Step 1: Identify Ethical Issues
In this scenario, a clothing company is determining whether or not it is right to source from an Asian manufacturing company. The following ethical issues are identified:
The factory is shown to work the employees long hours, with very low pay compared to America. However, the workers claim that they are very grateful for the jobs that are given to them.
Is it fair to work employees so much for so little, even if they are satisfied by it?
Threads with Style is dedicated to social responsibility as well as profitability. The basic pay of the workers might be low, however it would be better if some form of benefit was given. Although the workers are paid such a low salary, it should be seen that this salary is legal according to their country’s standards. If the pay does not match minimum wage, or if the employees are not receiving any form of benefits that can guarantee them security, then the company is not doing its job in providing good work for the people who work in the factory. The workers should have a contract in which they are entitled benefits after working for a set number of months. They should also be healthy and fit to work in such conditions. If the company fails to prioritize the health of its workers, then it is not right to make them work for so little with very unforgiving working conditions.
Should the company favor profitability (in hiring a cost-effective manufacturer) or social responsibility (in sourcing clothes from companies they can fully trust)?
The factory employs child labor, but the manager seems to care about his employees, and that this age is the normal time in which citizens enter the workforce. However, the working conditions of the children that are made to work in the factory should also be scrutinized. Before looking at their hiring process, the factory or premises should be inspected. Although it is culturally acceptable for them to hire children at such a young age to work in a factory, the condition of the workers should be looked into. Social responsibility should always be the number one goal for any company. If they want the two countries to mutually benefit from the relationship that they have, in terms of business, the company sourcing the workers should know how to give back to the community. Everyone would want their children to be in school, or to get an education. Hiring children workers is promoting child labor, no matter what angle you look at it. The company should encourage children to go to school and fight child labor. No children, no matter what the culturally acceptable age is to work, should have a full-time job that interferes with their education and their future.
Is it right to respect the cultural traditions of a business partner, even though one personally finds it distasteful?
I believe that the central ethical issue involved is the second one; Threads with Style is at an impasse in their mission statement, in which they must explore all of their options and determine whether they want to make more profit or source their products from somewhere they feel more comfortable. They have no reason to believe that the manager is telling them the truth about the safety of their workers, and even the working family’s satisfaction is not enough to necessarily place their trust in this company. Assuming that Ms. Perpercoss is dissatisfied about the underage workers, she would have to make a choice about whether or not to support this (through their patronage) in the name of profit. Before partnering-up with the factory, there should be an inspection where the premises is checked. Although they might want to respect the cultural traditions of the company, if it does not coincide with their overall mission, the partnership should not push through. Your own personal conviction should also be honored, no matter what. If you believe that the factory is abusing basic human rights, then the factory should not be encouraged to hire workers who will do anything to earn money.
Step 2: Research
The following are articles that provide insight into the ethical issues surrounding Threads with Styles’ ethical dilemma.
1. “The Political Economy of Child Labor and Its Impacts on International Business.”
This article denotes that child labor is often inextricably linked to global business, whether directly or indirectly. Business are at the forefront of making clear, positive changes to the child labor industry by engaging in trade with less exploitative markets; by making these decisions, it becomes more feasible to obey child labor laws and improve their own conditions. “Any firm that confronts the issue of child labor must decide whether adopting one of the responses outlined above—or any other—will cost more than ignoring the issue” (Bachman 39).
2. “No Life for a Child: The Grim Reality of Nepal’s Child Laborers.”
This article showcases the equally poor conditions of child labor in Nepal, a neighboring country in Asia. “Though child labor is illegal in Nepal, an estimated 1.6 million children between the ages of five and 17 years are in the work force, according to the National Child Labor Report. About three-quarters of them are under the age of 14, and most are girls” (Bhandari, 2013). To that end, even if what the supervisor says is true about the legality of their child labor, the conditions it puts them in are far from ideal, and something Ms. Perpercoss is not comfortable with.
3. “Do Consumers Care About Ethics? Willingness to Pay for Fair-Trade Coffee.”
This study measures the extent to which consumers would be willing to engage in ethical buying behavior, which can be an important factor in determining how to source one’s products. If people are not willing to pay the extra money to buy products from Threads with Style sourced in ethical environments, the company will go out of business. In this study about fair-trade coffee, “The willingness to pay for a fair-trade label on coffee of the respondents indicated that about 10% of the sample wanted to pay the current price premium of 27% in Belgium” (de Pelsmacker, Driesen and Rayp 381)
4. “Cambodia Garment Factory Conditions Continue to Worsen.”
This article cements the ever-growing problem of Asian garment factory conditions. According to the United Nations, there are “ lower compliance levels with key health and safety measures[in Cambodian factories] than seven years ago, suggesting efforts to improve the sector there aren’t totally effective” (O’Keeffe, 2013). While this may not necessarily be true or indicative of the Shrenisra factory, it does indicate a disturbing trend in Asian factory garment work that is not strictly acceptable, even by Asian working standards. To that end, it may not necessarily be prudent to assume that the poor conditions and low pay in the plant is tacitly accepted by everyone who works there.
5. “Central Asia: Child Labor Alive and Thriving.”
This article gets more into the mentality of people like the family Ms. Perpercoss met whose child works in the factory; many see it as a point of pride for their family. They work to put food on the table, and are willing to put up with the terrible conditions. The article also mentions many governments’ ambivalence to do anything about labor laws, due to the economic contributions they make through their effort: “Human rights activists say that cotton brings cash to the state coffers as well as to the pockets of the ruling elite in some countries” (Saidazimova, 2008).
Step 3: Analysis
In this section, we will look at the options Ms. Perpercross has, the stakeholders, and how these options affect stakeholders. The stakeholders are Ms. Perpercross, Shrenisra, the Juversina family/other workers, and TWS/shareholders. The options are as follows:
Source clothing from Shrenisra Child Labor
Source clothing from an ethical company, and raise price points Ethical Source
Convince Gariana to improve working conditions Improve
Step 4: Application of Principles
This section will apply ethical theories to the aforementioned options available in this scenario.
Non-consequential Theory: Libertarianism
In classic liberalism/libertarianism, limited government is the key to a successful society; individual liberty and choice is placed above everything else, and people should be allowed to pursue their self-interest. Free market capitalism is heavily linked to this principle, as it is thought that the concept of a free market would allow people to realize their destinies according to their will and resources (Friedman, 1962). To that end, the only moral imperative is to allow people to exercise their personal freedoms, and not be told what to do by an overarching authority figure.
Applying Libertarianism: The aforementioned options will be evaluated on the principle of Natural Rights (i.e. inalienable, mutually respected freedoms of the individual).
Child Labor: This option respects the freedom of Shrenisra to conduct business as they see fit, the workers’ desire to work regardless of their conditions (as they seem content with them). This also exercises TWS and Ms. Perpercross’ personal freedom to select whatever option they like.
Ethical Source: This option allows TWS and Perpercross to exercise their freedom of selecting options, but does not allow Shrenisra to benefit from their patronage due to that choice. Shrenisra and the workers are allowed to continue business as usual
Improve: This option fails to respect Shrenisra’s freedom to conduct its business, and imposes a set of values upon them that they do not necessarily share. This violates the tenets of libertarianism.
Consequential Theory: Utilitarianism
One of Mills' primary arguments is the Greatest Happiness Principle, which states that “actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness. By happiness is intended pleasure, and the absence of pain; by unhappiness, pain, and the privation of pleasure” (Mill, 1998).To that end, Mill’s idea of justice depends on the ability to receive social benefits from an action; if an action leads to an overall reduction in crime, for instance, it becomes moral. In essence, Mill’s perspective is that the ends justify the means.
Applying Utilitarianism.
In order to apply Utilitarianism to this situation, one must determine which of the three options provides the ‘greatest happiness’ to all involved.
Child Labor: Brings happiness to Shrenisra, profitability to TWS, but sacrifices social responsibility, Ms. Perpercross’ conscience, and working conditions for workers.
Ethical Source: Brings happiness to Ms. Perpercross and TWS, but sacrifices work for workers, profitability for TWS and Shrenisra. Potentially encourages Shrenisra to improve conditions in order to successfully attract buyers.
Improve: Brings happiness to Ms. Perpercross, TWS, and workers, but sacrifices profitability for Shrenisra, as well as the possibility of the deal falling through altogether.
Step 5: Recommending a Solution
Ms. Perpercross and TWS must decide between their own moral imperative to not contribute to the child-labor practices that pervade modern business, but must also make their clothes cost-effective in order to maintain profitability. Following libertarianism, either going with or going without Shrenisra respects everyone’s ability to exercise personal freedoms. In the case of utilitarianism, bringing the greatest happiness to everyone involved is the primary goal. Looking over both theories, it is clear that Ms. Perpercross’ choice must be to choose another ethical source. Regardless of the cultural relativism inherent to the situation, Perpercross would not feel comfortable supporting child labor practices, thus sacrificing TWS’s integrity. By not choosing Shrenisra, they do not partake in this practice, and have the potential to still get the contract through ethical business practices.
Step 6: Evaluation
There are several counterarguments to this choice. First, there is no reason to believe that the workers feel they are being treated unfairly; the Juversina family seems happy to have their family working at the factory, and Mr. Gariana seems to care about his workers. However, this does not necessarily mean that Ms. Perpercross must act against her instincts or conscience, or that the family represents the attitudes of everyone working there. Secondly, not using this cheaper source may cost TWS that major retailer contract; however, their commitment to social responsibility comes with a price, and that may mean not getting the profitability they need.
Step 7: Reflection
The issue of child labor is something that I have always been troubled by; the differences in cultures may mean that I am more upset about it than those involved (as they may see it as a normal part of life). I understand the difficulty that businesses must go through in sourcing ethical materials; the nature of globalization and industrialization means that a lot of companies outsource their goods to other countries, where standards of living are much lower – this also potentially sacrifices ethical integrity for these businesses. Examining the reasoning behind these decisions gives me greater insight into the stakes of all parties involved.
Today, one can say that we live in a time where world leaders can be morally unethical. It is the increase in information, and the emergence of scandals which increases the confusion about leadership. Great leaders in time have been probed of their ethical short-comings, and it’s very hard in today’s day and age to have heroes when everything about their lives is so public. Ethics and leadership focus on two things, these are: integrity and honesty. If TWS wants to run as a successful business, they have to prove themselves a great leader. Since their aim is for expansion, they need to be completely honest with themselves and work with integrity. This means, that even though hiring child workers is completely acceptable in a certain culture, they should not bend or go ahead with it. If they believe in their hearts that it is an immoral issue, which they do, because the question of ethical working conditions was brought up, then they should not continue with the partnership. Ethics is located in the heart of leadership, and they are not two separate things. The study of ethics is generally being able to tell right from wrong, knowing virtue, one’s duty and obligations, etc. Leadership entails certain kinds of moral problems in connection with human relationships. The goal of leadership ethics studies is to try to understand how the leadership-follower relationship works.
Without the emphasis on contiguous commitment and the right modeling of leadership standards, business ethics cannot be achieved in an organization. The ethics of leadership, no matter how the leader carries it, will reverberate in the workplace, and will directly influence choices and decisions make by workers or the leader’s followers. Leadership is what sets the tone to shape the working environment in an organization. When a leader influences the actions of his or her followers through modeling and reinforcement, the leader has succeeded in reproducing his certain behavior, characteristics or habits. The question as to whether the behavior, characteristics or habits is ethical or morally correct is not the focus. The fact that followers do reflect on leaders is the key, this is why we need leaders who are ethical. Ethics, or ethical thinking begins within a person, it involves free will. Ethics is generally reflective conduct; it is when one knows what is morally right, to what is wrong.
The followers of leaders reflect their conduct on what they witness, however it does not mean that they do not have responsibility over their own actions. Leaders and their followers are accountable for their conduct in an organization. It is the workers or the followers of the leaders who communicate the ethics of their leaders through their performance; it is the followers who establish their desired expectations or standards in accordance to what the leaders demand. Workers directly absorb and reflect the manners and morals of a workplace; they are affected by the modeling standards set by leaders. In turn, work reflects on how one spends his or her life, it generally contributes to lessons one learns, and it adds a large portion to one’s development and moral perspectives.
Ethics is very communal, it does not focus on one person, it is a web of interlaying relationships. Because ethics does not focus on the individual, it is about the rights and obligations we share with others. In a business, an organization cannot run without the help of others. Individuals need other people to thrive and survive. Ethics in a business is the ongoing need to find justice, equity and fair play. Work is not detached from human life, and ethics in business focuses on the people you work for and work with. This makes the people in your organizational environment a big part of your life. The question is now, what should we do in regards with others? If TWS does continue with hiring the factory workers, each person working in that factory will be part of their life. Not only this, but the management will be held morally accountable for all of those child workers.
Ethics is said to be pluralistic and non-egotistic. The evaluation of the self in relation to others is said to be its primary paradigm. An individual must always take into account his or her actions (Waldman, de Luque, Washburn, & House, 2006). When the actions of that individual come into conflict with the interests of those around him or her, the individual should go into reflection and maybe even suspend or modify his or her actions. This is because ethics requires us to act on behalf of others. In order to pursue our best interests, we must first take into account the interests of those around us.
The importance and qualities of the leader-follower relationship stems from unity. A large piece of the leader-follower relationship is how the leader perceives himself or herself in relation to his or her followers, and vice-versa. The self-other perception is important to ethics because it is an issue concerning how workers are involved, and this can be used to evaluate the leader if he or she is abusing his or her power and other issues. Looking at it from this perspective, followers may seem to be manipulable and compliant to their leaders. An abuse of power contradicts the idea of mutual dependency in the working environment, and it takes away the value of maintaining one’s personal dignity. Coercing you will onto an individual is not the best way to get their best performance, this type of abuse depraves a leader from the honesty and judgment he can receive from his subordinates. However, leadership is still seen as power over others, rather than service towards others.
Leadership does come with its ethical failures, this is seen in immoral decisions, actions, etc. This is seen a lot with leaders across the globe, throughout many businesses and organizations. When ethical leadership is exposed to others, we tend to look for an explanation for the leader’s immoral acts, instead of trying to analyze the moral status of his action. Sometimes, people are too preoccupied with the immoral act, that there are questions which are left unanswered. To be able to locate an answer to these questions, we must look at the features of decisions and what make them right or wrong. The point in defining an action if moral or not is to direct leaders into knowing how to behave morally given a clear-cut definition of the characters of ethical success. This shifts the view of people on leaders from how they act, to why they should act that way.
Much of what causes leadership failure in terms of morality and ethics, is said to be caused by human nature. This is because as humans, we are naturally egotistic. This contradicts what was discussed above, saying that ethics in the workplace should be non-egocentric, and the focus should be on an individual’s relationship towards others. Thus, leadership failure is not directly because of moral principles, it is in connection with self-interest, and fulfilling it. It is assumed that when there is immoral behavior, no matter the severity, there will be consequences. Fortunately, there are many effective ways in which society makes it possible for self-interest to come together with morality. This in-turn does not come into conflict with the individual’s relationship towards others. When one does not conform to such requirements of moral standards, others will withhold their cooperation, making the leader a failure in the organization.
Leadership refers not to the position or power of a person; it is a particular person’s relationship with his or her followers/workers. Ethics is not focused on the individual; it is about an individual’s relationship with the people around him or her. Therefore, leadership ethics relies on the web of relationships within the workplace. Workers or followers will conduct their behavior based on what the leader shows them. The leader is the one who sets the standards in an organization, and his actions directly impact all those around him or her, creating the mood set in the workplace. This suggests that a leader’s actions are very crucial to an organization, and he or she must act in a way to benefit others as well as the organization. This entails leadership to be non-egocentric. Because leadership is seen as not focused on the individual, leadership failures come around when one pursues his or her self-interest above others. When there is failure in terms of leadership on a moral or ethical standpoint, there are consequences to follow. Thus, it is best if a leader, or a company best define what ethics and morals are so that a leader may incorporate this in his or her behavior.
For the case of TWS, the company should stick with their morals and choose not to partner with such a factory that employs child workers. No matter how socially acceptable it is in a country, if it is unethical in their eyes, then they should not take part in child labor. Education is highly valuable, no matter what society you are in. By hiring a child worker, you are stopping them from getting an education. In order to become a good leader and show the factory or the company that TWS wishes to partner with good faith, they must show ethical leadership. There should be no reason for any child to work in a factory, even if they are being paid an acceptable amount. TWS should focus on ethical leadership and not on profit alone.
Works Cited
Bachman, S.L. “The Political Economy of Child Labor and Its Impacts on International
Business.” Business Economics (July 2000): 30.
Bhandari, Bibek. “No Life for a Child: The Grim Reality of Nepal’s Child Laborers.” CNN Aug
15, 2013. < http://www.cnn.com/2013/08/14/world/asia/nepal-child-labor/>.
De Pelsmacker, Patrick, Driesen, Liesbeth and Glenn Rayp. “Do Consumers Care About Ethics?
Willingness to Pay for Fair-Trade Coffee.” Journal of Consumer Affairs 39.2 (2005): 363.
Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago Press, 1962. Print.
Mill, J. S. Utilitarianism. Oxford: Oxford University Press, 1998.
O’Keeffe, Kate. “Cambodia Garment Factory Conditions Continue to Worsen.” The Wall Street
Saidazimova, Gulnoza. “Central Asia: Child Labor Alive and Thriving.” Radio Free Europe
Radio Liberty, October 27, 2013. < http://www.rferl.org/content/article/1144612.html>.
