at risk due to systemic failures beyond their control. Levi Strauss attempted to “do the right thing”, but poor rules and oversight make competing in a broad ethical manner quite dangerous to its ultimate survival. Strauss’s example should serve as a wakeup call to U. S. consumers and our Congress: systemic change is needed, and it’s needed NOW.