Social Sustainability Challenge at Nike
CSR, Corporate Social Responsibility, has become intertwined in the business models so much that organizations face high reputational and economic costs of ignoring it. Nike, a global organization, has been facing a major CSR challenge; social sustainability challenge, to state it more specific. Social sustainability, as a CSR dimension, is least defined; however it refers to providing quality to the society and to building a relationship with it. Unfortunately, Nike has been excoriated for maligning social sustainability by not giving quality conditions to workers.
The company has been facing protests since 1990s for the poor work conditions in its factories in developing countries. Though Nike has tried to improve on ethical and human rights issues, it still reels under the challenge of balancing costs and workers safety. For Nike, human rights and labor issues continue as fundamental worries and priorities. Nike owns more than 600 contract factories; these factories make productions for multiple brands thereby making it difficult to maintain standards.
Scholars have demonstrated various variables that affect an MNC's decision with respect to CSR issues, i.e., consumers, shareholders, government policies, labor activists, and litigation. In Nike's case, there are multiple factors that have acted as a catalyst for bringing out CSR issues. First of all, the products are manufactured by independent contractors, and the company says that persistent monitoring of wages, overtime, and working conditions is not easy. An effective monitoring may take lots of efforts in terms of time and cost which the organization may not desire considering consumers and shareholders' perspective.
So, the CSR challenge of Nike can be seen as an outcome of tradeoff between cost and workers' safety. The organization follows a business model to minimize cost in its supply chain through outsourcing. It has often selected suppliers based on prices with a core aim on low prices. This business model has encouraged the contractors to plummet the prices as low as possible to win Nike's orders. In recent years, the organization, though, has made efforts and has included workers' conditions in the business model. Still, lot needs to be improved in terms of vision, mission, and managerial actions.
The organization needs to collaborate with other brands and more importantly, work with competitors on solving labor issues. It is obvious that the top tier needs to understand and adhere to employee standards(health, safety, diversity, equality) and integrate these into business model. Additionally, the organization can cut down the pressure on suppliers by reducing apparel styles and following lean production methods. Authorities in Nike have admitted that there is a need to change the way of interaction and engagement with supply chain as a whole. As CSR seems to be a struggle for Nike, working on these measures will improve the conditions to some extent.
The organization must respond to the changing awareness in the society. Though it may be difficult to maintain a balance between stakeholders expectations, business capacities, and societal issues; the organization must tread the path if it has to succeed in the long term.
References
Banjo, S. (2014) Inside Nike's Struggle to Balance Cost and Worker Safety in Bangladesh, 21 April, [Online], Available: http://www.wsj.com/articles/SB10001424052702303873604579493502231397942 [28 December 2014].
Connor, M. (2010) Nike: Corporate Responsibility at a Tipping Point, January, [Online], Available: http://business-ethics.com/2010/01/24/2154-nike-corporate-responsibility-at-a-tipping-point/ [28 December 2014].
Harvard Business Review (2004) The Path to Corporate Social Responsibility, December, [Online], Available: https://hbr.org/2004/12/the-path-to-corporate-responsibility/ [28 December 2014].
Verbeke, A. (2013) International Business Strategy, Cambridge University Press.
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