Child Labor in Developing Countries: A Case Study of Nike's Practices

This report provides a detailed analysis of child labor in developing countries, specifically focusing on the practices of Nike, a major athletic footwear company. The study examines Nike's operations, particularly in Southeast Asia, and the ethical implications of child labor within its supply chains. It explores the use of the Semiotic Square model to illustrate the relationships between ethical and business aspects, including implications on business sustainability and legal issues. The report also discusses ethical theories such as deontology and utilitarianism, and how they apply to Nike's business practices. It covers the historical context of child labor issues, Nike's responses to criticisms, and the implementation of recommendations to address unethical practices. Furthermore, the report highlights the challenges faced by multinational companies in monitoring their global supply chains and the importance of enforcing codes of conduct to maintain international reputation. The analysis includes specific cases, legal frameworks, and the impact of NGOs and activist groups on the company's operations and ethical considerations.

Child labor in developing countries
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Introduction
Child labour is regarded as a serious social problem in which children are engaged in
employment practices and work processes (Rugman and Verbeke, 2007). Apparently, children
should not be included in employment management; still due to lack of financial resources,
families were open for child labour. Most of the children work for their families and also to
maintian their livelihood. Thus, in such respect focus has been laid on Nike’s practices regarding
child labour. Thus, in this context, the present research study has been emphasizing on Nike
which operates business as a athletic footwear organization and which delievers several products
and accessories to the consumers.
Along with different sports products, Nike is engaged in rendering other acessories as
well. The organization is greatly focused on brand management which also ensures to enhance
customer satisfaction rate. In this respect, focus has been laid on organizational practices of Nike
with regards to child labour in developing countries. Hnece, discussion has also been included
regarding labour practices of Nike in South East Asia. Therefore, in this respect reearcher has
highlighted all the ethical practices of Nike through using semiotic square (Srivastava, 2011).
However, many countries do not prioritize the child development and instead allows its children
to get involved in child labor. Many millions of laborers across the world are children where
many are working as hidden workers in homes or the underground economy (Srivastava, 2011).
The international labor organization prohibits child labor simply because it is a violation of
human rights. Child labor is one of the factors contributing to the failure of children to complete
education and thus affecting their future negatively.
Labor practices of Nike in Southeast Asia
In developing countries, many families are poor, and the issue of family planning is a big
challenge. It is easier to find a family with around ten children all under the age of 18years and
that both parents are not employed in these countries. Resolving the issue of child labor in such
situations is therefore not an easy task (Shah, 1998). This is because the children are in such
cases are working to get basic commodities and forcing the companies that employ these
children to terminate the employment may lead to the children seeking other employments with

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lower paid work or even get involved in child prostitution in some cases (Shah, 1998). However,
this does not mean that practicing child labor should be encouraged in such areas, but instead,
other ways to help the children is encouraged.
A good example of child labor issues is Pakistan. In 1996, a life magazine published an
article about child labor, and it had had a photo of a 12-year-old kind stitching a ball which was a
product of Nike. This kid would spend most of the day stitching the pieces together only to be
paid 60cents at the end of the day. This article led to activists complaining about the issue of
child labor, and Nike later accepted that some of the soccer balls that Nike bought from Pakistan
had been made by a contractor who was using child labor. Although the issue of Nike using
subcontractors who are using child labor came into public in 1996, it may have started earlier
because Nike has always used the third world countries to produce its commodities and to leave
when the living standards of the country rise and make the manufacturing more expensive. A
good example is Japan where Nike used to produce its commodities and later left when Japan’s
living standards went high.
The case of the 12year old boy stitching the soccer ball was just one of the many cases which
happen, and it shows that child labor is existent in many developing countries. However, this
does not mean that the governments’ involved has allowed child labor but the problem is that
enforcement is weak. For instance, Pakistan has laws concerning child labor, but in some places
within the country, some children work for 10hours a day, six days a week simply because the
law is not enforced by the government (Schanberg, 2006).
Semiotic square
Semiotic Square is also called as Greimas square which is a tool that is used for structural
analysis. This also identifies relationship between semiotic signs through considering opposite
sides of the concepts. Applying the model in Nike, it can be said that the semiotic square is
formed by an binary relationship among two contrary signs. It basically focuses on the study of
signs and symbols which are the major elements of communicative behaviour. At the same time,
it also includes identification of the system of communication such as language, clothing and

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gestures. Another dimension is that it depicts a general theory of signs and symbolism. This is
usually divided into the branches of pragmatics, semantics and syntactics.
There are three different aspects that lies in this model and this can also be applied in
Nike in terms of showing the relationship between business aspects.
Implications
of Ethical
terms
Affects
business
sustainability
Nike’s
business
operations
Child labour
as an ethical
issue

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Thus, on the basis of above diagram, it can be said that Nike has to implement ethical
aspects in to business practices. However, the practice of child labour increases ethical
implications on Nike and as a result it affects the business prospects. The diagram depicts that
child labour impacts Nike business operations and at the same time it also increases legal
implications of the business. Therefore, with the elementary structure, it is evident that the model
shows relationship between contrary, contradictory and implication. In this context, it can be said
that business marketing is mainly focusing on the business interaction between organizational
actors.
According to the Semiotic Square, Nike has to ensure that all the business practices are
ethically and legally managed as that has a direct impact on business performance and
productivity aspects. In addition to the same, it can also aid Nike to avoid all such aspects that
can affect the business practices. However, the model shall not be applied in the situation if Nike
already follows all ethical dimensions. For instance- Nike can protect the business practices and
performance through acting ethically and at the same time it does not require implementation of
Semiotic Square in diverse business aspects. Therefore, this context it is clear that Nike needs to
ensure that all legal and ethical dimensions are being considered.
In addition to the Semiotic Square, Nike is also required to emphasize on ethical theories
so as to apply different principles which aids business entities to judge the effectiveness of
business practices. Two major theories which are applicable in this case are discussed as follows:
 Deontology: According to this theory, ethical principles of the business can be
ascertained through observing how people adhere to their obligations and duties at the
time when they are engaged in decision making process. The theory contains several
positive attributes; however it also has various confined elements. However, as per the
ethical principles, it is crucial for the business entity to oblige all the terms and conditions
so keep all the ethical standards (Srivastava, 2011).
 Utilitarianism: This theory is based on one’s ability for predicting the consequences of a
specific action. Choice is typically made regarding all the aspects that provides the most
benefits to the business entity. However for such perspective, it is crucial for the business

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entity to focus on justice and equity so that prominent outcomes can be derived
accordingly. Focus is required to be laid on good practices so that legal issues and
constraints can be avoided accordingly (Schanberg, 2006). Hence, organizational people
of Nike must emphasize on legal, ethical and accurate practices in all domains (New
York Times. 1997).
Following these cases, many consumers of Nike’s products and activist groups protested
against the issue of Nike and child labor. However, just like many other companies would do,
Nike’s response was defensive, and they claimed that it is their subcontractors who were getting
involved in child labor and not Nike itself. Nike said that it was not aware of the extent of the
child labor and that it is these subcontractors/suppliers who should be responsible for such acts
(Rugman and Verbeke, 2007).
It is obvious that Nike’s code of conduct cannot promote child labor. In its code of
conduct, it clearly explains that it does not support child labor. With this, it cannot be seen as a
company that supports child labor, and this avoids future repercussions that may arise from child
labor practice (Woo, 2017). However, the issue of child labor is controversial, and it is a major
challenge for multinational companies like Nike. This is due to its utilization of global supply
chains which largely depend on outsourcing their products. It is tough to monitor all the
operations of a product and the legality of the process involved. Labor laws also vary across
different countries and for this, the legal working age for children is different for different
countries. Companies should thus be aware of these differences and abide by them.
As seen earlier, many children involved in child labor comes as a result of poor backgrounds
whereby their situation forces them to work. If some of these children do not work, then it means
that no food on the table (Rugman and Verbeke, 2007). For this reason, some individuals
including Nike’s stakeholders claim that in the case of poor backgrounds, child labor is essential
to the survival of the family. On the other side, some stakeholders are against it as it tarnishes the
company’s reputation. NGOs and activists groups also put pressure on the issue, and this
presents a dilemma for many businesses like Nike. However, for the company to maintain its
international reputation, it has to do what is right. It has to enforce its code of conduct by all

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means. In some places there some regulations that employees should not talk to their coworkers
(Wilsey and Lichtig, no date). These unethical practices was a big blow for Nike having in mind
that one of the big assets that Nike has is its name, then tarnishing the name would bring a major
backlash.
Despite the presence of some unethical practices within the companies involved with Nike, they
were able to implement some recommendations from experts to deal with the issues. This means
that they took actions before their international reputation was completely eroded. Some of the
recommendations that Nike implemented were: start paying workers the legal minimum wages
or higher than the minimum, eliminate any forced or excessive overtime, eliminate regulations
that prohibit workers from talking to their coworkers, stop deducting additional criminal fines
among other recommendations (Kahle, Boush and Phelps, 2000).
After many of the recommendations had been implemented, many issues pertaining child labor
and other unethical issues were resolved and further surveys to check whether the problem was
still prevailing were conducted. The later reports indicated that the workplaces had greatly
improved and that the workers are more comfortable than before. However, there were still some
little ethical issues and just like before, there were some recommendations to solve the remaining
issues (Kahle, Boush, and Phelps, 2000). Some of the recommendations were that the company
should continue to implement global standards for international labor practices. They should also
be more aggressive in enforcing the code of conduct. Labor representatives should represent the
worker's interests, and it should be the duty of Nike to promote the development of these
representatives. The factories that manufacture Nike products should come up with better
grievance systems within the factories to solve issues in a better manner. They were also
recommended that they should enhance their relationships with human rights community within
the countries where their commodities are produced. External monitoring to ensure that the code
of conduct is implemented was also recommended (Kahle, Boush, and Phelps, 2000).
Conclusion
The use of Nike in this report is just a representation of many other companies that have
unethical practices in conducting their businesses. Child labor is also practiced illegally in many

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parts of the world in developing countries. Many multinational corporations have put in place
measures to ensure that good code of conduct is implemented to avoid human rights violation.
However, the problem of child labor is still persistent in some areas, and it can be attributed to
poor living standards.

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Rugman, A.M. and Verbeke, A. (2007) REGIONAL AND GLOBAL STRATEGIES OF
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http://www.globalissues.org/article/62/child-labor (Accessed: 9 February 2017).
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