March 28, 2005
Weinstein Describes Nike's Road to Corporate Responsibility
By Leslie Chandler
The path to corporate social responsibility has
been a long and fruitful journey for Nike, according to Lee
Weinstein, the company’s director of global corporate
communications.
Speaking to MBA students at The University of Texas at Austin’s
McCombs School of Business, Weinstein described the company’s
path from past public relations setbacks around the company's
global labor practices to the present day, when Nike is on its
way to becoming a model global corporate citizen.
The Nike story began in 1962 when Phil Knight, an MBA candidate
at Stanford University, wrote a paper analyzing the profit
potential of applying low-cost production methods to the shoe
industry. Knight’s paper led to the creation of Blue Ribbon
Sports. The firm started in 1963 with 200 shoes produced in
Japan and shipped to the United States for sale. By outsourcing
production, the company was able to grow quickly, pulling in
$1.96 million in revenue by 1971.
In 1972, Blue Ribbon Shoes became Nike, adopting the famous
swoosh symbol that Knight said he “hated least” among the design
options presented at the time. Sticking to its strengths in
design and marketing, including a partnership with Michael
Jordan, Nike underwent phenomenal growth over the next two
decades, raking in $3 billion in revenue by 1991.
One of the prices of that success was visibility. Nike “became a
big, red, juicy tomato,” Weinstein explained. Because of its
role as an industry leader, Nike’s strategy and supply chain
were intensely scrutinized.
The media were particularly harsh on Nike’s production methods.
A series of exposes described below-subsistence wages and forced
overtime for laborers, toxic chemicals in Nike plants, and
incidences of child labor.
Nike took the hits to its brand image and bottom line, losing
celebrity endorsements and large university-wide contracts.
At first, “Nike was arrogant,” Weinstein confessed, with Knight
and other company representatives insisting that the company had
no responsibility for the conditions in the factories to which
they outsourced shoe production. Yet, as pressure from the media
and the consumer-base mounted, Nike took concrete steps to
improve conditions for the workers throughout its supply chain.
In the last two decades, Nike has created a labor practices
division, has established a position for the vice president of
corporate and social responsibility and has defined a committee
within the board dedicated to corporate responsibility. By
working with various NGOs, the company has set and maintained
labor and environmental standards for its manufacturing plants.
The company has also designed dozens of programs devoted to
environmental concerns, health, education and development in
countries where it manufactures its products. Additionally, the
company has become known for promoting recreational physical
activity—not labor—among children worldwide.
Because of the need for such programs in rapidly changing
societies, Weinstein suggested that “there is no finish line” in
the corporate responsibility challenge. Corporations must be
vigilant about reviewing and addressing their supply chains,
monitoring the needs and concerns of their employees and giving
back to their communities, he said.
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
