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Article

17 Aug 2015

Author:
Chad Autry, professor of supply chain management at University of Tennessee, & Beth Davis-Sramek, associate professor of marketing at University of Louisville, in Wall Street Journal (USA)

Guest Voices: Sweatshops Hurt the Bottom Line

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“People over profit,” the rallying cry for a growing movement of protests against sweatshops in emerging markets, illustrates a fundamental misconception of modern supply chains... Companies with a long-term perspective on economic performance know that offshoring production to a factory full of safety hazards isn't a path to profit. On the contrary, it creates unnecessary business risk... The safety and livelihood of factory workers in many low-cost regions may actually be at risk because of the unrealistic demands by activists... [In Bangladesh] Some activist groups dismiss...actions [by the Alliance for Bangladesh Worker Safety] because the efforts are self-regulated. Alliance members have been the targets of protests and boycotts because it appears that repairs have been slow. But engaging in industrywide reform efforts and seeing results isn't an easy path... Protests that call for sustainability to become...a punitive measure, will swing the pendulum to a position that undermines a firm’s economic viability. At this point, it can be better for a company to distance itself as much as possible from the public relations issue than to try to resolve the problem...

Companies can and must be socially responsible—while also seeking profitability. But they can’t be held solely responsible for working conditions in factories they do not own. When special interest groups and activists call for social responsibility to go so far that it threatens a firm’s economic viability, sustainability is lost.

[refers to Nike, Walt Disney]