Ethical Issues in International Business 597
SWEATSHOPS AND BRIBERY
T h e G r e a t Non-Debate over International Sweatshops
I n r e c e n t y e a r s , t h e r e h a s b e e n a d r a m a t i c g r o w t h in t h e c o n t r a c t i n g o u t of p r o d u c t i o n by c o m p a n i e s in t h e i n d u s t r i a l i z e d c o u n t r i e s to suppliers i n developing countries. This glob- alization of p r o d u c t i o n has l e d to a n e m e r g – i n g i n t e r n a t i o n a l division of l a b o r in footwear a n d a p p a r e l in which c o m p a n i e s like Nike a n d R e e b o k c o n c e n t r a t e o n p r o d u c t d e s i g n a n d m a r k e t i n g b u t rely o n a n e t w o r k of contractors in I n d o n e s i a , China, Central America, a n d t h e like, to b u i l d shoes o r sew shirts a c c o r d i n g to exact specifications a n d deliver a high-quality g o o d a c c o r d i n g to p r e c i s e delivery s c h e d u l e s . As Nike’s vice p r e s i d e n t for Asia has p u t it, “We d o n ‘ t k n o w t h e first t h i n g a b o u t m a n u f a c t u r – i n g . We a r e m a r k e t e r s a n d designers.”
T h e c o n t r a c t i n g a r r a n g e m e n t s have d r a w n i n t e n s e fire f r o m c r i t i c s — u s u a l l y l a b o r a n d h u m a n rights activists. T h e s e “critics” (as I will r e f e r t o t h e m ) h a v e c h a r g e d t h a t t h e c o m p a – nies a r e (by p r o x y ) e x p l o i t i n g w o r k e r s i n t h e p l a n t s (which I will call ” i n t e r n a t i o n a l sweat- s h o p s ” ) of t h e i r s u p p l i e r s . Specifically t h e c o m p a n i e s s t a n d a c c u s e d of c h a s i n g c h e a p l a b o r a r o u n d t h e g l o b e , failing to p a y t h e i r w o r k e r s living wages, u s i n g c h i l d labor, t u r n – i n g a b l i n d eye t o a b u s e s of h u m a n r i g h t s , b e i n g c o m p l i c i t w i t h r e p r e s s i v e r e g i m e s i n d e n y i n g w o r k e r s t h e r i g h t t o j o i n u n i o n s a n d failing to enforce m i n i m u m l a b o r s t a n d a r d s in t h e w o r k p l a c e , a n d so o n .
T h e c a m p a i g n against i n t e r n a t i o n a l sweat- s h o p s has largely u n f o l d e d o n television a n d ,
Ian Maitland
t o a lesser e x t e n t , i n t h e p r i n t m e d i a . W h a t seems like n o m o r e t h a n a h a n d f u l of critics has m o u n t e d a n aggressive, media-sawy cam- p a i g n w h i c h h a s p u t t h e publicity-shy r e t a i l giants o n t h e defensive. T h e critics h a v e or- c h e s t r a t e d a s e r i e s of s e n s a t i o n a l ” d i s c l o – s u r e s ” o n p r i m e t i m e television e x p o s i n g t h e terrible pay a n d working conditions in factories m a k i n g j e a n s for Levi’s o r sneakers for Nike or Pocahontas shirts for Disney. O n e of t h e princi- pal scourges of the companies has b e e n Charles K e r n a g h a n who r u n s t h e National L a b o r Coali- t i o n ( N L C ) , a l a b o r h u m a n r i g h t s g r o u p in- volving 25 u n i o n s . It was K e r n a g h a n w h o , in 1996, b r o k e t h e news before a C o n g r e s s i o n a l c o m m i t t e e t h a t Kathie L e e Gifford’s c l o t h i n g l i n e was b e i n g m a d e by 13- a n d 14-year-olds working 20-hour days in factories in H o n d u r a s . K e r n a g h a n also a r r a n g e d for t e e n a g e workers from sweatshops in C e n t r a l A m e r i c a to testify b e f o r e c o n g r e s s i o n a l c o m m i t t e e s a b o u t abu- sive l a b o r practices. At o n e of these h e a r i n g s , o n e of t h e workers h e l d u p a Liz Claiborne cot- ton sweater identical to ones she h a d sewn since s h e was a 13-year-old w o r k i n g 1 2 – h o u r days. A c c o r d i n g to a news r e p o r t , ” [ t ] h i s i m a g e , ac- cusations of oppressive c o n d i t i o n s at t h e fac- tory a n d the Claiborne logo played well o n that evening’s n e t w o r k news.” T h e result has b e e n a circus-like a t m o s p h e r e — a s in R o m a n circus w h e r e Christians were t h r o w n to lions.
K e r n a g h a n has shrewdly t a r g e t e d t h e c o m – p a n i e s ‘ carefully cultivated p u b l i c imag es. H e
From Ian Maitland, “The Great Non-Debate Over International Sweatshops,” British Academy of Management Annual Conference Proceedings, September, pp. 240-65, 1997. Reprinted with permission of the author.
598 Ethical Issues in International Business
has explained: “Their image is everything. They live and die by their image. That gives you a certain power over them.” As a result, he says, “these companies are sitting ducks. They have no leg to stand on. That’s why it’s possible for a tiny group like us to take on a giant like Wal-Mart. You can’t defend paying someone 31 cents an hour in Honduras.. . .”1
Apparently most of the companies agree with Kernaghan. Not a single company has tried to m o u n t a serious defense of its contracting practices. They have judged that they cannot win a war of soundbites with the critics. In- stead of making a fight of it, the companies have sued for peace in order to protect their principal asset—their image.
Major U.S. retailers have responded by adopting codes of conduct on h u m a n and labor rights in their international operations. Levi-Strauss, Nike, Sears, J.C. Penney, Wal- Mart, Home Depot, and Philips Van-Heusen now have such codes. As Lance Compa notes, such codes are the result of a blend of hu- manitarian and pragmatic impulses: “Often the altruistic motive coincides with ‘bottom line’ considerations related to b r a n d name, company image, and other intangibles that make for core value to the firm.”‘ Peter Jacobi, President of Global Sourcing for Levi-Strauss has advised: “If your company owns a popular brand, protect this priceless asset at all costs. Highly visible companies have any number of reasons to conduct their business not just re- sponsibly but also in ways that cannot be por- trayed as unfair, illegal, or unethical. This sets an extremely high standard since it must be applied to b o t h company-owned businesses and contractors. . . .” And according to an- olher Levi-Strauss spokesman, “In many re- spects, we’re protecting our single largest asset: our brand image and corporate reputation.” Nike recently published the results of a gen- erally favorable review of its international op- erations conducted by former American U.N. Ambassador Andrew Young.
Recendy a truce of sorts between the critics and the companies was a n n o u n c e d on the White House lawn with President Clinton and Kathie Lee Gifford in attendance. A presi- dential task force, including representatives of labor unions, human rights groups and ap- parel companies like L.L.Bean and Nike, has come u p with a set of voluntary standards which, it hopes, will be embraced by the entire industry. Companies that comply with the code will be entitled to use a “No Sweat” label.
OBJECTIVE OF THIS PAPER
In this confrontation between the companies and their critics, neither side seems to have judged it to be in its interest to seriously engage the issue at the heart of this controversy, namely: What are appropriate wages and labor standards in international sweatshops? As we have seen, the companies have treated the charges about sweatshops as a public relations problem to be managed so as to minimize harm to their pub- lic images. The critics have apparently judged that the best way to keep public indignation at boiling point is to oversimplify the issue and treat it as a morality play featuring heartless ex- ploiters and victimized Third World workers. The result has been a great nondebate over in- ternational sweatshops. Paradoxically, if peace breaks out between the two sides, the chances that the debate will be seriouslyjoined may re- cede still further. Indeed, there exists a real risk (I will argue) that any such truce may be a col- lusive one that will come at the expense of the very Third World workers it is supposed to help.
