DESPITE A NOTABLE UPTICK IN SOCIALLY RESPONSIBLE behaviour by corporations in recent years, irresponsible employment practices remain all too common. The challenge is especially difficult for firms that source products from overseas. Many large corporations, themselves committed to social responsibility, purchase inputs in emerging markets from small manufacturers that engage in practices that expose employees to harm.
One of the most widespread practices is wage theft, whereby employers deny earnings and benefits that workers are owed. At the more extreme end of the spectrum, workers have been enslaved (e.g. by Nestle’s seafood suppliers in Thailand) and subjected to compulsory political and religious indoctrination (e.g. by suppliers to Adidas, H&M and Nike in China). When the Fair Labour Association audited the China operations of Foxconn, one of the world’s largest manufacturers and exporters of electronics, it found that 14 per cent of workers had experienced some form of wage theft, even after the company’s practices had supposedly been improved in the wake of a series of worker suicides.
The human consequences are unacceptable to leaders in a wide range of companies, and yet socially irresponsible business practices have persisted even after buying organizations committed to root it out of global supply chains. In our research, we sought insights regarding why the practices are so entrenched, and what the leaders of global multinationals can do to get suppliers off a low road and onto a high road in their treatment of workers. In this article we will summarize the findings of our research, recently published in Organization Science, and the implications for corporations that do business in emerging markets.
Irresponsible Employment Practices
An extensive body of research has linked human resource management (HRM) practices to a wide range of organizational outcomes, including productivity, wages, employee turnover and profitability.
However, this research
