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A Review and Analysis of Nike, Inc.’s Corporate Social Responsibility Program

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Running head: NIKE’S CSR PROGRAM 1

A Review and Analysis of Nike, Inc.’s Corporate Social Responsibility Program

Jonathan Riddle

Corporate Social Responsibility

Thomas Edison State College

2013

Revised: September 5, 2016

NIKE’S CSR PROGRAM 2

A Review and Analysis of Nike, Inc.’s Corporate Social Responsibility Program

Introduction

“Is that the best we can do?”- Bill Bowerman, track and field coach and co-founder of

Nike, Inc. In the report, the Nike, Inc. Sustainable Business Report, the president and chief

executive officer of Nike, Inc., Mark Parker, wrote that, “NIKE, Inc.’s commitment to a more

transparent and sustainable future is stronger than ever.”

All businesses must be self-sustaining and satiate a market. The business’ vision

expresses why it exists beyond just making money and that vision, combined with the mission,

strategies and tactics, it provides significance and meaning, as well as direction for the actions of

the business.

Environmental, strategic, competencies and structure framework (E.S.C.S

framework). According to Werther and Chandle (2011), in their book, Strategic corporate

social responsibility: Stakeholders in a global environment, the “E.S.C.S Framework” is the

environmental, strategic, competent, and structural framework, which allows for a workable

strategy and makes it ideal for the stakeholder environment, this framework shapes the functions

of the business’ vision, mission, strategies, and tactics.

Analysis of E.S.C.S. This paper will analyze the impact of the E.S.C.S on the vision,

mission, strategies and tactics as seen through the corporate social responsibility (CSR) lens,

while Nike, Inc. has shaped its vision, mission, strategies and tactics using the E.S.C.S.

framework.
NIKE’S CSR PROGRAM 3

Nike, Inc.’s CSR effort. Nike, Inc. has developed into a prototype for some businesses

because of the company's CSR efforts, and regardless of the fact that what the firm went through

during the 1990’s which caused it reputation to be very tarnished, their focus on their current

CSR program emphases on four areas of innovation:

 What materials to use – including new choices for recycled and recyclable

materials;

 Better processing – employing new ways of processing with less energy, water,

chemicals or waste;

 Better choices – creating and applying indexes, restricted substance lists, policies

and better ways of operating, and sharing them with vendors and suppliers;

 Bringing choices to scale – increasing the scale and availability of new material

choices, including sharing intellectual property and enabling recycling of

materials (Nike, Inc., 2011).

Five stage models. This is the current CSR model for Nike which takes into

consideration all of the stakeholders and the environment into account as a part of its business

process. Taking a look at Simon Zadek’s and Bob Williads’ five stage models to see how Nike

has evolved as a company that had defended its business position while today they have evolved

into a respectable corporate citizen with an ever improving CSR track record.

Classification of stakeholders. The classifications of stakeholders fall into three

different categories and this paper will analyze how a firm has arranged the status of the various

stakeholders taking into consideration of the operations of the business in question. The three

categories of stakeholders are according to the text’s authors, Werther and Chandler (2011) they

stated that the different types of stakeholders are: economic, organizational and societal.
NIKE’S CSR PROGRAM 4

Stakeholders analysis. Stakeholder analysis will provide the basis of who is the

stakeholder and what is at stake, their importance (Agle & Wood, 1997), their influence and

interest, and those who support the CSR policies (Gilliland, 2008). As part of the analysis, the

paper will look at the criteria that have been used in deciding between competing stakeholder

interests, how policies could be different, and if the corporation’s policies should be followed.

Justifications of Nike, Inc.’s policies. In the end, a corporation can endure to exist only

by meeting the minimum expectations of each of its key stakeholders. There needs to be a

justification for either following the company's policies or proposing different ones, they must

consider the cultures in which they works, the environment, the communities and, their

consumers, workers, contractors, stockholders, and regulating authorities. And this company

incorporates all three of the classifications.

Discussion

As recently as of last year, Nike, Inc. was being accused of sources manufacturing with

factories that have been polluting rivers in China as report by Greenpeace, and there are

accusations of abuse in an Indonesia factory.

According to Dara O’Rouke of the Huffington Post, in The Blog, it stated that, “Nike's

investigation found that nearly two-thirds of the 168 factories making Converse products fail to

meet Nike's standards for contract manufacturers. Nike blames these problems on pre-existing

licenses and subcontracting relationships that they claim prevent Nike from inspecting factories

or enforcing their code of conduct” (O’Rouke, 2011).

NIKE’S CSR PROGRAM 5

Five Stages of Organizational Learning Model

In the article, The Path to Corporate Responsibility (2004) by Simon Zadek in the

Harvard Business Review, Zadek offers the Five Stages of Organizational Learning which

include:

Defensive. The company at this stage either rejects the allegations or denies the link

between its product and any harm it is causing. Phil Knight was in denial of the conditions of

factories overseas and claimed they were not as bad as claimed (Wilsey & Lichtig.)

Compliance. At this stage the company will do what it has in order to protect the

company’s reputation and prevent litigation. “Phil Knight officially responded to his critics on

May 18, 1998. His speech was the result of intense internal discussion about what actions needed

to be taken to improve conditions in the overseas factories. What they came up with were several

new "laws" that Nike factories throughout the world were to be required to obey, (Wilsey &

Lichtig.)

Managerial. Managers and key personnel have to take ownership of the core problem

and take responsibility for the problem and to find a solution.

Strategic. At this stage a company realigns it business practice to find responsible

solutions that will provide an advantage over the competition and lead to better success.

Currently Nike has achieved this stage and beyond.

Civil. A business at this stage has the experience to identify social problems as they arise,

take a proactive response and work with government, NGOs and other companies within their

industry to deal with the problem. Nike has developed associations with governments and
NIKE’S CSR PROGRAM 6

NGOs to develop programs to deal with social problems and become a better global corporate

citizen. Nike, Inc.’s program involves cutting energy, slash water use, empower workers, reject

toxics, reduce waste and support communities.

5-Stage Sustainability Journey Model

Bob Willard wrote in his article, The 5-stage sustainability journey (2010) which offers a

similar model as Zadek, and that Willard goes on to explain that the stages are much more direct

and he goes into the details about what actually happens in the business practices (Zadek, 2005):

Stage 1: Pre-Compliance. At this stage the company will cut corners, ignore rules and

regulations such environmental, health and safety. The natural environment is treated as a dump

site for the company end-of-life disposal of their goods.

Stage 2: Compliance. In the compliance stage the company will follow the rules and

regulations that they are legally liable for such as: labor, environmental, health and safety. At

this stage there is little effort put into CSR and most of the companies’ compliances are

reactionary at best, ultimately they are unsustainable.

Stage 3: Beyond compliance. Companies move into this stage voluntarily and the

company learns they can reap the financial benefits by being more proactive, and by working

more eco-friendly. The company saves money by using less energy, using less water, using

fewer materials and reducing or eliminating waste or making waste as a part of input process,

such as with lean manufacturing.

Stage 4: Integrated Strategy. The company transform into a sustainable business using

the borrow-use-return model. The companies make products with requires taking less from
NIKE’S CSR PROGRAM 7

nature, focuses on responsible consumption, uses biomimicry in the business process and close

loop production (Willard, 2010).

Stage 5: Passion and Purpose. At this stage the company is trying to make a better

world for the company, society and the environment. They do this because it is the right thing to

do. Some companies as a part of their vision and mission enter this stage at the beginning of

their business.

Summary of Nike, Inc.’s Corporate Responsibility Report

Nike, Inc. vision. Nike, Inc.’s current Corporate Responsibility Report spells out its

current vision, mission, strategies and tactics. According to Nike, Inc.’s Corporate Responsibility

Report, the vision of the company is:

…to help NIKE, Inc. and our consumers thrive in a sustainable economy where people,

profit and planet are in balance. To get there, we're integrating sustainability principles

and practices into everything we do: design; developing sustainable materials; rethinking

processes; advocating for change in industry. To measure our progress, we set ambitious

long-term targets and report on our performance, (Nike, Inc. Corporate Responsibility

Report FY07-09).

The current Nike, Inc. vision state has evolved into much more simplified and straight

forward statement, “Our vision is to build a sustainable business and create value for Nike and

our stakeholders by decoupling profitable growth from constrained resources. (Nike, Inc.

FY10/11 Sustainable Business Performance Summary)”

NIKE’S CSR PROGRAM 8

Sustainable business and innovation. Sustainable business and innovation is their form

of corporate social responsibility, and as part of that vision:

1. Innovate to deliver enterprise-level sustainability solutions.

2. Integrate sustainability into the heart of the NIKE, Inc. business model.

3. Mobilize key constituents (civil society, employees, consumers, government and

industry) to partner in scaling solutions (Nike, Inc. FY10/11 Sustainable Business

Performance Summary).

Nike’s vision and E.S.C.S. With this vision for Nike, the company has covered all aspect

of E.S.C.S. The mission of Nike, Inc. is, “to bring inspiration and innovation to every athlete in

the world.” And, "if you have a body, you are an athlete” – Bill Bowerman, legendary track &

field coach at the University of Oregon and co-founder of Nike, Inc., (Nike, Inc., 2013).

Stakeholder Classifications

Three categories of stakeholders. Classification of stakeholders into three categories is

an over simplification, there are several factors. It is possible to reduce factors into three

categories, but for a company to truly understand their stakeholder, especially key stakeholders

and those with the great influence a great analysis of the stakeholder should be done.

Classification according to the author, Peter Gilliland, PMP, on the website

ProjectStakeholder.com in the article, the Best practices (Part 2 of 6): Project stakeholder

classification:
NIKE’S CSR PROGRAM 9

One strategy is to map out all the stakeholders on your project (in this case, this method

of classification can be applied to analyze a company’s stakeholders) and partition them

according to their:

INFLUENCE (“the ability to control or affect the actions, beliefs and attitudes of other

people”) and:

INTEREST (“the state of being responsible, affected, involved, concerned, attentive

curious”).

After considering all the classifications, one will be able to plot the stakeholders into a

chart similar to the example below:

(Gilliland, 2008)

Five categories of stakeholders. A further dimension can also be added by considering

people’s level of support for one’s project, and according to Gilliand (2008), there are five

categories of stakeholders, which range from: allies, supporters, neutral, reluctant and opponents,

and after assessing their motivation, they can be fitted into one of these categories. And as a part

of a company’s stakeholder analysis, the importance or if a stakeholder is a key player can have a
NIKE’S CSR PROGRAM 10

great influence over the development of the company’s CSR policies, which depending on the

interest of the stakeholders.

Different views of the stakeholder. According to the authors Agle & Wood (1997), in

their article, Toward a theory of stakeholder identification and salience: Defining the principle of

who and what really counts, in the journal, Academy of Management Review, the authors

discussed the different views of a stakeholder, ranging from wide and narrow and according to

the authors they stated that:

Narrow views of stakeholders are based on the practical reality of limited resources,

limited time and attention, and limited patience of managers for dealing with external

constraints. In general, narrow views of stakeholders attempt to define relevant groups in

terms of their direct relevance to the firm's core economic interests.

And:

…scholars who attempt to narrow the definition of stakeholder emphasize the claim's

legitimacy based upon contract, exchange, legal title, legal right, moral right, at-risk

status, or moral interest in the harms and benefits generated by company actions and that,

in contrast, scholars who favor a broad definition emphasize the stakeholder's power to

influence the firm's behavior, whether or not there are legitimate claims (Agle, & Wood,

1997).

Identification from the point of view of management. Identification is important from

a management point of view. The authors argued that it comes down to two critical points: the

company’s economic interest and those who have a legitimate claim involving the interest of the

company’s actions in committing harm or providing benefits. The company’s CSR policies have
NIKE’S CSR PROGRAM 11

to be committed to providing the greatest benefit to stakeholders, reducing harm, while assuring

economic success of the company.

Stakeholders and Nike, Inc. as an example. The company that has the best example

that fits all three stakeholder categories is Nike, Inc., especially considering their historical lack

of CSR policies. According to Nike, Inc., the environment is their top priority (societal

stakeholder), then followed by their workers, and suppliers (organizational stakeholdersf), while

maintaining profitability (economic stakeholder). The current Nike, Inc. vision state has evolved

into much more simplified and straight forward statement, “Our vision is to build a sustainable

business and create value for Nike and our stakeholders by decoupling profitable growth from

constrained resources” (Nike, Inc. FY10/11 Sustainable Business Performance Summary), the

stakeholders are the environment, the communities, the company’s consumers, workers,

contractors, stockholders, and regulating authorities, and this covers all of the stakeholders:

economic, organizational and societal. The company identifies limitation of available resources,

while focusing on the economics of the company.

Value as a commercial strategy. According to Nike, Inc. a key to create value as part of

its commercial strategy includes providing corporate responsibility, the examples are: innovation

of both product line, their corporate social responsibility, transparency, while reporting is critical

to transparency. Four of their strategy goals for 2010 were:

1. Put investing in sustainability as a key innovation, along with research and

development which is a priority on consumer brands’ agendas. (The stakeholders are the

customer, they fit both societal and economic stakeholders).

NIKE’S CSR PROGRAM 12

2. Fast track innovation through investment and collaboration. (This is an example of

organization stakeholders: stockholders and the contractors).

3. Launch the GreenXchange as a platform for enabling the sharing of intellectual

property to fast track changes efficiently. (This is an example of organizational

stakeholders: suppliers and manufacturing contractors).

4. Build an advocacy agenda to push for large-scale policies and investments in

sustainable innovation as a key enabler of global economic competitiveness. (This takes

into account all of the global stakeholders, or societal stakeholders) (Nike, Inc., n.d.).

Closed loop business model. Another part of their strategy is the closed loop business

model, involving the development of the product using reclaimed materials with the end of life

of the product being used to create a new product. (Using reclaimed materials involves the

environment as a stakeholder, which has overall impact involving all global stakeholders or

societal stakeholders, as well as economic stakeholders, (Nike,Inc., n.d.)

Nike Inc.’s key human resource management tactics. One of the key tactics of Nike,

Inc. involves the use of human resource management (HRM), HRM is involved with education

and training of the work force in lean manufacturing and to teach value to empowered their work

force. That empowerment involves the treatment, safety, health, living conditions of workers,

and set a living wage for workers. As well as teaching supervisors and managers how to correct

and communicate with workers. (The workers as organizational stakeholders are educated and

trained making a major improvement in their lives and well-being.) This also provides an

economic advantage for the company by having a better workforce which can provide the best

product quality (Nike,Inc., n.d.).

NIKE’S CSR PROGRAM 13

Conclusion

Nike follows the attitude of Bill Bowerman in that, “is that the best we can do?” The

Nike of today shows what CSR can do to improve its position within its industry through

innovation, transparency, proper corporate governance and being a socially responsible citizen.

E.S.C.S framework and corporate social responsibility of Nike, Inc. Nike, Inc. has a

comprehensive corporate social responsibility program that covers all aspects of the “E.S.C.S

framework”. Nike, Inc.’s business vision and mission incorporates sustainability, which

involves innovation of the products, education and training of their work force, and working with

NGO’s throughout the world to become a leader in sustainability.

Nike, Inc.’s structure. The structure of Nike, Inc. brings in all of its suppliers and

manufacturers under its corporate responsibility program. This is done through training and

education of its workforce.

Nike, Inc. strategy. The strategy of Nike, Inc. is to focus on corporate responsibility

through the investment of sustainability through innovation along with research and development

projects, while expanding collaboration and advocacy. The competency of Nike, Inc. is through

improvements of living standards of their workers. Competency is maintained through

monitoring and auditing of their suppliers and manufacturing.

The environment and Nike, Inc. The environmental aspect of Nike, Inc. was not

mentioned in the discussion, but a major interest of Nike is conserving of water. A large amount

of water is in the dying process and a new innovative process was developed to reduce water

usage. CSR implies that a company will align itself with an ethical standard, transparency, and

care about its employees and the values of the community at large.
NIKE’S CSR PROGRAM 14

Societal, organizational, and economic stakeholders and Nike, Inc. Companies like

Nike, Inc. take into account all of their stakeholders: societal, organizational and economic.

Corporate social responsibility goes beyond the profits of a corporation, but tries to include all

stakeholders from investors, shareholders, customers, employees and the general public. The

company will listen to all stakeholder concerns involving employee treatment and environmental

concerns. Corporations need to take better stewardship of the world by building greater

collaborative partnerships with stakeholder groups. Ultimately, the stakeholders are all the

people of the world.

Stakeholder’s interest and CRS. All companies should take into account the interests of

the stakeholders have, make a clear CSR vision for all stakeholders, and so they know the

company’s position and stance, and its effect on them. The policies depend on the type of

business and the product. The CSR policies should be tailored to the specific interests of that

company. For some companies might require several years to implement their plan and policy

because of the constraints of the business, but some products take only a couple of weeks to

design. As part of the CSR policy, the company should think about how to implement a policy

that will help the company make a profit.

Broader analysis of stakeholders. After looking at the articles, the text’s authors should

provide a broader analysis of who the stakeholders are and address what is at stake. This comes

from a practical standpoint in provide the foresight in developing CSR policies based on the

influence and interest of all stakeholders, while focusing on the core function of the business

which is to make a profit.

NIKE’S CSR PROGRAM 15

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NIKE’S CSR PROGRAM 16

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