(University/College/Institute)
Globalization and cultural
Contracting out has been a consistently debate. Whether the purpose of companies to outsource was to skirt around unions, maximize profits by taking advantage of the lower labor costs in another country, or just to exploit the technical expertise of expatriate contractors, the end result is that jobs are lost and others will gain owing to lower wages in that country. The animosity grows when one considers the distance and the ‘chasm’ of the wages in the country of the outsourcing company and those in the country of the contracting country (Pearlstein, 2012). However, though traditionally outsourcing gives the opportunity for companies to cut down on costs as well as give jobs to others, outsourcing ultimately weakens the relationship of the third component of this business relationship-the local communities. Moving production operations as well as the attendant jobs destroys the relations between the domestic communities and the outsourcing companies releasing massive ideological and political tidal waves that can effectively negate all the benefits realized by opting for outsourcing, and can inflict additional losses as well (Mourdoukoutas, 2011).
Sporting wear giant Nike was one of these companies that looked to exploit the advantages of outsourcing. Nike’s officials recognized that the company’s primary expertise lay in research and development, distribution, and in marketing. In this light, the company moved almost all of its manufacturing activities abroad, except for a limited number of specialized parts. Though the sportswear giant reaped tremendous financial benefits, the company was buffeted with accusations regarding its anomalous workplace policies. For example, Nike paid basketball superstar Michael Jordan $20 million in 1992 as part of its advertising deal; this is $20 million more than what the company paid its entire 30,000 workforce in Indonesia that made the shoes that Jordan was paid to promote. These practices made Nike a target for protests against the practice of free trade across the globe (Day, 2002).
In the position of Stigler (1975, p. 140), as cited by May, Cheney, and Roper (2007, p. 207), the sole facet that must be understood in terms of human behavior is that humans want to maximize the benefit from the use of a resource. Regrettably, progressive economists do not factor in cultural components in securing the benefits of an economic practice. In the United States, outsourcing is changing the manner that work is valued. Any initiative to consider the social and cultural impacts of any business practice is deemed as a capitulation to the enemies of capitalism. In the theory of Friedman, any effort to examine and assess business practices is an effort to annihilate capitalism (May, Cheney, and Roper, 2007, p. 207).
Though the local workforce was deemed protected owing to the operation of the code of conduct specifically developed by Nike for this purpose, the massive size of the manufacturing network ultimately led to violations and breakdowns in regards to workplace conditions and civil and human rights. Withal that there have been efforts at reforming the system; it has still a considerable ways to go before it can fully address these problems. For example in Pakistan, rather than producing sporting wear and products in regulated facilities, the children in the villages around the factory were drawn into the manufacturing facilities. Though the company has been trying to address the issue, there have been cases wherein children are employed in its outsourced facilities such as in Cambodia who are paid as little as $5 a month. In addition, it is known that workers are paid inadequately; for example, critics claim that Nike shoes are priced at £ 70, but only a pittance of that is given to the workers contrary to the claims of the company (Boggan, 2001).
It was believed that an American company, with the United States being regarded as a beacon of civil rights, would develop and implement policies to rectify this anomalous practice. These laws that protect the rights of the Americans in the workplace must not stop when US territory stops; it must extend to the global community where the United States maintains a presence. Nike, a global player in terms of cultural and trade revenue, must then take the lead in championing the rights of workers (Wilsey, Lichtig). Unfortunately, in complete contrast to the activism that marked the initiatives to address “sweat shop practices,” there was no effort at organizing the workers to better contend with abuses. This can be reflective of an American inclination, since American unions play a negligible part in forging American labor practice policies. In this light, Nike must shift itself from amoral and “gutless,” among others, and transform itself to an organization that is responsible for its actions in the global trade arena (Micheletti, Stolle, Nishikawa, and Wright, pp. 17-18).
References
Boggan, S (2001) “‘We blew it:’ Nike admits to mistakes over child labor” Retrieved 30 June 2016 from <http://www.commondreams.org/headlines01/1020-01.htm
Day, M., (2002) Gower handbook of purchasing management. Farnham: Gower Publishing Ltd.
May, S.K., Cheney, G., Roper, J (2007) The debate over corporate social responsibility. Oxford: Oxford University Press
Micheletti, M., Stolle, D., Nishikawa, L., Wright, M. “A case of discursive political consumerism: the Nike e-mail exchange” Retrieved 30 June 2016 from <http://profs-polisci.mcgill.ca/stolle/Data_files/MichelettiochStolleDiskursivTemaNord.pdf
Mourdoukoutas, P (2011) “The unintended consequences of outsourcing” Retrieved 30 June 2016 from <http://www.forbes.com/sites/panosmourdoukoutas/2011/12/09/the-unintended-consequences-of-outsourcing/#501a470e20f8
Pearlstein, S (2012, July 1) Outsourcing: what’s the true impact? Counting jobs is only part of the answer. The Washington Post Business
Van Dusen, S (1998) “The manufacturing practices of the footwear industry: Nike vs the competition” Retrieved 30 June 2016 from <http://www.unc.edu/~andrewsr/ints092/vandu.html
Wilsey, M., Lichtig, S “The Nike controversy” Retrieved 30 June 2016 from <https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html
