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INTERNATIONAL

BUSINESS SCHOOL
MBSA 1533 Business Ethic, Responsibility
and Sustainability
Assignment 1 (Individual) Journal Article
Review: Ethics in International Business:
Multinational Approaches To Child Labor.
By Ans Kolk & Rob Van Tulder
Name
: Nasrudin Insaf Bin Jaafarali
Section
:2
Matrix No
: MBS151020
Lecturer
: Dr. Choi Sang Long

Reviewed Journal: Ethics In International Business:


Multinational Approaches to Child Labor
Introduction
The article draws attention on the issue of Child Labor and the Multinational
Company as a possible expression to the Strategic International Human Resource
Management. In particular, the author analyses weither 50 leading multinationals
adopts universal ethical norms (related to exportive HRM) or relativist ethical norms
(related to adaptive HRM and multidomestic).
This article is intended for researchers and students interested in areas that engage
child labor, code of ethic, international business studies and any area related to
international business ethic. Managers working with multinational company should
also study this to give them a good overview on the child labor issue apart from
understanding the challenges and approaches when managing across border. To
fully understand this article, the audience should be familiar with codes of ethic,
codes of conduct, the Social Accountability International (SAI) rooted from
Internatonal Labor Organization (ILO) United Nations (UN). For supplementary
reading and to understand some key aspects of this research; research, strategic
synthesis, which outlined the trade-off and value of stakeholder and shareholder
(De Wit & Meyer, 1999) and model to analyze and compare codes of conduct on
child labor issues (Kold & Van Tulder, 2002b). This article has been published in
Journal of World Business Volume 39 in 2004. The article is appropriate for this
journal since the area of research is clearly related to International Business and
discuss Child Labor norm in many different countries. The Journal of World Business
has been a premier journal of international business since 1965, and has been a
major source of article for the related field. Journal of World Business also welcomes
various sorts of research, the journal does not restrict article to be included in this
journal to be conceptual only or empirical only. A bit of both, which is the
classification of this article is also welcome in Journal of World Business
The journal article is rather expository than analytical or descriptive, and mostly
uses data from external sources and researchers in early 2000s through collection
of Code of Conduct from 50 multinational. This strongly suggests that this article
implies conceptual research in the study, but, this article also uses sources from
previous research done by another researcher, especially on the strategy issue and
trade-offs outlined from other research study
Brief Summary
For this research, approximately one hundred codes of conduct from largest
multinationals and companies that have been identified as pioneers in the field of
corporate social responsibilty (CSR) have been collected. Those codes were selected
for explicitly address the issue of child labor, but only 13 turned out to have codes
with such provision. Therefore, codes from slightly smaller firms that are known as
pioneers of the adoption of such codes were added. Eventually, 50 codes were
collected in which 60% originates form US, 35% from Europe and no Japanese

Reviewed Journal: Ethics In International Business:


Multinational Approaches to Child Labor
company. 75% are active in apparel industry and remaining are spread over variety
of sectors.
These 50 codes were examined with an existing standardized framework of analysis
based on De Wit and Meyer (1999) adapted to the peculiarity of child labor. This
framework focuses on the specificity with regard to the code (both content and
scope) and the compliance mechanism (monitoring and sanctions in case of
violations). Aspect that were considered in this research are the current standard
and minimum age norm, that were used to identify the multidomestic and global
approach on child labor issue. The standard refers is International Labor
Organization (ILO) and United Nation (UN) convention on child labor. Child labor
code can also refer to host country and home country laws, or none of them
depends on the approach taken by the multinational itself. Earlier research has
shown that codes drawn up by industry association are least specific and have
lowest compliance compare to codes developed by three other types of actors;
company, international organizations and non-governmental organizations),
therefore, codes drawn by industry association were not considered in this research.
Result
According to the data collected by the author, some of the companies in the set of
50 based their code on the Social Accountabilit 8000 Standard (SA8000) developed
by the Council on Economic Priorities Accreditation Agency (CEPAA) which is firmly
rooted on the recognition of ILO and UN conventions. Meanwhile, most
multinationals refers to host country law and/or to international standards. Result
from the research shows that, 52% of the 50 selected companies refer to the Host
Country Law, 26% refer to the international conventions and standards while 22 did
not indicate whether they adhere to host country laws and/or to the international
standard.
Another important finding is the minimum age of employment. Almost all the
companies that stipulate minimum age of employment explicitly mention hostcountry specificity. Thus, they adopt a multidomestic strategy and only a small
number of multinational adhere to a minimum-age requirement that applies to all
locations adopting universal approach. From the result of the research, 66% of 50
multinationals adopt the host-country law, 6% adhere to universal standard and
28% did not indicate any minimum age requirement.
Analysis
In the case of child labor norm, it can be concluded that multidomestic approach is
more prevalent than international or global strategy approach in this issue. This is
due to some significant aspect that influence the adaptation. Many multinational
has been implementing this approach since the article has been written, even if the
multinationals have global instrument such as the code of conduct with child labor
provision, their approach can be characterized as local responsiveness, although
this picture does not apply to all of them. Some companies review their codes of
conduct several times to ensure there is no violation to the international standard
and hose country requirements, these companies reviewed the code of conduct
based on the work condition. Whereas, some companies follow almost completely

Reviewed Journal: Ethics In International Business:


Multinational Approaches to Child Labor
the SA8000 standard, but with few modification and therefore underlines their
responsibility for ensuring that measures are taken in the childs best interest,
considering its specific social situation, education and age. The minimum age of
employement generally is the main determinant in selecting appropriate
approaches. The definition of children varies from country to country thus only small
percentage of multinational adheres to a minimum age requirement that applies to
all locations. Important factor in this regards were type of work and local cultural
perception on the moment when children become adult. Moreover, in this case, both
ethical and Human Resource Management approaches can diverge where ethical is
more universal and Human Resource Management would be adaptive.
Alternatively, for the time being, most multinationals adhere to universal ethical
norms, while adapting the implementation more to the local circumstances. Apart
from that, some multinationals also taking the step to change the nature of work in
line with International Labor Organization (ILO) recommendation and ideally in
consultation with local community based on Non-Government Organization (NGO).
The authors also proposed that the consumer sentiment at home country as a major
influence to the approach in child labor code. In their country, companies face quite
a different set of expectation in their role in the society. With consumers in home
country urging a complete ban in child labor and accompanying strict monitoring on
compliances, multinationals face dilemma when their plant are located in countries
with lack of support from host government and infrastructure. Some companies do
suggest to gather information on case by case basis and develop an appropriate
reponse in the context of the particular country and business sector. Thus, this will
allow the companies to respond to local needs in their markets across the world
through a multidomestic approaches and use the International Labor Organization
(ILO) and United Nations (UN) standard when drawing up the models and contracts.
For issue of child labor and multinationals approach toward it, we cannot draw
definite conclusion about the type of ethical and Human Resource Management
(HRM) strategies for all multinationals studied. Thus, making the measurement to
what extent the issue has been resolved pretty uncertain. To conclude, the issue
cannot be solved without broader policies with possibilities to the extent of
recognizing the social context in which child are forced to work.
General Critique
The author has done very great work to determine the relation between child labor
code and the approach by multinationals. The use of Strategy Issue and Trade-Off
based on De Wit and Meyer (1999), is very helpful to readers to further understand
factors that influence multinationals approach toward child labor. The peculiarity of
this issue is well explained by using these three basic categories; strategic issue,
strategic tension and strategic perspective as outline by De Wit and Meyer (1999).
The used of this principle throughout the research to explore the strategic
managerial aspects related to child labor codes has crystallizes and explained the
tension between profitability and responsibility, and between shareholder and
stakeholder values. The application of a model to analyze and compare codes of
conduct on child labor issues based on Kolk and Van Tulder (2002b) is exceptionally
great idea, where this model path the way where it make the process of examining
the fifty codes collected with an existing standardized framework of analysis,

Reviewed Journal: Ethics In International Business:


Multinational Approaches to Child Labor
adapted to the perculiarities of child labor a lot easier. From this model, particular
attention was paid to two aspects: standards and the company-internal applicability.
As a result or consequences of this, the identification of multidomestic versus global
approach was establish.
Eventhough the result and procedures taken by the author on this research is
outstanding, there are also some area for improvement. The set of data which is
fifty does not overall reflect and represent multinational approach. Compare to the
United Nation Conference On Trade and Development (UNCTAD) data in 2003, the
number of multinationals is about 6,300, with 700,000 branches around the world
Oprea and Ionescu (2008). This figure suggested that the fifty multinational which
barely reach 1% of the total multinational in 2003 hardly represent the overall
multinationals considering this article was written in 2004. Furthermore, the set of
fifty data generally represent multinationals from United States of America (US) in
which 64% of multinational from the set originated from this country without a
handful portion of multinationals frmm other region such as as Asia and Europe
which in my opinion will diversify the results more. Nevertheless, the authors hve
made good efforts to include three different set of multinationals; from US, US
apparel industry and the full set for comparison on ethical norms referred on child
laborcodes (with reference to either host country law only, international convention
or no reference). The researchers of this article also made a good suggestion for
further research on this issue which is 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.
Contribution
As few research done before analyzed child labor codes been more general in this
issue, this research has extensively focused on content analysis and on the factor
that influence their adoption by multinationals. This article has contribute to two of
important findings in child labor approaches by multinational. Among the finding is
that; the most important determinants of companies integration or responsiveness
grid concerning the ethic of child labor will firm-specific. The spread and intensity of
international production increase coordination problems and thus the likelihood that
multinationals need codes of conduct to guide their ethical conduct especially in the
aspect that involve child labor. Another significant contribution of this article is that,
the authors finding that when the host countries are those where child labor still
exist, multinationals will be inclined to adopt a multidomestic approach, whereas
universal approaches will prevail in other cases. The universal approaches might
also be applied for multinationals with low degrees of internationalization, or with a
predominant market share in one or more countries.
The author significant finding on child labor approaches are very relevant to this
issue. The article had discussed child labor issues extensively and the findings are
very helpful for multinational to manage accros border, outlining the need to gear
ethical approaches to overall corporate strategy and suggest vital role for Human
Resource Management in this respect. Apart from that, the author also suggest
fellows researcher to study to what extent multinational are responsible for the
activities of direct suppliers and other companies in the supply chain and for

Reviewed Journal: Ethics In International Business:


Multinational Approaches to Child Labor
supplementing governments in case of insufficient regulatory and enforcement
capabilities. In my opinion, this matter is likely to be useful for researchers and
managers in determining the best approach on child labor as from the research,
there were only limited number of multinationals that have adopted an active policy
with explicit codes and policies, while others follow with rather general statement.

References:
Oprea, R., & Ionescu, R. (2008) Multinational Corporations And The Global Economy,
Third Pan-Helen Internatioanl Conference On Political Economy, Athens, 1618.05.2008