This study examines the social impacts of labor-related corporate social responsibility (CSR) policies or corporate codes of conduct on upholding labor standards through a case study of CSR discourses and codes implementation of Reebok – a leading branded company enjoying a high-profiled image for its human rights achievement – in a large Taiwanese-invested athletic footwear factory located in South China. I find although implementation of Reebok labor-related codes has resulted in a “race to ethical and legal minimum” labor standards when (...) notoriously inhumane and seriously illegal labor rights abuses were curbed, Chinese workers were forced to work harder and faster but, earned less payment and the employee-elected trade union installed through codes implementation operated more like a “company union” rather than an autonomous workers’ organization representing worker’ interests. In order to explain the paradoxical effects of Reebok labor-related codes on labor standards, I argue the result is determined by both structural forces and agency-related factors embedded in industrial, national and local contexts. To put it shortly, I find the effectiveness of Reebok labor-related codes is constrained not only by unsolved tension between Reebok’s impetus for profit maximization and commitment to workers’ human rights, but also by hard-nosed competition realities at marketplace, and Chinese government’s insufficient protection of labor rights. Despite drawing merely from a single case study, these findings illuminate key determinants inhibiting the effectiveness of labor-related CSR policies or codes in upholding labor standards, and hence two possible way-outs of the deadlock: (1) sharing cost for improving labor standards among key players in global supply chain; and (2) combining regulatory power of voluntary codes and compulsory state legislations. (shrink)

This study examines the social impacts of labor-related corporate social responsibility policies or corporate codes of conduct on upholding labor standards through a case study of CSR discourses and codes implementation of Reebok - a leading branded company enjoying a high-profiled image for its human rights achievement - in a large Taiwanese-invested athletic footwear factory located in South China. I find although implementation of Reebok labor-related codes has resulted in a "race to ethical and legal minimum" labor standards when notoriously (...) inhumane and seriously illegal labor rights abuses were curbed, Chinese workers were forced to work harder and faster but, earned less payment and the employee-elected trade union installed through codes implementation operated more like a "company union" rather than an autonomous workers' organization representing worker' interests. In order to explain the paradoxical effects of Reebok labor-related codes on labor standards, I argue the result is determined by both structural forces and agency-related factors embedded in industrial, national and local contexts. To put it shortly, I find the effectiveness of Reebok labor-related codes is constrained not only by unsolved tension between Reebok's impetus for profit maximization and commitment to workers' human rights, but also by hard-nosed competition realities at marketplace, and Chinese government's insufficient protection of labor rights. Despite drawing merely from a single case study, these findings illuminate key determinants inhibiting the effectiveness of labor-related CSR policies or codes in upholding labor standards, and hence two possible way-outs of the deadlock: sharing cost for improving labor standards among key players in global supply chain; and combining regulatory power of voluntary codes and compulsory state legislations. (shrink)

: We discuss the role that transnational corporations should play in developing global governance, creating a framework of rules and regulations for the global economy. The central issue is whether TNCs should provide global rules and guarantee individual citizenship rights, or instead focus on maximizing profits. First, we describe the problems arising from the globalization process that affect the relationship between public rules and private firms. Next we consider the position of economic and management theories in relation to the social (...) responsibility of the firm. We argue that instrumental stakeholder theory and business and society research can only partially solve the global governance issue, and that more recent concepts of corporate citizenship and republican business ethics deliver theoretically and practically helpful, fresh insights. However, even these need further development, especially with regard to the legitimacy of corporate political activity. (shrink)

We discuss the role that transnational corporations (TNCs) should play in developing global governance, creating a frameworkof rules and regulations for the global economy. The central issue is whether TNCs should provide global rules and guarantee individual citizenship rights, or instead focus on maximizing profits. First, we describe the problems arising from the globalization process that affect the relationship between public rules and private firms. Next we consider the position of economic and management theories in relation to the social responsibility (...) of the firm. We argue that instrumental stakeholder theory and business and society research can only partially solve the global governance issue, and that more recent concepts of corporate citizenship and republican business ethics deliver theoretically and practically helpful, fresh insights. However, even these need further development, especially with regard to the legitimacy of corporate political activity. (shrink)

This article addresses the democratic deficit that emerges when private corporations engage in public policy, either by providing citizenship rights and global public goods (corporate citizenship) or by influencing the political system and lobbying for their economic interests (strategic corporate political activities). This democratic deficit is significant, especially when multinational corporations operate in locations where national governance mechanisms are weak or even fail, where the rule of law is absent and there is a lack of democratic control. This deficit may (...) lead to a decline in the social acceptance of the business firm and its corporate political activities and, thus, to a loss of corporate legitimacy. Under these conditions corporations may compensate for the emerging democratic deficit and reestablish their legitimacy by internalizing democratic mechanisms within their organizations, in particular in their corporate governance structures and procedures. The authors analyze the available corporate governance models with the help of a typology and discuss the possible contributions of a new form of democratic corporate governance. (shrink)

The design and development of appropriate regulatory mechanisms have attracted renewed attention in recent years. In particular, a shift towards voluntary self-regulatory mechanisms has been witnessed within many industries, such as the Australian mining and petroleum industries which have developed voluntary codes of conduct. This paper analyses the development of different regulatory forms and provides a brief comparative analysis of the two main voluntary codes of conduct used by the Australian mining and petroleum industries. In particular, the study focuses on (...) the integration of social sustainability elements within these frameworks that help contribute to solving issues such as coverage of human rights, approaches to employee and community relations, systems of stakeholder engagement, community consultation and public reporting. The study concludes that stakeholders have an important role to play in driving the introduction of voluntary regulation. This phenomenon can be traced back to how a company’s need to maintain its legitimacy, or social licence to operate, often motivates it to go beyond compliance. By providing a fuller understanding of factors driving the evolution of different regulatory mechanisms, this study has important implications for policy makers and practitioners interested in developing effective regulation. (shrink)

In the mid-1990s, global labour standards emerged as a new and important are of concern for socially responsible investors, especially with respect to investments in the "problematic" footwear, apparel, and toy industries. In this paper, I elucidate the primary areas of concern for investors and discuss a framework for evaluating firms'' labor standards performance. In addition, I argue that today''s sweatshop debates follow closely those of centuries ago, with the standard economic defense of low wage manufacturing on the one hand, (...) and the activists'' protests against poor conditions and wages on the other. An examination of this historical context reveals a promising middle ground in this ongoing debate. (shrink)

ABSTRACTThis article introduces an “ordonomic” approach to corporate citizenship. We believe that ordonomics offers a conceptual framework for analyzing both the social structure and the semantics of moral commitments. We claim that such an analysis can provide theoretical guidance for the changing role of business in society, especially in regard to the expectation and trend that businesses take a political role and act as corporate citizens. The systematicraison d'êtreof corporate citizenship is that business firms can and—judged by the criterion of (...) prudent self-interest—“should” take on an active role in rule-finding discourses and rule-setting processes with the intent of realizing a win-win outcome of the economic game. We identify—and illustrate—four ways that corporate citizens can employ moral commitments as a factor of production to enhance their processes of economic value creation. (shrink)

This article introduces an “ordonomic” approach to corporate citizenship. We believe that ordonomics offers a conceptual framework for analyzing both the social structure and the semantics of moral commitments. We claim that such an analysis can provide theoretical guidance for the changing role of business in society, especially in regard to the expectation and trend that businesses take a political role and act as corporate citizens. The systematicraison d'êtreof corporate citizenship is that business firms can and—judged by the criterion of (...) prudent self-interest—“should” take on an active role in rule-finding discourses and rule-setting processes with the intent of realizing a win-win outcome of the economic game. We identify—and illustrate—four ways that corporate citizens can employ moral commitments as a factor of production to enhance their processes of economic value creation. (shrink)

The debate about the appropriate standards for upstream corporate social responsibility of multinational corporations has been on the public and academic agenda for some three decades. The debate originally focused narrowly on “contract responsibility” of MNCs for monitoring of upstream contractors for “sweatshop” working conditions violating employee rights. The authors argue that the MNC upstream responsibility debate has shifted qualitatively over time to “full producer responsibility” involving an expansion from “contract responsibility” in three distinct dimensions. First, there is an expansion (...) of scope from working conditions to human rights and social and environmental impacts broadly defined. Second, there is expansion in depth of this broader responsibility to the whole upstream supply chain without regard to contracting status. Upstream responsibility now includes all suppliers, including direct contractors and the chain of suppliers to such contractors. Finally, the change in CSR scope and depth has led to an evolution of CSR management practice. (shrink)

As corporations are going global, they are increasingly confronted with human rights challenges. As such, new ways to deal with human rights challenges in corporate operations must be developed as traditional governance mechanisms are not always able to tackle them. This article presents five different views on innovative solutions for the relationships between business and human rights that all build on empowerment, dialogue and constructive engagement. The different approaches highlight an emerging trend toward a more active role for corporations in (...) the protection of human rights. The first examines the need for enhanced dialogue between corporations and their stakeholders. The next three each examine a different facet of empowerment, a critical factor for the respect and protection of human rights: empowerment of the poor, of communities, and of consumers. The final one presents a case study of constructive corporate engagement in Myanmar (Burma). Altogether, these research projects provide insight into the complex relationships between corporate operations and human rights, by highlighting the importance of stakeholder dialogue and empowerment. All the five projects were presented during the Second Swiss Master Class in Corporate Social Responsibility, held in Lausanne, Switzerland on December 12, 2008. The audience for this conference, which examined business and human rights, was composed of researchers, governmental representatives, and business and non-governmental organization practitioners. (shrink)

As corporations are going global, they are increasingly confronted with human rights challenges. As such, new ways to deal with human rights challenges in corporate operations must be developed as traditional governance mechanisms are not always able to tackle them. This article presents five different views on innovative solutions for the relationships between business and human rights that all build on empowerment, dialogue and constructive engagement. The different approaches highlight an emerging trend toward a more active role for corporations in (...) the protection of human rights. The first examines the need for enhanced dialogue between corporations and their stakeholders. The next three each examine a different facet of empowerment, a critical factor for the respect and protection of human rights: empowerment of the poor, of communities, and of consumers. The final one presents a case study of constructive corporate engagement in Myanmar (Burma). Altogether, these research projects provide insight into the complex relationships between corporate operations and human rights, by highlighting the importance of stakeholder dialogue and empowerment. All the five projects were presented during the Second Swiss Master Class in Corporate Social Responsibility, held in Lausanne, Switzerland on December 12, 2008. The audience for this conference, which examined business and human rights, was composed of researchers, governmental representatives, and business and non-governmental organization practitioners. (shrink)

Private, voluntary compliance programs, promoted by global corporations and nongovernmental organizations alike, have produced only modest and uneven improvements in working conditions and labor rights in most global supply chains. Through a detailed study of a major global apparel company and its suppliers, this article argues that this compliance model rests on misguided theoretical and empirical assumptions concerning the power of multinational corporations in global supply chains, the role information plays in shaping the behavior of key actors in these production (...) networks, and the appropriate incentives required to change behavior and promote improvements in labor standards in these emergent centers of global production. The authors argue that it is precisely these faulty assumptions and the way they have come to shape various labor compliance initiatives throughout the world—even more than a lack of commitment, resources, or transparency by global brands and their suppliers to these programs—that explain why this compliance-focused model of private voluntary regulation has not succeeded. In contrast, this article documents that a more commitment-oriented approach to improving labor standards coexists and, in many of the same factories, complements the traditional compliance model. This commitment-oriented approach, based on joint problem solving, information exchange, and the diffusion of best practices, is often obscured by the debates over traditional compliance programs but exists in myriad factories throughout the world and has led to sustained improvements in working conditions and labor rights at these workplaces. (shrink)

This article considers two prominent, competing approaches to defining the scope of business responsibility for human rights. The first approach advocates extension of business responsibility beyond the boundaries of the enterprise to encompass broader ' spheres of influence'. The second approach advocates a business ' responsibility to respect* human rights (but not a ' positive* duty to protect, promote or fulfil rights).Building on a critical evaluation of these competing accounts of business responsibility, this article outlines a modified account, referred to (...) as a framework of ' spheres of responsibility*. On such an account, business responsibility for human rights outcomes is conceptualised not only in relation to direct ' harms' imposed by business, but also in relation to corporate influence over broader relationships and institutions that shape and constrain the substantive realisation of human rights. (shrink)

This article considers two prominent, competing approaches to defining the scope of business responsibility for human rights. The first approach advocates extension of business responsibility beyond the boundaries of the enterprise to encompass broader ‘spheres of influence’. The second approach advocates a business ‘responsibility to respect’ human rights. Building on a critical evaluation of these competing accounts of business responsibility, this article outlines a modified account, referred to as a framework of ‘spheres of responsibility’. On such an account, business responsibility (...) for human rights outcomes is conceptualised not only in relation to direct ‘harms’ imposed by business, but also in relation to corporate influence over broader relationships and institutions that shape and constrain the substantive realisation of human rights. (shrink)

In light of recent attempts to determine the political role and status of corporations I discuss the normative implications of considering multinational corporations (MNCs) as political actors. I posit that corporations do indeed have a new political role in a connected world, in particular with respect to matters of human rights, social and environmental justice. We thus find a growing need for ethical and political knowledge to inform and guide the emerging political co-responsibility of MNCs. I draw on the rich (...) literature in cosmopolitanism to seek such guidance and discuss some of the implications that a cosmopolitan perspective implies. (shrink)

The public support of corporations is continuously declining. The view that the system of free enterprise and profit-making are at odds with societal interests isbecoming more and more prevalent. Business’s associated loss of social acceptance poses a serious threat to the future viability of the system of free enterprise. Thus, corporate leaders face the task of regaining and sustainably securing the social acceptance of business. This paper presents three interrelated business ethics competencies which corporate leaders require to be able to (...) accomplish this task: (1) the ability to prove that business and profit-making do have a societal function, (2) the knowledge of what defines responsible business, and (3) the ability to organize responsible decisionmaking within their corporations. (shrink)

This paper addresses ethical issues surrounding global supply chains of multinational companies in developing countries. In particular, it considers the development and application of industry-wide ethical standards and codes of conduct for multinational supply chains in China. We describe and analyze the ethical norms and compliance components of such industry-wide regimes in the toy, textile, and consumer electronics industries. We argue that this development represents an positive attempt to institutionalize emergent international ethical standards and practices into this component of the (...) Chinese economy. (shrink)

This paper addresses ethical issues surrounding global supply chains of multinational companies in developing countries. In particular, it considers the development and application of industry-wide ethical standards and codes of conduct for multinational supply chains in China. We describe and analyze the ethical norms and compliance components of such industry-wide regimes in the toy, textile, and consumer electronics industries. We argue that this development represents an positive attempt to institutionalize emergent international ethical standards and practices into this component of the (...) Chinese economy. (shrink)

Western buying companies impose Supplier Codes of Conduct (SCC) on their suppliers in developing countries; however, many suppliers cannot fully comply with SCC and some of them even cheat in SCC. In this research, we link contract characteristics - price pressure, production complexity, contract duration - to the likelihood of supplier's commitment to SCC through a mediating process: how the buying companies govern their suppliers. Our structural equation model analysis shows that the hierarchy/relational norms governance is a perfect mediator of (...) contract characteristics' effects on the likelihood of supplier's commitment; the market governance, an insignificant one. The managerial implications are provided for successfully implementing SCC in global supply chains. (shrink)

This article examines how culture influences Chinese managers’ perception of some western management instruments, such as codes of ethics and performance evaluation systems. The research is based on analyzing the tacit messages in “stories told” by managers and reviewing some of the barriers that may hinder understanding. Major obstacles lie in failing to ‘read’ each other’s cultures correctly. Assumptions and biases are left alone instead of being addressed openly. Western management systems and tools do not necessarily function equally well in (...) the Chinese culture, unless they are reassessed and adapted. Some recommendations for managers and further research are given. (shrink)

Self-regulation exists at the firm-level, the industry-level, and the business-level of economic organization. Industry self-regulation has faced economic (free rider) and legal (antitrust) impediments to widespread implementation, although there exist examples of effective industry self-regulation, e.g., securities industry and the SEC, advertising and the FTC. By instituting industry codes of conduct, national trade associations have shown to be natural vehicles for self-regulation. While there has been long-standing general encouragement for establishing industry codes, adopting and enforcing conduct codes has been seriously (...) circumscribed by restrictive Supreme Court decisions and FTC advisory opinions. One approach to clearing legal confusion is to petition the FTC to issue an industry guide on promulgating and enforcing trade association codes of conduct. Another strategy is to utilize a stakeholder approach to association ethics committee appointments that subsequently influence code creation and enforcement. Finally, a new concept of an industry code of conduct will consist of three subcodes: an economic code; an environmental code; and a socio-political code. Combined, these strategic approaches will offer new opportunities for effective nonmarket regulation. (shrink)

A recent preoccupation in scholarly research is the capacity of firms in developing country industrial clusters to comply with international corporate social responsibility policies and codes of conducts. This research is at an early stage and draws on several—often quite distinct—scholarly traditions. In this paper, we argue that future work in this area would benefit from a more explicit examination of the connection between cluster firms and human rights defined according to the 1948 Universal Declaration of Human Rights and subsequent (...) covenants and treaties. We argue that cluster firms’ adoption of CSR policies, often indiscriminately imposed by global buyers, should be differentiated from firms’ actual human rights practices. Based on this distinction, we elaborate a typology of industrial clusters and identify a set of factors likely to influence their practice. Against this background, we discuss an agenda for future research and elaborate on the potential methodological intricacies related to research on the interface between industrial clusters and human rights. (shrink)

Does private regulation of workers’ rights in global value chains improve working conditions on the factory floor? Drawing on one of the first systematic longitudinal studies of supplier compliance with multinational corporation (MNC) codes of conduct, this paper finds—in contrast to previous research—substantial improvements over time. While in 2004, the four examined Chinese toy suppliers violated most of the evaluated code of conduct criteria and consciously decoupled the code of conduct policy from actual practices, by 2009 they had recoupled policy (...) and practice and complied with nearly all examined criteria (except working hours). The paper contributes to the private regulation literature by challenging previous research claims, identifying factors that could make private regulation effective, and outlining a research method for empirically studying the effects of codes of conduct over time. The paper also contributes to new institutional theory by discussing how recoupling could be influenced by two factors not identified in previous research: (i) trusting relationships between the organization and the stakeholder exerting pressure and (ii) factors unrelated to main external pressures leading to “accidental” recoupling. (shrink)

Despite increased academic and practitioner interest in codes of conduct, there has been little research into the actual compliance of suppliers in developing countries with the codes of conduct of multinational corporations (MNCs). This paper addresses this lack by analysing Chinese suppliers’ level of compliance with Swedish toy retailers’ codes of conduct. Based on unannounced and unofficial interviews with employees of Chinese suppliers, the study shows that all of the nine studied suppliers breached some of the standards in the toy (...) retailers’ codes, with over two-thirds of the suppliers not complying with the majority of the studied standards. While there are different explanations of this lack of compliance, the main explanation seems to be that Chinese suppliers successfully deceive toy retailers’ monitoring organisations by decoupling the formal monitored part of their organisation from the actual operational part of their organisation. The paper concludes with a discussion of how to increase compliance with MNCs’ codes of conduct. (shrink)

Despite increased academic and practitioner interest in codes of conduct, there has been little research into the actual compliance of suppliers in developing countries with the codes of conduct of multinational corporations. This paper addresses this lack by analysing Chinese suppliers' level of compliance with Swedish toy retailers' codes of conduct. Based on unannounced and unofficial interviews with employees of Chinese suppliers, the study shows that all of the nine studied suppliers breached some of the standards in the toy retailers' (...) codes, with over two-thirds of the suppliers not complying with the majority of the studied standards. While there are different explanations of this lack of compliance, the main explanation seems to be that Chinese suppliers successfully deceive toy retailers' monitoring organisations by decoupling the formal monitored part of their organisation from the actual operational part of their organisation. The paper concludes with a discussion of how to increase compliance with MNCs' codes of conduct. (shrink)

This article addresses the democratic deficit that emerges when private corporations engage in public policy, either by providing citizenship rights and global public goods (corporate citizenship) or by influencing the political system and lobbying for their economic interests (strategic corporate political activities). This democratic deficit is significant, especially when multinational corporations operate in locations where national governance mechanisms are weak or even fail, where the rule of law is absent and there is a lack of democratic control. This deficit may (...) lead to a decline in the social acceptance of the business firm and its corporate political activities and, thus, to a loss of corporate legitimacy. Under these conditions corporations may compensate for the emerging democratic deficit and reestablish their legitimacy by internalizing democratic mechanisms within their organizations, in particular in their corporate governance structures and procedures. The authors analyze the available corporate governance models with the help of a typology and discuss the possible contributions of a new form of democratic corporate governance. (shrink)

In recent years, there has been increasing managerial and academic attention given to a variety of mechanisms for companies to respond to stakeholder concerns about global business ethics. One area that merits further analysis is the role of industry‐level cooperation regarding issues in global business ethics such as labor practices. There are two main issues that we will address in this article: institutional pressures that predict when an industry will create a code of conduct and institutional complements for an industry‐level (...) code of conduct to be “successful” with regard to responding to stakeholder concerns about international business operations. We offer a number of propositions—bringing together work from both the corporate social responsibility and (neo)institutional theory literatures—with regard to both predictors and complements of industry self‐regulation in reference to labor practices. (shrink)

As a consequence of the changing conditions of doing business, we can observe the emergence of an increasing number of industrial and company-specific codes of conduct, as well as social and environmental standards. This paper considers these initiatives as being self-regulating governance mechanisms, which are characterized by a process of voluntary adherence on the part of firms to certain mechanisms or principles that seek to promote a “good society.” Two specific internationally established standards are discussed: Social Accountability 8000 and AccountAbility (...) 1000. These institutionalized approaches are described and then contrasted in relation to a number of different factors, particularly the degree to which they foster “reflexivity,” in terms of how businesses think about these issues, and “dialog,” in terms of how businesses interact with stakeholders. Such questions are relevant to the ways in which these standards might be introduced and implemented, and which of these institutionalized approaches are the most promising for international businesses in developing countries. (shrink)

This article introduces an “ordonomic” approach to corporate citizenship. We believe that ordonomics offers a conceptual framework for analyzing both the social structure and the semantics of moral commitments. We claim that such an analysis can provide theoretical guidance for the changing role of business in society, especially in regard to the expectation and trend that businesses take a political role and act as corporate citizens. The systematicraison d'êtreof corporate citizenship is that business firms can and—judged by the criterion of (...) prudent self-interest—“should” take on an active role in rule-finding discourses and rule-setting processes with the intent of realizing a win-win outcome of the economic game. We identify—and illustrate—four ways that corporate citizens can employ moral commitments as a factor of production to enhance their processes of economic value creation. (shrink)

Corporate social responsibility (CSR) is increasingly becoming a popular business concept in developed economies. As typical of other business concepts, it is on its way to globalization through practices and structures of the globalized capitalist world order, typified in Multinational Corporations (MNCs). However, CSR often sits uncomfortably in this capitalist world order, as MNCs are often challenged by the global reach of their supply chains and the possible irresponsible practices inherent along these chains. The possibility of irresponsible practices puts global (...) firms under pressure to protect their brands even if it means assuming responsibilities for the practices of their suppliers. Pressure groups understand this burden on firms and try to take advantage of the situation. This article seeks to challenge the often taken-for-granted-assumption that firms should be accountable for the practices of their suppliers by espousing the moral (and sometimes legal) underpinnings of the concept of responsibility. Except where corporate control and or corporate grouping exist, it identifies the use of power as a critical factor to be considered in allocating responsibility in firm-supplier relationship; and suggests that the more powerful in this relationship has a responsibility to exert some moral influence on the weaker party. The article highlights the use of code of conducts, corporate culture, anti-pressure group campaigns, personnel training and value reorientation as possible sources of wielding positive moral influence along supply chains. (shrink)

This book is vintage North."--Barry Weingast, Professor of Political Science, Stanford University "In this book Douglass North once again opens new frontiers in economic research.