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Adidas: Application of standards of Engagement to Child Labor Dilemma

The following case deals about the concern of child Labor in international business. The Adidas Company founded in 1940 produces shoes, clothing, and sport equipment. Adidas does not manufacture any of these product but deals with a lot of foreign suppliers all over the world.
This case raises several questionsbut the main topic here is the ethical issue in international business regarding the companies’ behavior concerning labor standard while chasing overseas cheap labor. Adidas faced a challenging dilemma when it performed a first time audit of a footwear supplier in Vietnam. Indeed they found out that 2000 workers were under aged according to adidas’s SoE (standard of Engagement).

We can drawthree ethical concepts in connection with our case:
- Universal Moral Norms Application to International Business
- Human Rights Obligations of Multinational Corporation
- Sweatshops and Respect for Persons: Labor standards

In today business world, the question of morally right or wrong is very difficult to answer as most of the company goes global. Indeed what’s consideredright or acceptable in one country is considered wrong or unacceptable in another.
So is it possible to have any universal moral norms applicable in international business?
1 According to Norman Bowie, when the norms of the home country and the host country are in conflict, a multinational corporation has four options:
- Follow the norms of the home country
- Follow the norms of thehost country
- Follow which ever norms is more profitable
- Follow whichever norms is morally best
Adidas to protect itself from activist and wrong accusations has published in 1998 its Standards of Engagement (SoE) with the aim of ensuring that all of its suppliers’ factories are safe, fair places to work according to western, home country norms.
2 Indeed it seems that they felt theyhave a moral obligation to ensure that their suppliers follow local labor laws, refrain form coercion, meet minimum safety standards, and provide a living wage for employees. When the adidas company faced this dilemma of what to do with their suppliers that didn’t followed their code of conduct the ethic department of the company had to stick to their engagement and find a way to make it rightagain according to their norms. Under aged child labor being considered wrong by SoE.

Question 1:
- If a supplier is not in compliance with SoE the most effective way for adidas to respond would be to send a note or a memo to their partners and suppliers reminding them the code of business conduct they have signed and let them deal
and resolved in the most immediately way the dilemma that hasbeen found.

- It would be necessary for adidas to terminate its relationship or partnership with the supplier if it didn’t follow the SoE more then once. In my mind adidas can terminate the relationship with the supplier if the company did some irreparable damages to the environment or putting people in great jeopardy or didn’t follow the basic human rights. 3Because “the notion of human rightsprovides a set of universal standards that both individuals and organizations, including business organizations, should respect”. Nevertheless adidas has a moral responsibility regarding their employees. They need to help their supplier to follow the SoE if they struggle with it. Indeed terminating their relationship wouldn’t injured only the supplier but also all the factory employees that would beout of job as adidas is their main client.

Question 2:

I think adidas’s respond to child labor challenge in its supplier was effective. Not only the multinational gave a second chance to the supplier to resolve the anomaly being done, they also pointed out to the company what should be the way to do it.

Of course they didn’t wanted to be sued by the activist and keep a good...
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