Whether it be in manufacturing, food production, or any product range that requires a level of low-skill labor, companies have always tried to find the cheapest possible means of production in order to maximize economic profit. Today, large companies based in capital-intensive nations demand the outsourcing of cheap labor to undeveloped nations which offer a comparative advantage in labor costs. In her book, The Travels of a T-Shirt in the Global Economy, Pietra Rivoli explains this phenomenon as the “race to the bottom.” While companies in rich nations have been able to profit heavily off of these practices, the effects creating such labor developing nations can be seen as exploitative. Outraged by injustices committed by large corporations in poor nations, many people in the United States have boycotted goods that are the product of unfair or exploitative labor practices. While there is a strong argument that each company should follow some system of labor standards to protect the interests of its employees in developing nations, the issue becomes difficult when applied to large corporations such as Nike, Apple, and other companies with supply chains consisting of many large companies with the means to regulate their own labor practices.
Strengths of the Argument for Intervention in Supply Chains
By their nature, larger companies carry more power than the smaller ones in their supply chains. These smaller companies, which might focus in manufacturing just one small piece of the bigger product to be sold by the major corporation, get their business from the bigger ones, and by that effect, are more willing to bend to the demands of the major corporations in order to maintain t...
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... most beneficial ways for large companies to implement the better treatment of workers along its supply chain is through manager education programs, like Apple’s EHS Academy. Using this approach, the larger companies need only to intervene in training managers, who in turn will make sure that each factory is operating up to the standards set by the company whose products are being produced. Because there is so much gray area around the idea of paying workers in the supply chain a living wage and there is no such legislation in a majority of developing nations, the duty to provide fair wages falls on each smaller company in a supply chain. In an attempt to create a better standard of living, representatives of the large companies can take an active role by working with the lawmakers to create labor standards legislation in nations home to their supply chain factories.
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