Nike Case Study

The 20th century has marked an era of rising new business concepts that are used to reinforce the business workforce on all levels as well as readapt it to the technological, environmental, political, economical and social changes that have been occurring through time. Business ethics and Corporate Social Responsibility are amongst these concepts that help business practices catch up with the rapid changes of the markets but also solve solutions to problems such as Globalisation. 'The main cause behind the expansion of CSR can be found in the erosion of the division of labour between business and government and the growing pressure of civil society actors'' (Scherer and Palazzo, 2010 : 5). The corporate scandals of the 1990s (Enron, Exxon, American Airlines...) has also had a profound effect on the development of these fields.

Defining Corporate Social Responsibility or CSR is not as evident as it may seem, as Sethi has noted that ''the phrase CSR has been used in so many different contexts that it has lost all meaning'' (Griseri and Nina, 2010:9). Neglecting the fact that some argue that CSR has lost all its meaning, we could broadly define it as ''the expectations that society has of businesses'' (Carroll, 1979). However what people expect of companies obviously evolves over time and across countries which makes CSR a continuous process of accommodating corporate behaviour to societal expectations. Furthermore, Idowu and Filho have stated that ''what falls under the umbrella of CSR in one country may perhaps be of little or no significance to another'' (Griseri and Seppala, 2010: 9).

There are various ways of thinking about why corporations carry out Corporate Social Responsibility initiatives. Scherer and Palazzo (2010) distinguish between "economic perspectives" and "political perspectives" on CSR.

Nike, a multibillion dollar corporation is one which has continuously used CSR efforts to respond to activist attacks and accusations concerning sweatshops, child labour and abuses of human rights.

In this paper I will attempt to study in depth the case of Nike's engagement as well as response to anti-sweatshop activists while analysing the different CSR efforts it has conducted. I will then examine and assess the effectiveness of these efforts from an ''economic'' and a ''political'' perspective. Finally I will conclude by summarising and breaking down the impact CSR has had on Nike as well as the way the company is running today and eventually giving my opinion on the matter.

Nike Inc. was founded in 1962 by Bill Bowerman and Phil Knight as a partnership under the name Blue Ribbon Sports, that later became Nike. Over time, Nike has constructed itself as an icon that ''embraces a larger image system that possesses both a philosophy and a personality'' (Goldman and Papson, 1998: 19). We live in a cultural economy of signs and Nike's swoosh is currently one of the most recognisable brand icon in that economy.

Let's go back to how it all started. At Stanford University, Knight analysed the shoe manufacturing industry and arrived at the conclusion that with cheap Japanese labour, an American manufacturer could sell track shoes that would rival Adidas in quality, at significant lower prices (Goldman and Papson, 1998). With increasing competition and the rise of globalisation, the quest for cheaper labour to drive down costs appeared to make a good business sense on the basis of competitive advantage. For many consumer products companies, cheaper labour is necessary for market survival. ''In response to the wage rate pressure, the apparel industry has pursued a set of related strategies of outsourcing production to sweatshops'' ( Pfeffer, 1998: 48). And that is what Nike did; some 150 Nike subcontracted factories employ more than 450000 workers (Beauchamp, 2004:177).

Soon Knight's vision of cheap Japanese labour became too expensive for the highly competitive market and Nike found Vietnam. By 1998, one out of ten pairs of Nike shoes came from Vietnam whose official rural unemployment is of about 27 per cent in some regions (Beauchamp, 2004). ''Between 1972 and 1998, this strategy worked phenomenally well. Nike became the largest seller of athletic footwear and apparel in the world, with

Fiscal 1998 revenues of approximately $9.5 billion and net income of nearly

$400 million (Spar and La Mure: 89).

In the 1990s allegations of worker abuses in factories that contracted with Nike began to mount and by 1998 investigation of Nike labour practices in Vietnam were launched. The report stated that ''by not directly running the factories where its products were made, Nike had little control over internal labour conditions'' (Beauchamps, 2004: 178). It found that Nike had a fine code of conduct but that its local contractors consistently violated it. But ''even where companies break no local laws, they may stand in violation of their own self-proclaimed standards or be accused or breaching international community norms'' (Kytle and Ruggie, 2005: 7).

Starting with the embarrassing revelation that Pakistani child labour was stitching soccer balls (Appendix 1) and all these accusations, Nike found itself on the news week after week during 1996 and 1997. It was not long before all sorts of anti-Nike campaigns started back lashing at the company. Nike was accused of ''inhumane treatment of workers by their supervisors, paying wages below the legal minimum wage, and the sexual abuse of several women workers at Nike shoe manufacturing plants in Vietnam'' (Source: ICMR).

Phil Knight first reacted to the accusation by neglecting them and staying on point with the fact that it is not ''what Nike is all about''. Appearing on Michael Moore's documentary 'The Big One', Knight justifies outsourcing by saying that no American would want to make shoes and despite Michael Moore finding him people willing to manufacture shoes in America he still sticks to his statement.

However with the rise of concerns on the matter and social activism against the company ('No Sweat' campain, anit-Nike websites, anti-Nike facebook group...) measures had to be taken. 'It was not until May 1998--in the face of weak consumer demand, retail oversupply, and steady NGO activism--that Nike changed course' (Spar and La Mure, 2010 :91).

Nike having to justify itself for the actions it has been accused of started their Corporate Social Responsibility efforts to end all of the negativity