Business Ethics
Ethics & Supply Chain Management:
General Motors and Nike
Whose Responsibility?
Dominant Firm
• in the supply chain should be responsible for the ethical conduct
of its suppliers
Why?
• The most powerful value chain member bears the greatest burden
of responsibility
• ‘With greater power comes greater responsibilities’
• Examples in this case: Nike and GM
How?
• Identify & develop suppliers whose policies & values mirror their
own
• Able to influence supply chain due to its relative size & buying
power
• Willingness to end relationships/contracts with unethical suppliers
or repeat offenders
• Move from traditional SC
sustainable SC
• Includes environmental, social & ethical issues
Reference: Phillips & Caldwell, Value Chain Responsibility: A Farewell to Arm’s Length
Sustainable Supply Chain Management
Social Issues
Environmental
Issues
• Natural resource
use
• Emissions, waste
• Energy loss
• Use of biodiversity
& deforestation
• Nuclear radiation
• ozone depletion
• climate change
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Role & responsibility
with local community
Direct & indirect
employment in
developing countries
Investment in
education & training
Ethical issues
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Source: www.shef.ac.uk/uni/companies
Labour practices (child
labour, discrimination,
wages, unions, working
hours, health & safety)
Irresponsible marketing
(marketing to children,
misrepresentation)
Supporting oppressive
regimes
Honesty, trust, respect &
fairness in corporate
relations
Bribery & corruption
GM’s Gift Policy
Positives:
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Minimizes opportunities and sets expectations
Facilitates unbiased business decisions
Provides guidelines and examples
Outlines process to handle exceptions
Applies universally across the company
Negatives:
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Grey areas: Applicability not always clear
Makes exceptions in certain cases depending on business interests
Adopts a relativist stance – leads to inconsistency
Difficult to distinguish expected social courtesy from bribes
GM’s Gift Policy
Does this policy do enough to Ensure ethical conduct?
• It is an important means of promoting ethical conduct, but…
• A policy by itself cannot ensure ethical conduct.
• Other aspects are essential: Training, education, culture,
environment, leadership
• Ultimately, each employee is entrusted with the responsibility for
ethical conduct
Nike Goes Green
• Starting in 1993, Nike has made big efforts to “green” its
supply chain.
• It began using best practices and demanded the same
from its suppliers. It educated them on:
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Corporate environmental policy
A master substances list
Legislation concerning products and packaging
Executive summaries on all programs so factories know which
programs apply to them
– A sustainability assessment
– Labor practices programme information
Questionable Labour Practices??
• Although Nike educates its suppliers, it has had to
contend with allegations of at least one account of a
subcontractor using sweatshop labour.
• This has sparked much controversy and large boycotts
of Nike’s shoes
• But, Nike has made huge strides in environmental
awareness…
Does one Good Act Balance a Bad One?
• There is no way one “right” can make up for a “wrong” this is a form of rationalization.
• Nike has had to deal with issues facing many MNCs and
it needs to lead by example.
• Inappropriate labour practices can never be balanced by
a sound environmental policy.