An Ethical Analysis of the Nike Sweatshop Controversy

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Nike is a popular sports apparel company that sells shoes, clothing, and athletic equipment. While Nike is a very successful brand and advertises worldwide, it has drawn criticism from activists who have condemned the company’s practice of manufacturing its products in sweatshops abroad. As critics charged, Nike exploited poor individuals abroad by hiring them at unacceptably low wages and providing them with poor working conditions. This case study will assess the ethical dilemmas Nike faced in its decision to operate its manufacturing facilities in low-wage markets abroad. Through the framework of ethical relativism, it can be assessed that companies have an obligation to consider the welfare of employees, even when they operate in markets where labor rights are given a lower priority.

Background

Nike is a multinational corporation that manufactures popular athletic apparel. During a period between the 1970s and late 1990s, Nike became a dominant company in the athletic footwear and apparel market both domestically and abroad (Carty, 2001, p. 34). Yet, criticism over the company’s labor practices abroad threatened the company’s brand image. Activists also asserted that Nike created hazardous and exploitative working conditions abroad, asserting that the company failed to maintain safety standards, prevented laborers from unionizing, and promoted on-site living arrangements in order to force workers to meet higher production quotas (Carty, 2001, p. 37). During the 1990s, widespread protest against the use of low-wage labor at Nike factories in developing countries caused Nike’s revenues to decrease by 50 percent in 1998, causing Nike to layoff 1600 employees (Carty, 2001, p. 34). The negative attention drawn to Nike manufacturing plants forced the company to consider the ethical ramifications of its operations in poorer countries. While the company had the ability to reduce its operating costs by adopting labor standards that were unsatisfactory in developing countries, it also faced the risk of significant consumer backlash and a diminished brand image for its labor practices.

Ultimately, Nike yielded to the protestors. In 1997, Nike paid Indonesian workers the minimum wage, though it had been able to evade Indonesian minimum laws previously (Carty, 2001, p. 38). The company also made amends by acknowledging its wrongdoings. In 2001, Nike acknowledged the abuses that were documented by human rights activists and NGOs for nearly one decade (Carty, 2001, p. 39). By working to remedy the working conditions faced by its employees in developing countries, Nike began to repair its brand image. From an ethical standpoint, the Nike sweatshop incident is significant because it demonstrates the ethical conflicts that can occur when companies conducting business abroad are permitted to engage in practices that would be considered unethical in other countries.

Overview of the Ethical Problem

This case study will utilize the framework of ethical relativism to assess the morality of employing sweatshop labor in Nike factories. The principle of ethical relativism holds that moral values differ between societies. Thus, when assessing a moral dilemma, it is important to consider the ethical values of others before making an ethical decision. In the case of international business, ethical relativism is a prominent framework because multinational corporations must often do business in countries where the ethical values differ from the values of their home countries. Further, companies can often engage in practices abroad that would not be acceptable in their home country. For example, while an American brewery cannot market its products to minors in the United States, it can market its products to minors in countries where the drinking age is below eighteen and the culture is more permissive towards youth drinking. From a relativist perspective, individuals must accept that ethics differ between countries and make efforts to accommodate those differences.

Discussion and Conclusion

Ethical relativism applies to the case of Nike sweatshop factories because it involves a conflict in values between the activists in developed countries and the practices that are permitted in developing countries. While businesses in developed countries must adhere to more stringent labor protection practices in countries like the United States, these protection practices are not mandated in countries such as Taiwan. While employee rights are a critical value in developed countries, they are less valued in developing countries. In many cases, the availability of jobs might be more of a priority to the citizens of developing countries than the right to unionize or receive fringe benefits. Thus, from this standpoint, it was more of a detriment to workers when Nike was forced to cut jobs following a boycott then when it operated sweatshops that provided low wages.

Yet, ethical relativism can also be used to condemn many of Nike’s practices. While wages, benefits, and the right to unionize are values that can differ between countries, other values are universally shared. For example, while the appropriate wage might differ between countries, citizens everywhere likely agree that companies should promote humane working environments. While Nike can modify its labor practices to match the expectations of developing countries, there are certain values that it must uphold. Because human dignity is an important value, the company must sponsor working conditions that promote the wellbeing of employees. Also, the company has an obligation not to use its influence to violate minimum wage laws in countries such as Indonesia because those laws are a reflection of the values of the country in which Nike operates. In consideration of the values that are shared between activists in developed countries and workers in developing countries, Nike was correct to acknowledge the abuses in its sweatshop and remedy those abuses.

Reference

Carty, V. (2001). The internet and grassroots politics: Nike, the athletic apparel industry and the anti-sweatshop campaign. Tamara: Journal of Critical Postmodern Organization Science, 1(2), 34-47. Retrieved from http://search.proquest.com/