Unethical Behavior and Child Labor in Supply Chains: Willful Ignorance

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Unethical Behavior and Child Labor in Supply Chains: Willful Ignorance
Anneke Zwart, Moderator
Even though many organizations claim to comply to strict policies with regard to human rights such as child labor, a report by Amnesty International has revealed that still a lot of technology companies are linked to child labor. Those companies argue that it is impossible to track the source of their raw materials, and to verify that supplying companies are behaving irresponsible and unethical.
Despite the claims of many organizations to adhere to strict rules and policies about ethics, reports about unethical behavior within organizations' supply chains is still commonplace.
Zane, Irwin and Reczek (2016) claim a possible explanation for this contradiction can be found in the concept of "willful ignorance", referring to organizations not actively researching their supply chains to obtain such information. This phenomenon occurs both in consumer and organizational contexts:
  1. CONSUMER CONTEXT: Consumers tend to – either consciously or unconsciously – neglect information regarding unethical activities within organizational supply chains. Consumers will factor the information about (un)ethical behavior of organizations into their decision making. But they will not further investigate the issue, because the outcomes may be hard to process and lead to negative feelings about purchasing the product/service. In other words, human coping mechanisms make them prefer to remain blind for information that will be hard to deal with.
  2. ORGANIZATIONAL CONTEXT: Organizations tend to ignore information related to unethical behavior in their supply chain for the simple reason of refraining from the possible costly outcomes. Willful ignorance does not mean that organizations will not take actions when reports of unethical behavior are reported. It just means that they will be ignorant if the information has not been revealed yet.
Because of the above, reports by third parties about supply chain activities of organizations are valuable in that it forces them to think about ethical issues. But they do not necessarily spur actual changes in their behavior due to the fact that these reports often contain information about several competing organizations at once. As a result organizations will not feel more or less ethical than their competitors and may not feel a (strong) need to change.

⇒ To what extent do you believe that reports by parties such as Amnesty International are important to spur changes in organizations’ supply chains?

Source: Zane, D., Irwin, J. and Reczek, R.W. (2016) "Why Companies Are Blind to Child Labor" Harvard Business Review

Child Labor in Supply Chains
Ismael Bena - MBA, SIG Leader
This is a great point, as companies naturally tend to refrain from self-initiated actions to evaluate their supply chain from exploitation, and thus the cost associated with rehabilitation or switching their suppliers (from which the latter is the least favorable as the problem would still insist).
Increasing public awareness often proofs to be a powerful medium, as customers' purchase power often sparks the shifts in corporate policies needed to combat this. In support of Amnesty International, I believe the Global Reporting Initiative (GRI) could be more pressing on this issue to trigger action. Even though action is still voluntarily, the outcomes would still be accessible for all stakeholders.

Role of Leaders in Corporate Responsibility
Edward Watson, Member
I've found that, especially in hierarchical structures, leaders are reluctant to ask questions they believe will lead to negative answers and therefore negative and costly solutions. This creates a culture of willful ignorance that trickles down to subordinate levels of the institution.
From personal experience, I can confirm that the size of the institution has a definite correlation to the amount of energy placed into investigating questionable practices by external collaborators. Keeping bad news from the higher ups becomes more important (and possible) as the size of the organization increases.

Classification of Child Labour in Rural Areas
Thato Fredrich Peloentle, Member
It is very true. Sometimes it depends on how one group or country views/classifies child labour. Recently one country approved a policy to allow children over the age of 10 to work in order to remedy the poverty situation in most rural areas.

Moral Intensity Construct (Jones)
Murtada Khidir Mohamed Abuzaid, Member
The moral intensity constructs developed by Jones (1991) and its associated six variables may avail the needed answer. Issues like the magnititude of the consequences, social consencus about what is right, proximity of the incident, etc. All will act to offer some explanations why people do what they do. Positive ethical decision making models and normative theories will act together to develop a better framework for assessing ethics and its impact.

We Should Address the Root Causes of Child Labor and Poverty
Josephat Olwal Ngesah, Member
This is definitely an important conversation for businesses. I would like to thank Transparency International (TI) for picking it up. From where I sit, this is an economic problem with a political answer. I would urge TI to go ahead and lobby the world economic leaders to have it as an agenda item in the G-meetings. I am crossing my fingers that it will not be accorded lukewarm and "tongue-in-cheek" kind of approach like we have witnessed in the climate discussion meetings, that is if it will be considered at all.
Use of child labor is a human rights issue just like poverty. What that refers to as classification of child labor above is regrettable. Child labor is child labor and no amount of classification will change that. Even if allowing children to work just because they are poor is often a reality of the developing economies, especially on the Asian and African continents, it is never justified. The issue is to address the root causes of poverty, which in Africa, is not rocket science. The majority is poor leadership and greed.

Recognizing and Resolving Child Labor. Role of CSR
Brillo L. Reynes, Member
I agree this ethical problem exists, especially in less developed countries where many children are not in school and their parents do not have enough income to ensure their education.
Organisations and institutions such as Amnesty International, therefore, have a necessary role of bringing such issues to light and to advocate for their proper resolution.
But RECOGNIZING the problem is one thing, RESOLVING it is another matter altogether. A developing country may lack the wherewithal to address such problems effectively. This highlights the importance of CSR initiatives, both of developed economies and successful enterprises, to mitigate the problem of child labor and similar underdevelopment challenges.
But most importantly, awareness should be complemented with positive action.

Living in Spirit May Be the Solution
srinivas, Member
Willful Ignorance affects the further progress. Living in spirit by leaders may help.
We may define 'spirit' as follows; accepting that opposites coexist and in spite of the existence of these opposites, there is a detachment to it and there is immobility at affected part of value set, and yet at the same time the desired value is delivered by adopting a solution which satisfies all the boundary conditions and results in progress.
Maybe knowledge of a process would be of help in living the above objective... We may be unable to enforce changes in the supply chain, however, leading by example may be inspiring to a change.

Profit is the Religion and the Shareholder is God
Gerald Richards, Member
In the good old / bad days, people committed offences against their fellow being while claiming that it was God on their side and they were doing his bidding.
Now, in the corporate world, there is a new religion and God, and that God is the Shareholder. Thus, directors, CEO's and Boards proclaim that their behaviour is to protect shareholders with the religion being profit.
To investigate the supply chain too closely could result in a profit drop and the God being angry. This could result in priests/executives/directors being replaced and their power and privileges deminished. Thus, objectivity and social good cannot be championed by worshipers, but must be driven by outsiders and, dare I say, heretics.

Why 'Sweat-Shop' Issues are Neglected in Underdeveloped Countries
Ismael Bena - MBA, SIG Leader
Often, underdeveloped or emerging countries, with little influence on large organizations, are faced with dilemmas to enforce social behaviour on corporation. Newell (2000:121) argues, “… frequently the presence of large transnational corporations appear to wield powers without responsibility, they are often as powerful as states and yet unaccountable”. Because of fear to lose these companies, governments become reluctant to counteract irresponsible corporate behavior.
This is (partly) due to their fear that such regulations will discourage domestic investments or cause departure of large corporations, hence making their economies less competitive (Lipschutz, 2005). By holding these societies hostage (for example the garment industry of Bangladesh), the general public becomes more likely to close one eye, and thus the corporations can thrive and continue there operations.

Governments Burying their Heads in the Sand
Josephat Olwal Ngesah, Member
@Ismael Bena - MBA: The question is for how long will governments keep on burying their heads in the sand for the sake of multinationals as will they continue to reap "immoral" profits? My assumption is that labour is just one of the factors of production that attract investments in countries. Whether this should be abused for the survival of the countries is another matter.

The Roles of Companies and Politicians in Child Labor
Obviously child labor is common in developing and underdeveloped nations. Some well-known multinational companies are investing in these counties just because labor cost are lower. In other words they are contributing to child labor too. Ethics and compliance are not possible due to political influence of the big shots of the government.

Governments Held Hostage to Choose Between Two Social Evils
Ismael Bena - MBA, SIG Leader
@Josephat Olwal Ngesah: I agree with you that governments should use other criteria to support domestic/foreign investment, in line with global accepted humanitarian practices. Even if many of these development countries need to choose between two evils and then often opt to the lesser one, hence job creation despite child labor.
In my opinion, the global society should raise the pressure on companies in their home countries, i.e. as was done with Nike and GAP. The issue is how do we create enough urgency for this to happen, and challenge the social operating license of these companies in the first world countries.

History Shows This is Hard to Change
Briolett, Member
There have been many labour movements throughout North America, who once experienced what underdeveloped countries are now facing:
- It was the workers who forced the change, often at the cost of their own lives.
- Corporations, if they could get away with it on their own turf, would do the same again - history and actions today prove it (e.g. Walmart).
- Governments aren't likely to implement anything with real teeth because they depend heavily on corporate funding - we see it all the time, everywhere.
The approach needs to be global, but how to implement it? Greed by some and the lack of ability to pay higher prices by others makes this difficult to change, even with organizations like Amnesty International bringing these problems to the fore. Should a solution be found... Absolutely!

What we Did Learn from the Past!
Ismael Bena - MBA, SIG Leader
I concur with you @Briolett, history has learned us that shifting of a paradigm is challenging.
Generally speaking, shifting of paradigms takes decades to accomplish, especially since they also need to supersede old paradigm perspectives held by the preceding generations. As Einstein (1946) famously argued:

“We can't solve problems by using the same kind of thinking we used when we created them.”

This implies that new ways of thinking, perceptions and education are imperative if we want to shift the prevailing paradigm. This mindset reflects the crucial root cause for failures to integrate or institutionalize best practice CSR in a holistic way. This can also be assigned to the interconnectedness of our networked world (Maira, 2009), as we need to consider complete ‘eco-structures’ changes, including their interdependencies, since these are increasingly the result of our flattened world, grounded on the fundamental basic business principles of supply & demand. See topic Shifting the CSR Paradigm.

Child Labour - a Complex Situation
Andrew Blaine, Member
Forced child labour is always abhorrent. However, in many developing countries, particularly where AIDS and HIV has played a significant part in life, many families are headed by children of between 9 and 14 years.
When child labour in these countries is banned, these families are placed under enormous pressure simply to survive. The placebo of Aid does little to relieve this situation, mainly because a significant portion of this aid does not reach those for whom it was intended. Opportunities open to this "child headed" family grouping are being artificially removed. In the developed World, where sophisticated welfare systems operate, the tendency to judge everybody by their own standards is understandable but, in my opinion, blinkered.
Is there not an urgent need to offer those children who wish, or for survival must, earn a living, opportunities through which they can care for their siblings and, simultaneously, develop themselves optimally, without exposing them to exploitation?

Combine Education with Constructive Labour
Francis Joseph, Member
In areas where there is obvious persistent child labour - despite the volume and numerous calls and conferences by child protection advocates - this abuse continues. We continue to see the sad faces of poverty, mainly in failed countries and within remote rural areas where it is extremely difficult to monitor and offer alternatives to parents and families.
I suggest that we combine "education" with "constructive labour" (not child labour) where children are engaged in four (4) hours of supervised labour and five (5) hours of school.
That initiative may convert parents, as business people and our young children are investing in their future, that is skilled development, business acumen and preparing themselves to be independent adults.
That initiative will hopefully address and reduce the continued level of poverty and the stigma placed on these young children. Combine learning with labour as a skill towards family, community security. Both compliment the other.

Ethics Enforcement Concerns
Edy Khalife, Member
Two major concerns arose specifically at international organizations:
First, ethics rules and policies are not integrated in the core missions of organizations. Thus no regular reviews are imposed and valued by their Board of Directors (BoD).
Second, most international organizations strive to maximize their profits at the expense of the human resources and any non-core policy. For this organizations acquire the willful ignorance rule to exempt from global policies.
Control and auditing has to be executed not only on the business side, but through all operations details as well.

Assumed Standard
Tim Dibble, Member
Like the use of chemical weapons in war, child labor assumes everyone is on the same page.
But clearly we are not, as many comments point to instances justifying child labor.
Too many people fall into the power of slavery for profit, presumably there are a few who end up there without initial intent, but by the time there are moral qualms, they are in too deep. Slavery is a cheap way to produce goods and there are all sorts of moral justifications people use.
In the for profit business world, cost is the only driver that matters. Unless and until either customers or governments demands from corporations they have to pay attention to slavery, business won't. Such attention decreases profitability. Better turn a blind eye and shove the responsibility off on some unnamed "Other".
The point is, until there is universal agreement on the concept, child labor will continue.


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Ismael Bena - MBA
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