Social Sustainability Regulation And Practice Relating To Companies From Developed Countries That Outsource Manufacturing To Factories In Developing Countries

Social Sustainability Issues in the Case

Multinational corporations have been accused of ignoring the corporate social responsibility that they have in areas that they operate especially in developing countries. This is seen in the quest for profits and different business approaches as compared to what happens in their home countries. The literature on MNCs has reported that most of these organizations have violated human rights issues in developing countries and caused more harm than benefits. The case of study presents some ethical issues that have not been addressed in the course of business in Pakistan.

Social Sustainability Issues in the Case

1. Ethical differences between developed countries and developing countries.

Developed countries run their businesses on the idea of corporate idealism which does not always work in developing countries since they face different economic and business challenges. According to French & Wokutch (2005), the local law and the community operate on economic situations that are comfortable with the status quo in the country. This makes it difficult to implement ethical guidelines from America or developed countries to places like Pakistan. For example, most girls do not go to school in this country and their mothers are forced to walk with them as the only way of keeping them safe and increasing their economic income. Since their mothers are poor they have to engage in work to boost the family income and at the same time keep themselves busy.

1. Different economic situations in developing countries

Third world countries have hard economic times which require people to work more to get paid. This is the reason why child labor is common because, in most occasions, it is difficult for manual laborers to earn enough which is the reason that pushes women to come with their kids so that they can earn a better salary. According to Adeola (2001), most corporations take advantage of developing countries through human rights violation and exploitation of poor developing countries. This is seen in the case study where the outsourcing has been used to explore the third world. This situation is different from developed countries where salaries and wages are policy controlled. This means that the challenges that third world countries face are different from what first world countries face. This is the reason why Ahmed insists that the kids cannot be fired since firing them will affect more than sixty families economically.

1. Poor ways of enforcing contract guidelines

One evident thing in the case study is that there are poor guidelines for enforcing contracts. According to Stein, the contract agreement needed to be used to control the operations of the contractors, but at the moment this was not binding thus making it difficult to operate. Chiwalo (2016) suggests that most multinational corporations have less interest in investing in human capital, environmental protection and community issues that affect the people that they work with. Ahmed argues that the business case here is the production of the required volumes that the contractors have signed for rather than the way the quantities are produced. This means that the contract was not binding enough thus making it difficult to hold the contractors accountable for the violation of agreements.

CRAP Analysis

CRAP Analysis 

Recommendations

One recommendation that Stein needs to put in place is addressing the working conditions for both the children and the women in Pakistan. This means that ILO and Pakistan labor laws need to be implemented as a way of ensuring the factories offer the best working conditions that harmonize the Pakistan and American factory systems. For example, the 1991 Pakistan statute requires children not work more than seven hours in a day thus the need for Ahmed to ensure that these conditions are put in place. For example, Ahmed does not know the amount of time that the children work in a day because they seem to be paid per quantity rather than the time they have worked. By discussing with the contractors and setting the time limit for the children based on the guidelines, it will be easy to change some of the conditions that exist in the country.

Stein’s concern of child labor is real but the real problem lies in the domestic challenges that the families face. This means that Stein needs to work with Ahmed and the contractors on ways of addressing the family burden that the parents face to reduce the sweatshop challenge. This can be through setting up a program that benefits the children directly so that even if they will be working in the factory, they can get other extended benefits from Timothy & Thomas. Kolk & Tulder (2002) suggests that the best way that MNC can assist child laborers in developed countries is to develop programs that seek to benefit the children directly.

For example, an education program will go a long way in ensuring that the children acquire education that is required at every stage of their life. With this, Stein can work with Ahmed to determine the best program that can benefit the children through social responsibility. As we have, the company seems to be socially irresponsible since it is not concerned with the issues that affect its workers in Lahore.

Lastly, Stein can implement American policies like the Trade and Overseas Private Investment Corporation (OPIC) legislation which seeks to build internationally recognized standards of labor. Through this policy, Ahmed and Pakistan contractors can then negotiate with Stein to determine the best way of accommodating the children based on the Pakistan and US laws. Baxi (2016) suggests that organizations need to develop ways of implementing relevant policies in their work environment regardless of the work environment. This means that the laws of both countries can be integrated to develop a mutual understanding that accommodates the needs of the parents who carry children to work, the Pakistan contractors and the US.

References

Adeola, F. O. (2001). Environmental Injustice and Human Rights Abuse: The States, MNCs, and Repression of Minority Groups in the World System. Human Ecology Review, 8(1), 39-59.

Baxi, U. (2016). Human Rights Responsibility of Multinational Corporations, Political Ecology of Injustice: Learning from Bhopal Thirty Plus? Business and Human Rights Journal, 1(1), 21-40.

Chiwalo, M. (2016). Multinational Corporations: Corporate Social Responsibility versus Environmental Problems. European Scientific Journal, 12(17), 241-260.

French, L., & Wokutch, R. E. (2005). Child Workers, Globalization and International Business Ethics: A Case Study in Brazil’s Export-Oriented Shoe Industry. Business Ethics Quarterly, 5(3), 1-40.

Kolk, A., & Tulder, R. v. (2002). Child Labor and Multinational Conduct: A Comparison of International Business and Stakeholder Codes. Journal of Business Ethics, 36(1), 291-301.