ethics

Ethics in international business: multinational approachesto child labor

Ans Kolka,*, Rob Van Tulderb

aAmsterdam graduate Business School, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam, The NetherlandsbRotterdam School of Management, Erasmus University Rotterdam, The Netherlands

Abstract

How do multinationals address conflicting norms and expectations? This article focuses on corporate codes of ethics in the

area of child labor as possible expressions of Strategic International Human Resource Management. It analyses whether 50

leading multinationals adopt universal ethical norms (related to exportive HRM) or relativist ethical norms (related to adaptive

HRM and multidomestic strategies). Child labor is not an issue where universalism prevails. Although some multinationals

adhere to universal ethical norms, HRM practices are largely multidomestic. To manage the ethical dilemmas, shown from case

material, strategic trade-offs (concerning strategy context, process and content, and particularly organizational purpose) are

outlined.

# 2003 Elsevier Inc. All rights reserved.

Managing across borders increasingly includes dif-

ficult ethical dilemmas, as pointed out in large num-

bers of publications on this topic (e.g., Bansai & Sama,

2000; Buller & McEvoy, 1999; DeGeorge, 1993;

Donaldson, 1989; Enderle, 1999; Van Tulder & Kolk,

2001). The field of business ethics, which aims to

formulate requirements for companies and the man-

agers who act on their behalf (Kaptein & Wempe,

2002), therefore also pays attention to multinationals.

Recent attention has, following the resource-based

perspective, focused on the potential of ethical cap-

abilities to improve multinationals’ competitive

advantage (Bowie & Vaaler, 1999; Buller & McEvoy,

1999; Litz, 1996). Bowie and Vaaler (1999) emphasize

the high asset specificity of certain ethical commit-

ments and the importance of avoiding their dilution,

leading to the argument for universal moral standards

for multinational corporations. According to such a

‘market morality,’ markets would induce multina-

tionals to refrain from cultural relativism.

Buller and McEvoy (1999) take a different

approach, outlining the need to gear ethical capabil-

ities to overall corporate strategy and the vital role for

strategic human resource management (HRM) in this

respect. Building on the integration/responsiveness

grid (Bartlett & Ghoshal, 1989; Prahalad & Doz,

1987) and Taylor, Beechler, and Napier’s (1996)

Strategic International Human Resource Management

approach, they distinguish three possible configura-

tions. A global strategy might be accompanied by

exportive HRM and universal ethical norms; multi-

domestic strategies by adaptive HRM and relativism;

and a transnational strategy by integrative HRM and

cosmopolitan ethics. This tripod is, however, not seen

as rigid and excluding other options. Using child labor

as an example, Buller and McEvoy (1999) suggest that

for such an ethical issue multinationals might follow a

Journal of World Business 39 (2004) 49–60

* Corresponding author. Tel.: þ31-20-525-4289;

fax: þ31-20-525-5281.

E-mail addresses: [email protected] (A. Kolk),

[email protected] (R. Van Tulder).

1090-9516/$ – see front matter # 2003 Elsevier Inc. All rights reserved.

doi:10.1016/j.jwb.2003.08.014

universal approach (e.g., through a corporate code of

ethics), even in the case of a multidomestic, adaptive

strategy. At the same time, gift giving could be an

example where local traditions are respected, even by

multinationals that strive for global consistency.

In spite of strategic HRM and ethics, a ‘moral free

space’ thus still exists, in which context matters, and

where managers have to deal with conflicts of relative

development and cultural traditions. As Donaldson

(1996: 56) put it, ‘In this gray zone, there are no tight

prescriptions for a company’s behavior. Managers

must chart their own course.’ This moral free space

is likely to be issue-specific as well (cf. Husted, 2000).

Child labor is such a topic where host-country and

home-country (international) norms sometimes

diverge, with different perceptions of what constitutes

child labor, the position of children in society and the

standards that must be adopted (Kolk & Van Tulder,

2002a). Donaldson (1989) also points at the fact that

views of ‘minimally sufficient education’ for children

depend on countries’ levels of economic development.

In that sense, child labor might be less susceptible to

universalism than Buller and McEvoy (1999) sug-

gested. This paper examines how multinationals

address these dilemmas related to conflicting norms

and expectations, focusing on corporate codes of

ethics as the instruments for expressing HRM strate-

gies. It conceptualizes universalism versus relativism

in the case of child labor codes, and analyses multi-

national policies in this regard as well as the degree of

consistency between norms and their specific com-

pany-internal application.

Existing research on codes of conduct has concen-

trated on descriptive surveys and content analysis,

with rather limited attention to the peculiarities of

multinationals. If multinationals are studied, a sectoral

and/or country approach is generally followed, so far

with scant interest in finding firm-specific factors that

might explain differences. Finally, this research has

focused on aspects that determine whether companies

adopt codes of conduct or not. The search for explana-

tions for ethical/HRM configurations is therefore by

necessity more exploratory, with emphasis on sugges-

tions for further research directions.

Furthermore, the more managerial implications can

be explored by relating corporate decision-making

on child labor to companies’ strategic choices in gen-

eral. In order to assess the effectiveness of Strategic

International Human Resource Management, it can be

positioned in a number of fundamental strategic

trade-offs, which includes universalism/convergence

versus localism/diversity (or particularism, as it has

been called, see e.g., Hampden-Turner & Trompe-

naars, 2000), but also the extent to which companies

want to focus on planning and control or a more

incremental approach to organizational change, and

aspire to be industry leaders or rather follow main-

stream developments. Pettigrew (1992) distinguishes

three logically distinct, yet related areas of strategy:

strategy context, strategy process, and strategy con-

tent. To these three basic categories, De Wit and

Meyer (1999) have added ‘organizational purpose,’

identifying, for the resulting four areas, ten ‘trade-

offs’ or strategy tensions (Table 1). In the final section

of this paper, these ten trade-offs will be used to

explore the strategic managerial aspects related to

child labor codes, on the basis of the ethical dilemmas

emanating from the analysis. It is in the organiza-

tional purpose where the tension between profitabil-

ity and responsibility, and between shareholder and

stakeholder values finally crystallizes, as the paper

underlines.

1. Child labor codes

To examine multinationals’ approach to child labor,

we collected corporate codes of ethics (frequently also

designated as ‘codes of conduct’ to distinguish such

external, societal, usually international documents

from the more internally-oriented ethical ones). From

a set of approximately one hundred codes of the

largest multinationals and companies that have been

pioneers in the field of corporate social responsibility,

those codes were selected that explicitly addressed the

issue of child labor (Kolk, Van Tulder, & Welters,

1999). Only 13 large companies turned out to have a

code with such provisions. Therefore, we added a set

of slightly smaller firms that are known as pioneers in

the adoption of codes (Van Tulder & Kolk, 2001;

Wolfe & Dickson, 2002). These appeared to have a

substantially higher share of child labor provisions.

The sectors in which these leading companies operate

are the ones with the highest likelihood of child labor:

retail and apparel (Kolk & Van Tulder, 2002a; Wolfe

& Dickson, 2002). The selection procedure resulted in

50 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60

a total set of fifty so-called ‘child labor codes.’ The

appendix lists the 50 companies, of which more than

60% originates from the US, and 35% from Europe; no

Japanese companies could be included in the sample.

Almost 75% is active in the apparel industry, with the

remainder spread over a variety of sectors.

While the relatively small number of child labor

codes issued by large industrial companies thus has a

clear sector effect related to types of products and

labor intensity, there is also another possibility for the

absence of child labor codes, as the case of Shell

illustrates. This company has a corporate code of

conduct without explicit child labor provisions, but

it issued a separate, rather extensive ‘management

primer’ on the issue, which clearly analyzes the

dilemmas, to which we will return later. Moreover,

other companies with a child labor code also point at

the fact that it cannot include everything. Levi Strauss,

for example, notes that ‘A code of conduct is a

statement of principles, which should be supported

by implementation policies in the factories from

which the company sources. Therefore, not everything

is detailed in a code of conduct, as often the solutions

to situations are on a case-by-case basis, depending on

what is the most suitable form of support.’ And Nike

states that ‘Codes of conduct are not the only formal

strategies that companies have. In case the use of child

labor is detected, other formal policies come into

force. However, these policies are not visible to the

public. But the code of conduct would become an

enormous document, if all the possibilities are

addressed at each and every provision.’

With these caveats in mind, all the fifty codes

collected were examined with an existing standardized

framework of analysis, adapted to the peculiarities of

child labor (see Table 2). This framework focuses on

the specificity of the child labor provisions included in

the codes (both with regard to contents and scope), and

the compliance mechanisms (monitoring and sanc-

tions in case of violations). For the purpose of this

paper, particular attention was paid to two aspects:

standards and the company-internal applicability of

minimum-age norms (respectively components 1.4

and 1.1/1.2 in Table 2). Both serve to identify a

multidomestic versus a global approach. The other

aspects in the table, which as such do not present

evidence on universalism or localism but involve

implementation and compliance, will be mentioned

in the paper where relevant.

‘Standards’ refer to the extent to which corporate

codes mention international ILO (International Labor

Organization) and UN (United Nations) conventions

on child labor, which can be done either explicitly or

implicitly, through the inclusion of the major provi-

sions of international organizations’ standards in the

corporate codes. Alternatively, child labor codes can

also refer to host-country or home-country laws, or to

none of them. Industry standards, such as those that

have emerged recently in for example apparel, are not

included in this category, as they do not represent

governmental attempts to arrive at generally applic-

able, legal rules. It must be noted that the codes that

have been analyzed do not refer to sector standards,

possibly because these are too recent or seen as less

Table 1

Strategy issues and trade-offs

Category Strategic issue Strategic tension Strategic perspective

Strategy context International context Globalization Localization Convergence Diversity

Industry context Compliance Choice Industry evolution Industry creation

Organizational context Control Chaos Leadership Dynamics

Strategy process Strategic thinking Logic Creativity Rational thinking Generative thinking

Strategy formation Deliberateness Emergence Planning Incrementalism

Strategic change Revolution Evolution Discontinuous change Continuous change

Strategy content Business level strategy Markets Resources Outside-in Inside-out

Corporate level strategy Responsiveness Synergy Portfolio Core competencies

Network level strategy Competition Cooperation Discrete organization Embedded organization

Organizational purpose Profitability Responsibility Shareholder values Stakeholder values

Source. Based on De Wit and Meyer (1999).

A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60 51

‘hard’ than those prescribed by law. Earlier research

has shown that codes drawn up by industry associa-

tions are least specific and have the lowest compliance

likelihood compared to codes developed by three other

types of actors (companies, international organiza-

tions and non-governmental organizations; Kolk

et al., 1999). A few companies in the set of fifty base

their code on the Social Accountability 8000 Standard

(SA8000; see the next section), developed by the

Council on Economic Priorities Accreditation Agency

(CEPAA, now renamed to Social Accountability Inter-

national, SAI), but SA8000 is firmly rooted on the

recognition of ILO and UN conventions.

In addition to these legal norms, we focused on the

company-internal HRM issue of the minimum age for

its employees. This involves the question whether a

company regards a minimum age to employment as

universal, regardless of the country where it operates,

or as country-specific and thus contingent on the

situation in its various locations.

2. Global or multidomestic approaches tochild labor?

Of the fifty multinationals with child labor codes,

none mentions home-country laws. Codes never refer

to the standards that are applicable in the companies’

country of origin (usually the US or Europe). This can

be explained from the fact that international conven-

tions have incorporated prevailing ideas in Europe and

North America about those requirements for child

labor employment that are deemed feasible in the

international context. Home-country laws, which are

usually stricter, therefore apparently fall beyond the

scope of corporate codes.

Table 2

A model to analyze and compare codes of conduct on child labor issues

Criteria Short elaboration Classification

Specificity 1.1 Minimum age to

employment

Does the code include a minimum age to

employment? If so, what age?

Yes (age); no

1.2 Applicability Is this a universal minimum age or are

country-specific exceptions indicated?

N.a.; universal; country-specific

1.3 Organization targeted To whom is the code addressed? General,

governments; internal operations of specific

firms; business partners (suppliers,

subcontractors, vendors, manufacturers)

Actor category (exact wording)

1.4 Reference Is reference made to international standards

(ILO, UN), either implicit or explicit, or to

home-country or host-country laws?

None; home; host;

international (implicit/explicit)

1.5 Nature of code Are alternative measures included in the code

(such as education for children)? Or does the

code only prohibit child labor?

Broad; strict

Compliance 2.1 Monitoring systems

and processes

Good insight into system and process (clear);

reference to some parts, but criteria or time

frames are lacking (clear to vague); only general

reference to monitoring without details (vague)

Clear; clear to vague; vague; none

2.2 Position of

monitoring actor

Firms themselves (first party); BSGs (second party);

external professionals paid by firms (third party);

combinations of different actors (fourth party);

NGOs (fifth party); legal authorities (sixth party)

Ranging from: 1st to 6th party

2.3 Sanctions Measures have no large implications, e.g., warnings

and exclusion of membership (mild); threat to

business activities (severe)

None; mild; severe

2.4 Sanctions to third parties Measures such as fines, or demands for corrective

action (mild); severance of relationship, cancellation

of contract (severe)

N.a.; none; mild; severe

Source. Kolk and Van Tulder (2002b).


Whereas home-country standards are not men-

tioned in codes of conduct, multinationals do refer

to host-country laws and/or to international standards.

Typical examples of the former are Lands’ End, which

prohibits ‘child labor below the minimum working age

in the host-country’ and KMART, which states that

‘Suppliers and their subcontractors must comply with

local child labor laws and regulations. Children under

the local age will not be employed by the supplier.’ A

case in point of the reliance on international standards

is Hennes & Mauritz, which explicitly follows the

definitions of children laid down in international

conventions, also with regard to the rules for types

of work allowed under apprenticeship programs.

As Table 3 shows, one quarter of the companies

refers to international conventions, whereas slightly

more than half of them only mentions to adhere to the

laws in host countries. The remaining 20% does not at

all indicate its standards. The reliance on international

child labor standards is higher than previous research

on codes of conduct in general showed, where refer-

ence to international conventions remained below

20% (Kolk et al., 1999; OECD, 1999). Both studies

also observed a much higher corporate commitment to

observe the local laws in the countries of investment,

which is in fact not a very surprising statement since

this seems a basic condition for doing business in a

(host) country in the first place. In the case of child

labor norms, it can be concluded that a multidomestic

approach is more prevalent than a global strategy, but

that both are followed by a considerable number of the

multinationals studied.

One of the main issues concerning child labor is the

minimum-age requirement, in other words, at what age

do companies regard children as old enough to become

their employees. Almost all multinationals that stipu-

late a minimum age to employment explicitly mention

host-country specificity. They thus adopt a multido-

mestic ethical strategy. Only a very small percentage

adheres to a minimum-age requirement that applies to

all locations, and is thus universal (see Table 4). An

example is Sara Lee, which states that ‘while the legal

definition of ‘‘children’’ sometimes varies from coun-

try to country, Sara Lee will not knowingly employ

individuals who are under 15 years of age.’

Phrased in terms of Buller and McEvoy’s (1999)

configurations, a global strategy can thus be observed

in the case of the child labor norms (a universal

approach to ethics). This is, however, relatively sel-

dom with regard to the company-wide application of a

major component, the minimum age to employment

(which would represent exportive HRM practices).

Hence, even if multinationals have a global instrument

such as a code of conduct with child labor provisions,

their approaches can much more be characterized as

local responsiveness, although this picture does not

apply to all of them.

Moreover, ethical and HRM approaches can

diverge, in that the former is universal (representing

global integration), whereas the latter is adaptive

(a multidomestic strategy). Table 5 presents this infor-

mation for those 35 multinationals that have made

their ethical and HRM approaches explicit in their

child labor codes. Almost 70% has an internally

consistent approach for the two dimensions, which

aims, in nearly all cases, at local responsiveness. By

contrast, 30% supports universal ethical norms, while

following a country-specific approach in the imple-

mentation of HRM practices.

Table 3

Ethical norms referred to in child labor codes (n ¼ 50)

Standard Percentage

Host-country laws only 52

International conventions 26

None 22

Table 4

Company-internal applicability of minimum-age requirements

(n ¼ 50)

Applicability Percentage

Country-specific 66

Universal, worldwide 6

Not indicated 28

Table 5

Classification of explicit ethical and HRM approaches in child

labor codes (in percentage n ¼ 35)

Ethics: norms for

child labor

HRM: applicability of child labor policy

Exportive Adaptive

Universal 3 31

Relativist 0 66


This phenomenon reflects the different perceptions

of child labor and the position of children in society

with which multinational managers are confronted in

their international activities. Frequently, diverging

views can be noted between the host countries in

which multinationals operate and their country of

origin. In their home countries, companies face a quite

different set of expectations about their role in society,

and possibly stakeholder pressure that deviates from

what host governments find reasonable. This can lead

to difficult dilemmas, for example, with consumers at

home urging a complete ban on child labor, and

accompanying strict monitoring of compliance, while

company plants are located in countries where the host

government support and the regulatory infrastructure

is lacking, and where child labor is (still) as common

as it was in many Western countries a century ago.

Multinationals run the risk of being accused of show-

ing a lack of respect for cultural traditions, and for

interfering with national approaches. Apparently, one

way to deal with this complexity is to adhere to

universal ethical norms, while adapting the implemen-

tation more to local circumstances.

The way in which Shell approaches child labor in its

‘management primer’ clearly shows awareness of

these dilemmas, on the basis of the experiences of

other companies. Shell points at the difficulty that a

very strict prohibitive policy would preserve its good

reputation with customers, but might, at the same time,

in some cases harm the situation of children by driving

them to more hazardous work. However, as the primer

notes ‘A company which focuses on the needs of its

supplier and local community stakeholders might well

have a different response to the same problem. Rather

than seeking to eliminate all work undertaken by

children, it might choose instead to change the nature

of work, in line with ILO recommendations and

ideally in consultation with a local community based

organization. The risk with this approach is that

although the children may benefit from restructured

working hours and conditions, the company may be

exposed to allegations of exploitation from quarters

where the complexity of the child labor issue is not

understood.’ The Shell advice to its companies is

therefore to gather detailed information on a case-

by-case basis, to develop an ‘appropriate response in

the context of the particular country and business

sector’ and thus ‘respond to local needs in their

markets across the world’ through a ‘multi-local’

approach. International universal standards from the

ILO and UN serve as references when drawing up

models and contracts.

Looking at the child labor codes in our study,

another way out of these difficult dilemmas seems a

less explicit child labor code. As Tables 3 and 4 show,

a considerable percentage of the multinationals does

not disclose information about their ethical and/or

HRM approaches at all. They merely state, for exam-

ple, to support a ‘ban on forced child or prison labor’

(Body Shop), to ‘reject the use of child labor’ (Elf

Acquitaine) or to ‘not knowingly allow the importa-

tion into the United States of merchandise manufac-

tured with illegal child labor’ (JCPenney). By leaving

such aspects vague, these companies to some extent

also avoid other dilemmas that explicit child labor

codes raise (Kolk & Van Tulder, 2002a).

One issue concerns the appropriate minimum age,

for which different standards are followed. Important

factors in this regard are the type of work (light or

heavy), local cultural perceptions about the moment at

which children become adults, a country’s stage of

development, and the existence of alternatives (such as

education) for non-working children. Explicit child

labor codes, moreover, lead to questions concerning

monitoring (how and by whom), and the enforcement

in case the provisions are violated. Whereas strict

measures tend to be received with approval in com-

panies’ home societies, they may be counterproduc-

tive because the underlying causes of child labor are

not addressed, and the situation of the child workers

can be worsened by driving them into more hazardous

work in the informal sector. Final dilemmas concern

the extent to which multinationals are responsible for

the activities of direct suppliers and other companies

in the whole supply chain, and for supplementing

governments in case of insufficient regulatory and

enforcement capabilities.

Case research into companies that have experience

with explicit child labor codes provides some inter-

esting illustrations. Nike, for example, has reviewed

its code of conduct a few times since 1992, which

included an increase in the minimum age from 14 to

18 years for footwear factory workers and from 14 to

16 for equipment and apparel, exceptionally high

compared to other company codes and the ILO

minimum-age convention. The company also started


an internal compliance program, supplemented with

external monitoring, but this seems not to have been

sufficient to silence the staunchest critics. Its website

reflects the way in which Nike tries to openly address

this critique, with ample information about the mon-

itoring of facilities and the dilemmas the company

faces after the introduction of its latest code.

A different approach to monitoring has been taken

by C&A, which set up its own internal unit, an

organization structured in such a way as to be fully

independent of the company’s commercial activities.

It has full and independent authority to monitor the

standards included in the code of conduct, and pub-

lishes an annual report. The company does not object

to third-party, external auditing, but prefers a detailed,

so-called ‘grass-roots’ approach from an organization

that has a profound understanding of C&A’s sourcing

system, the national context of its suppliers, and the

peculiarities of garment production.

Chiquita Banana almost completely follows the

SA8000 standard, including all references to interna-

tional conventions, but with a few modifications,

primarily to take account of workplace issues specific

to agriculture. The company’s strict child labor provi-

sions do not apply to family farms, small-scale hold-

ings in the seasonal, non-banana businesses which do

not regularly employ hired workers. This is also meant

to allow for employment of a farmer’s own children in

seasonal activities. WE’s code of conduct is fully

equivalent to the SA8000 standard. In line with this

standard, both companies include provisions for reme-

diation of children found to be working in supplying

factories by giving ‘adequate support to enable such

children to attend and remain in school until no longer

a child.’

Such a broad approach to child labor, in which

responsibility for the fate of the children prevails over

strictly punitive measures towards suppliers, is taken

by a very few other companies as well. Hennes &

Mauritz explicitly recognize the social context in

which children are forced to work, emphasizing that

it cannot be solved without broader policies. The

company therefore underlines its responsibility for

ensuring that measures are taken in the child’s best

interest, considering its specific social situation, edu-

cation and age. Similar statements are included in

Nestle’s code of conduct, which states that ‘ill-con-

sidered policies and commercial measures can make

the situation worse for children,’ and showing clear

awareness of the broader societal context and the

complexity of the causes of child labor.

These experiences of companies with explicit child

labor codes clearly show the dilemmas involved in

addressing this issue. Most companies have been less

explicit in their codes so far, as our data show.

Although we cannot draw definite conclusions about

the type of ethical and HRM strategies for all multi-

nationals studied, the analysis clearly shows that child

labor is not an issue where universalism prevails. The

picture is more diverse, with both global and multi-

domestic ethical approaches, but predominantly mul-

tidomestic HRM practices.

3. Implications for research

As already mentioned in the introductory section,

the few studies that have analyzed child labor codes

have largely focused on content analysis and on the

factors that influence their adoption by companies,

generally taking a sectoral and/or case study approach.

Sectors that have received particular attention have

been the production of carpets, leather footwear,

soccer balls, tea, sporting goods and/or apparel (Kolk

& Van Tulder, 2002a; US DOL, 1997; Wolfe &

Dickson, 2002). The concentration on sector as impor-

tant determinant clearly stems from the fact that the

sectors mentioned have a relatively high number of

child workers. Moreover, they sell their products on

consumer markets, not on business-to-business mar-

kets, frequently even with children as final consumers.

These peculiarities strongly increase the vulnerability

of companies to societal demands for action on the

issue of child labor, and thus the likelihood of code

adoption, both at the corporate and the industry level.

Likewise, research in the international sporting

goods industry on multinationals from different home

countries (US, Europe and Japan) showed that the

domestic context influences corporate inclinations to

draw up codes of conduct, due to the dynamics of the

interaction between various stakeholders (Van Tulder

& Kolk, 2001). This domestic stakeholder context

affected US companies in particular. A study in the

late 1980s, which compared the US and Europe, also

underlined that the adoption of corporate codes started

much earlier and was more widespread in the US


(Langlois & Schlegelmilch, 1990). Japanese multi-

nationals are least inclined to adopt codes, which

seems in line with their general HRM approach that

stresses informal coordination and control rather than

specific contractual relations.

While sector and country characteristics thus influ-

ence the adoption and evolution of corporate codes of

conduct, these are likely to be of much less direct

importance once multinationals have them in place,

and when it comes to the specific way in which ethical

standards are approached and implemented internally.

Langlois and Schlegelmilch (1990) also noted that

there are no differences between European and US

multinationals with regard to ethical principles that

transcend cultures. Although the set of multinationals

in our study is relatively small, this assumption could

nevertheless be considered with regard to US multi-

nationals in general and US apparel companies in

particular. Of the fifty child labor codes, a consider-

able percentage originated from the US (64%), and a

smaller, but still substantial, share from the US apparel

industry (44%).

Tables 6A and 6B show the information on ethical

norms and HRM practices for the three sets of multi-

nationals, listing multinationals from the US, from the

US apparel industry, and for the full set (as already

presented in Tables 3 and 4). It can be concluded that

the diversity concerning global versus multidomestic

approaches, as noted for all multinationals, equally

applies to the two other sets. While repeating the caveat

mentioned before about the limited number of observa-

tions, the tables appear to underline the societal scrutiny

in the US in general, and the US apparel industry in

particular, as the smaller percentages of ‘none’ and ‘not

indicated’ reveal. Compared to the more than 20% for

all fifty multinationals, the percentages are much lower

for the US, and especially for the apparel subset. These

companies seem to have felt much more pressure to be

specific with regard to the child labor issue, mostly

resulting in multidomestic approaches.

On the basis of this exploratory study, it can be

hypothesized that the most important determinants of

companies’ integration/responsiveness grid concern-

ing the ethics of child labor will be firm-specific.

Research on the evolution of codes of conduct, includ-

ing both adoption and stringency, has pointed at the

structure of multinationals’ production networks (Van

Tulder & Kolk, 2001). The spread and intensity of

international production increases coordination pro-

blems, and thus the likelihood that multinationals need

codes of conduct to guide their ethical conduct. How-

ever, this does not necessarily result in the adoption of

a universal approach. Internationalization of produc-

tion thus seems less relevant for the specific imple-

mentation of an ethical strategy than for the adoption

as such. A comparable logic seems to apply to the

employment characteristics of multinationals, that is

the extent to which they employ production workers

outside their home country, whether this involves their

own staff and production facilities or has been out-

sourced, and the economic situation in the countries

where this takes place. Here again, codes of conduct

can be vital instruments to improve coordination

within the multinational and to address its ‘vulner-

ability’ to ethical pressure from stakeholders, but seem

less important for the peculiar internal arrangements

of such provisions. They do, however, represent pro-

mising venues for investigation into the adoption

likelihood of ethical codes by multinationals.

Particularly the distribution and types of markets,

and market shares appear important factors to be

considered further. It might be suggested that the more

multinationals are truly internationalized in terms of

sales and markets, the greater the tendency to gear to

local contexts (cf. UNCTAD, 2001). This would also

Table 6A

Ethical norms referred to in child labor codes (in percentage)

Standard Whole set

(n ¼ 50)

All US MNEs

(n ¼ 32)

US apparel

(n ¼ 22)

Host-country

laws only

52 59 64

International

conventions

26 25 27

None 22 16 9

Table 6B

Company-internal applicability of minimum-age requirements (in

percentage)

Standard Whole set

(n ¼ 50)

All US MNEs

(n ¼ 32)

US apparel

(n ¼ 22)

Country-specific 66 75 86

Universal,

worldwide

6 9 9

Not indicated 28 16 5


involve the need to be responsive to specific require-

ments in these countries. It can be hypothesized that

when these countries are those where child labor still

exists, multinationals will be inclined to adopt a

multidomestic approach, whereas universality will

prevail in other cases. The latter might also apply

for multinationals with low degrees of internationali-

zation, or with a predominant market share in one or

more industrialized countries. In addition, it is worth-

while to analyze to what extent a reliance on universal

or local ethical standards also originates from firm-

specific characteristics which lead to large corporate

visibility, such as market leadership, brand reputation

and profitability. Further research into these various

aspects with potentially different degrees of influence

could help to shed light on the way in which multi-

nationals’ ethical approaches are related to their over-

all corporate strategies. This linkage is also very

important to management practice.

4. On the management of strategic andethical trade-offs

As pointed out in the introductory section, corporate

policy on child labor codes involves a number of

strategic trade-offs. They can be discussed in the

context of strategic tensions, especially to shed light

on how managers could deal with dilemmas, and

possibly embed it in the organizational purpose

(Table 1). The strategy context, discussed in more

detail in this article, deals not only with globalization

versus localization, and the managerial choice for

convergence (universalism) or divergence, which in

the case of child labor has so far led to multidomestic,

relativistic approaches. It also involves the trade-off

between ‘compliance’ and choice, where managers

will take the ethical and strategic behavior of other

firms in their sector into account. This implies a

consideration of the preferred position of the com-

pany: to what extent will it follow industry practices

with regard to reliance on international networks of

production and supply, and outsourcing? Moreover,

does it aspire to be a leader in ethics, with concomitant

uncertainties surrounding (rising) stakeholder expecta-

tions and possible criticism from other companies

in the industry, or merely aim to follow the general

evolution of approaches in the sector, usually embodied

in industry codes? As such, the rise of industry codes

can be expected to have a converging effect, and

follow-up research into the influence of these codes

will be worthwhile. It is, however, unclear how spe-

cific such industry attempts will be, in view of

previous research which showed that such codes tend

to be rather vague and weak on compliance and

monitoring, also when compared to company codes

(Kolk & Van Tulder, 2002b; Kolk et al., 1999). The

tendency towards the ‘lowest common denominator,’

noted in other studies on industry self-regulation as

well (e.g., King & Lenox, 2000) means that leadership

from individual companies in the sector continues to

be necessary to guide (future) ethical behavior.

This issue of leadership, included in the organiza-

tional context in Table 1, refers to the trade-off

between more or less managerial control. A more

‘empowered’ management style means a high toler-

ance for ambiguity. As noted by Whetten et al. (2000:

17), ‘managers with a high tolerance of ambiguity are

more likely to be entrepreneurial in their actions, to

screen out less information in a complex environment

and to choose specialties in their occupations that

involve less structured tasks.’ Buller and McEvoy

(1999) already noted that ethical management in

multinational corporations requires transactional lea-

dership, which thus in practice should be operationa-

lized as a high tolerance for ambiguity.

From the analysis of the child labor issue, it can be

concluded that a limited number of multinationals,

indicated in the case material in this article, have

adopted an active policy with explicit codes and poli-

cies, while others follow with rather general statements.

External pressure, either on the industry as a whole or on

individual companies, has sometimes played an impor-

tant role in this regard. Nike, subject to harsh criticism

concerning labor conditions from the early 1990s

onwards, is a case in point. This also applies to Shell,

forced to overhaul its overall ethical and environmental

positioning following Nigeria and the Brent Spar. Inter-

estingly enough, the company has issued a ‘business

primer’ on child labor, although the industry is hardly

involved in it, only perhaps indirectly through supply

chain relationships. Shell’s strategy of extending its

activities to retail seems to have inspired the company to

become a leader on the issue in its ‘old’ industry. It uses

this as a first step to facilitate stakeholder dialogue,

which aims at mutual learning processes.


We thus see that those companies with a more

explicit ethical policy make particular choices with

regard to the strategy process and content. With regard

to strategic thinking (the trade-off between rational

and generative thinking), strategy formation (planning

versus incrementalism) and strategic change (discon-

tinuous or continuous), these companies engage in

continuous, incremental change, leaning more

towards generative thinking. The nature of leadership

involves an open attitude towards stakeholders in

different countries and settings, in which a universal,

standardized approach does not really fit. This also

means a perspective of an embedded (rather than a

discrete) organization, which focuses on cooperation

and dialogue.

Unilever provides a clear illustration with the state-

ment that ‘there is no such thing as a ‘‘universal’’

standard. The Universal Declaration of Human Rights

is intended to be such a standard (. . .), but is often

interpreted in different ways. Observance of ethical

standards (. . ..) is also in our commercial interests.

Companies like ours are very much dependent on the

trust that they receive from society. In a continuous

dialogue with society, companies must establish what

is acceptable and what is not. That differs from one

society to another and from one period to another.’

(Tummers, 1999: 54).

Likewise, some leading companies mentioned in

earlier sections of this article explicitly acknowledge

responsibility for the fate of the children found work-

ing in supplying factories and recognize the broader

social and economic context. In such a broad approach

to child labor, the code of conduct is part of an ongoing

negotiation process, in which the company reckons

with the implications of its policy for internal and

external stakeholders, including (former) employees,

managers and suppliers (at whatever distance in the

supply chain), and the effects on other companies in

the industry.

The linkage between ethics and corporate strategy

ultimately affects the organizational purpose, which

underlies all other strategic trade-offs. In the trade-off

between profitability and responsibility, and between

shareholder and stakeholder values, companies that

want to integrate ethics will lean more towards the

stakeholder values perspective and emphasize

responsibility, not only profitability. Table 7 outlines

the different elements in these two perspectives,

which might help managers to position themselves

when dealing with their ‘moral free space.’ While

companies that aspire ethical leadership will move in

the direction of the stakeholder values perspective,

those that prefer a low profile on ethics will stick more

to the shareholder model, with the ‘ethical followers’

in between. Although an active policy on an issue

such as child labor involves many dilemmas, as

shown in this article, an open dialogue and a clear

choice for stakeholder values can be expected to bring

many positive spin-offs as well, and avoid risks that

a more passive approach to ethics might entail. Case

study research, which compares a typical ‘stake-

holder-oriented’ company with a ‘shareholder-

oriented’ company could be helpful to shed more

light on these issues.

Acknowledgments

This article is one of the publications resulting from

a joint, long-term project on multinational enterprises

Table 7

Shareholder versus stakeholder values perspective

Shareholder value perspective Stakeholder value perspective

Emphasis Profitability over responsibility Responsibility over profitability

Organizational objective To serve owner To serve all parties involved

Measure of success Share price and dividends Satisfaction among all stakeholders

Major difficulty Getting agent to pursue principal’s interests Balancing interests of various stakeholders

Corporate governance through Independent outside directors with shares Stakeholder representation

Stakeholder management Means End and means

Social responsibility Individual, not organizational matter Both individual and organizational

Society best served by Pursuing self-interest (economic efficiency) Pursuing joint interests (economic symbiosis)

Source. Based on De Wit and Meyer (1999).


and corporate social responsibility. Inge Sloekers is

gratefully acknowledged for her contribution to creat-

ing the dataset on which this paper is based.

Appendix A. List of codes of conductanalyzed in this article

Allied Domecq

Body Shop

Burton Group

C&A

Chiquita Banana

Converse

Dayton Hudson

Dillard Department Stores

Dress Barn

Elf Acquitaine

Federated Department

Fruit of the Loom

Gap

Hennes & Mauritz

JCPenney

Jones Apparel Group

Karstadt

Kellwood

Kmart

Lands’ End

Levi Strauss

Limited

Liz Claiborne

Mercantile Stores

Merck

Nestle

Nike

Northern Telecom

Oxford Industries

Phillips–Van Heusen

Pricecostco

Puma

Reebok

Russell Corporation

Salant Corporation

Sara Lee

Stage Stores

Starbucks

Stork

Talbots

TotalFinaElf

Tultex Corporation

Vendex KBB

Venture Stores

VF Corporation

Wal-Mart Stores

Walt Disney

Warnaco

WE

Woolworth

References

Bansai, M., & Sama, L. M. (2000). Ethical dilemmas in MNCs’

international staff policies. A conceptual framework. Journal of

Business Ethics, 25: 221–235.

Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders.

The transnational solution. Boston: Harvard Business School

Press.

Bowie, N. E., & Vaaler, P. (1999). Some arguments for universal

moral standards. In G. Enderle (Ed.), International business

ethics. Challenges and approaches (pp. 160–173). Notre Dame,

London: University of Notre Dame Press.

Buller, P. F., & McEvoy, G. M. (1999). Creating and sustaining

ethical capability in the multi-national corporation. Journal of

World Business, 34: 326–343.

DeGeorge, R. T. (1993). Competing with integrity in international

business. New York: Oxford University Press.

Donaldson, T. (1989). The ethics of international business. New

York: Oxford University Press.

Donaldson, T. (1996, September–October). Values in tension:

Ethics away from home. Harvard Business Review: 48–62.

Enderle, G. (Ed.). (1999). International business ethics. Challenges

and approaches. Notre Dame, London: University of Notre

Dame Press.

Hampden-Turner, C., & Trompenaars, F. (2000). Building cross-

cultural competence. Chichester: Wiley.

Husted, B. W. (2000). A contingency theory of corporate social

performance. Business and Society, 39(1): 24–48.

Kaptein, M., & Wempe, J. (2002). The balanced company. A theory

of corporate integrity. Oxford: Oxford University Press.

King, A. A., & Lenox, M. J. (2000). Industry self-regulation

without sanctions: The chemical industry’s Responsible

Care program. Academy of Management Journal, 43: 698–

716.

Kolk, A., & Van Tulder, R. (2002a). The effectiveness of self-

regulation: Corporate codes of conduct and child labour.

European Management Journal, 20: 260–271.

Kolk, A., & Van Tulder, R. (2002b). Child labor and multinational

conduct: A comparison of international business and stake-

holder codes. Journal of Business Ethics, 36: 291–301.

Kolk, A., Van Tulder, R., & Welters, C. (1999). International

codes of conduct and corporate social responsibility: Can


transnational corporations regulate themselves? Transnational

Corporations, 8(1): 143–180.

Langlois, C. C., & Schlegelmilch, B. B. (1990). Do corporate codes

of ethics reflect national character? Evidence from Europe and

the United States. Journal of International Business Studies,

21: 519–539.

Litz, R. (1996). A resource-based view of the socially responsible

firm: Stakeholder interdependence, ethical awareness, and issue

responsiveness as strategic assets. Journal of Business Ethics,

15: 1355–1363.

OECD. (1999). Codes of corporate conduct: An inventory. Paris.

Pettigrew, A. (1992). The character and significance of strategy

process research. Strategic Management Journal, 13: 5–16.

Prahalad, C. K., & Doz, Y. (1987). The multinational mission.

Balancing local demands and global vision. New York: The

Free Press.

Taylor, S., Beechler, S., & Napier, N. (1996). Toward an integrative

model of strategic international human resource management.

Academy of Management Review, 21: 959–985.

Van Tulder, R., & Kolk, A. (2001). Multinationality and corporate

ethics: Codes of conduct in the sporting goods industry. Journal

of International Business Studies, 32: 267–283.

Tummers, F. (1999). Our common future. In R. van Tulder (Ed.),

Redrawing organizational boundaries (pp. 49–60). Rotterdam:

Sviib.

UNCTAD. (2001). World investment report. Promoting linkages.

Geneva: United Nations.

US DOL. (1997). By the sweat and toll of children. Washington:

Department of Labor, Bureau of International Labor Affairs.

Whetten, D., Cameron, K., & Woods, M. (2000). Developing

management skills for Europe (2nd ed.). Harlow: Prentice-Hall.

De Wit, B., & Meyer, R. (1999). Strategy synthesis. Resolving

strategy paradoxes to create competitive advantage. London:

Thomson Learning.

Wolfe, J. H., & Dickson, M. A. (2002). Apparel manufacturer and

retailer efforts to reduce child labor: An ethics of virtue

perspectives on codes of conduct. Clothing and Textiles

Research Journal, 20(4): 182–195.


ethics

Documents

moral free space

notre dame press

oxford university press

child labor norms

universal moral standards

corporate social responsibility

child labor provisions

child labor codes