Previous

Page - 8

We may conclude that businesses are changing their role in modern society in order to adapt themselves to the demand for greater accountability. However, more often than not, these changes are defensive reactions rather than proactive. Take the case of Nike.

Nike was beset in 1996 and 1997 with a series of reports on working conditions in its factories. An accounting firm's spot audit of the large Vietnamese factory, which was leaked to the press, reported widespread violations of local regulations and atmospheric pollution. Other violations of minimum wages, environmental norms, etc., were reported in Indonesian and Chinese factories of Nike. Marc Kasky, Plaintiff and Appellant, in his complaint, had alleged that, in the course of this public relations campaign, Nike made a series of misrepresentations regarding its labour practices. Subsequently, Nike agreed to settle the lawsuit and to pay $1.5 million to the Fair Labour Association - an independent coalition that seeks to improve factory conditions and monitoring. In response, Marc Kasky agreed to withdraw the suit.

The organizations of today cannot afford to ignore the non-shareholding stakeholders because they can affect the shareholders too. Organizations in fact need to go further than the defensive and knee-jerk reactions to corporate mismanagement.

The following chart on the stages of organizational learning is pertinent in this regard: -

Next

* Contributed by: -
Saurabh Goswami & Malini Pande,
II Year Students,
IIM Kozhikode.