TOP STORY: BUSINESS ETHICS: Global business environment makes it hard to be ethical

c. 1996 Religion News Service (UNDATED) Nike Inc. says it can’t prevent Asian subcontractors from employing young children. Yet U.S. Labor Secretary Robert Reich leads an effort to ban soccer balls, including Nike’s, stitched by boys and girls in Pakistan. Columbia Sportswear Co. says it shouldn’t be judged for its partnership with a firm partially […]

c. 1996 Religion News Service

(UNDATED) Nike Inc. says it can’t prevent Asian subcontractors from employing young children. Yet U.S. Labor Secretary Robert Reich leads an effort to ban soccer balls, including Nike’s, stitched by boys and girls in Pakistan.

Columbia Sportswear Co. says it shouldn’t be judged for its partnership with a firm partially owned by a military dictatorship in Burma. Yet the Portland, Ore.-based company leaves the country after activists picket G.I. Joe’s and other Columbia retailers.


Kathie Lee Gifford says she didn’t know her line of outfits, sold by Wal-Mart, were made by Honduran girls paid 31 cents an hour. Yet a tiny human rights organization, the National Labor Committee, drives Gifford to tears on her television show, creating a public-relations crisis for Wal-Mart.

It’s a new world of corporate ethics these days: Global guilt by association is increasingly the norm.

The finger-pointing often begins with special interest groups shining their spotlight on those they consider accomplices.

Many of the allegations don’t stick. But socially conscious consumers are asking not only about product quality and cost, but also about who made the product and under what conditions.

“In the yuppie age, when we bought whatever we wanted, it was easier to be consistent because it was basically the me-myself-and-I principle,” said Michael Russo, an associate professor of management at the University of Oregon. “But in this socially responsible age, it’s a lot more difficult to make consistently ethical purchasing decisions.”

If consumers are having a hard time weaving through the new ethical maze, so are companies.

“Virtually no company can operate without recognizing the implications of the practices and policies of those firms with whom they do business,” wrote Marianne Jennings, director of Arizona State University’s Lincoln Center for Applied Ethics. “Facing the inevitable, companies must establish and enforce policies with suppliers and other third parties.”


Jennings called the trend third-party ethics.

“It’s all along the chain,” Jennings said. “It’s behind you and ahead of you. You are responsible for all the behavior.

“ … It’s enough of a struggle to get an ethical culture in your own company. That takes years. But then to take on other companies as well. That’s difficult.”

Hundreds of multinational corporations in almost every industry have gone overseas to lessen manufacturing costs. But footwear and apparel makers are feeling the heaviest pressure on the public-relations front.

They have responded in vastly different ways.

Nike, based in Beaverton, Ore., says its critics are naive and ignorant.

Archrival Reebok International Ltd. gives out human rights awards, and downplays the fact that it uses some of the same factories and child laborers as Nike.

A tiny handful, such as New Balance Athletic Shoes of Boston, keeps some limited manufacturing in the United States. The practice has made New Balance something of a pariah with its competitors because it stamps “Made in the U.S.A.” on shoes assembled here from components made abroad.

And the vast majority, such as Columbia Sportswear, are just trying to keep their heads down and survive in a tightly competitive industry.


Columbia President Tim Boyle is pained by the charges against his industry. He says his firm is not exploiting overseas workers, but helping them.

Boyle echoes a popular industry sentiment: If activists understood the Third World, they would recognize that peasants in Indonesia, Pakistan and elsewhere desperately want these jobs. Long hours in a smelly shoe or garment factory may be less than idyllic, but it’s preferable to subsistence farming or laboring in even harsher workplaces.

The shoe and apparel makers are sparking nothing less than an industrial revolution in these countries, Boyle said.

Columbia says its Burmese factory was in full compliance with the company’s internal code of conduct. There was no forced or child labor.

Yet when activists picketed key Columbia retailers, the company opted to pull out of the country.

Industry officials question whether the average consumer cares enough about overseas laborers to pay substantially more for products made at home or under better conditions. Although a few retailers, like J.C. Penney, have warned their suppliers to get their labor houses in order, few seem to be shying away from Nike _ despite the recent barrage of criticism against its overseas operations.


The company’s sales jumped more than 35 percent in its 1996 fiscal year. Orders are up another 55 percent through the first six months of its current year.

Concern about business behavior is nothing new. Witness the recent film, “Little Women,” based on Louisa May Alcott’s 19th-century novel. In the film, an indignant Meg tells her wealthy friends she will not buy a silk dress from the town shop because “children are forced to sew those dresses.”

But today’s debate has a wider range: Those dresses likely are sewn by a subcontractor in another country.

And the subsequent protest is more sophisticated: A professional interest group, such as the Made in the U.S.A. Foundation, alerts the public through an organized media campaign.

Nike is the current target of Made in the U.S.A., which is funded in part by organized labor and wants jobs returned home.

After failing to get a Gifford-like reaction from Nike symbol Michael Jordan, Made in the U.S.A. shifted attention directly to Nike and its founder, Phil Knight.


“Nike is a hollow company, much the way that the Mafia is hollow,” said Joel Joseph of Made in the U.S.A. “They both use their money and muscle to take what others have made by the sweat of their brow.”

The allegations against Nike are not new. But they are getting national attention because of the clothing controversy involving Gifford, a prominent expose of Asian child labor in Life magazine, the “Foul Ball” campaign by Labor Secretary Reich and an effort by several members of Congress to ban imports of all goods made with child labor.

Even the enormously popular Jordan is taking hits. Ira Berkow, a New York Times columnist, wrote that Jordan “did not distinguish himself” when he professed ignorance of the matter.

“Why should Jordan not know what abuses are taking place?” Berkow wrote. “Not only is he a citizen of the world, but one profiting hugely from the Nike undertaking.”

(OPTIONAL TRIM BEGINS)

If money is the issue, Nike’s Knight has complicated the consumer’s ethical equation, at least in his home state. He donated $25 million to the University of Oregon this year and $500,000 in Nike money and equipment to the financially strapped Portland Public Schools.

Joseph Tam, a Portland School Board member, said the $500,000 should be refused because of Nike’s overseas labor practices. Tam, president of the Chinese-American Citizens Alliance, worked in a Hong Kong factory as a child.


“If one accepts the Buddhist view that we’re all interconnected, one would understand my view that as a school board member, I’m not just here to represent the 58,000 students in Portland,” he said. “I have a responsibility to all children, especially children in Indonesia and Pakistan who would directly or indirectly contribute to our children’s education.”

It is a classic case of third-party ethics, which Tam says he discussed with Knight in a June 21 meeting.“Phil Knight himself said the school board cannot accept the money,” says Tam. “He asked, `What (is) the message you are sending the students? If the amount is large enough, do you then accept the terms?’ He even used the term, `Mafia money,’ asking, `If it’s Mafia money, would you accept it?’ My interpretation is that Phil Knight recognizes the ethical dilemma.

“I’m no more perfect or no less imperfect than Nike,”Tam said.”But we have to start this discussion of business ethics.”

(OPTIONAL TRIM ENDS)

But what many fail to see, said Ronald Hill, an ethics specialist and dean of the business school at the University of Portland, are the levels of complexity in the debate.

“We have to ask two questions,” Hill said. “One, if Nike didn’t hire these people, where would we be as a society? Would Nike then bring these jobs back to the U.S. and hire adult laborers at $10 or $12? It’s very doubtful.

“The second question is, if they cut these jobs out, who are the losers, and who are the winners? The truth is these children, who don’t live the white, middle-class lifestyle many of us enjoy in the Portland area, would often be losers. They might be homeless. They might go into prostitution. There are all kinds of worse opportunities.”


Hill cautions against “imposing our value system on other peoples and other nations.” And he predicts that, over time, “it will be forgotten, because it doesn’t stare us in the face.”

MJP END RNS

Donate to Support Independent Journalism!

Donate Now!