February 6, 2005
To Promote Social Responsibility, Focus on Local Priorities, Says Hess
by Sandie Taylor

Media coverage of the use of sweatshops or child labor can quickly damage the reputation of any multinational corporation. Still, some corporations are taking steps to be more open about their manufacturing codes of conduct—even if these codes still fall short of human rights goals.

According to David Hess, assistant professor of business law at the University of Michigan’s Ross School of Business, disclosing such information is a good start to protecting human rights in international business operations. Speaking Jan. 31 to MBA students at the McCombs School of Business, Hess said, “We should focus more attention on the process, and less on achieving a 100 percent outcome.”

“It would be almost impossible,” said Hess, “for a company to be 100 percent in compliance with these global regulations all of the time.”

Instead of boycotting and protesting companies, Hess said human rights activists should begin to praise and support companies that are working to prevent exploitation of foreign manufacturers.

“Boycotts are definitely driving factors when companies make decisions that may or may not be the right thing to do,” he said.

In the late 1990s, for example, consumers discovered that child laborers were stitching brand name soccer balls from their homes in Pakistan. An organized response called the Foul Ball Campaign evolved demanding that the companies end child labor practices, provide educational opportunities for them and centralize a manufacturing center.

The results, said Hess, may have been more damaging than helpful to the children. Evidence indicated some child labor continued in the soccer ball industry. In other cases, child-laborers shifted to more hazardous industries. According to Hess, some children were able to go to school, but in a poor educational environment that only prepared them to re-enter factory work eventually. And because of the campaign, adult family members lost the opportunity to earn second incomes from soccer ball stitching at home. Men still had the option of working in a centralized manufacturing center, but women were barred due to strict religious prohibitions against men and women working in the same factory.

In light of the potential for such negative outcomes, Hess suggested that corporations focus more on understanding local priorities than on meeting universal standards derived from American social values. “Gap tried to do this by allowing factories in China to form their own codes,” he added. Hess also recommends concentrating more on community investment and less on cash standards.

In surveys, 60 to 70 percent of people report that they would spend more money for a product made with a concern for human rights. However, Hess said, the opposite holds true when the consumers are actually filling up their shopping baskets and looking for a bargain.

As an alternative to social labeling, Hess expressed intrigue in the concept of cause-related marketing. “Let’s not just put a label on a product saying this has not been produced in a sweatshop,” he said. “Let’s say, if you buy our soccer ball, one dollar will go to this cause.” This technique, he suspects, would be a better way to convince consumers that merchandise was produced with a conscious dedication to corporate responsibility.

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