Edward Freeman, American Philosopher known for his stakeholder theory

Large companies such as Nike are calling for better standards to ensure fair working conditions abroad; standards that would eliminate child labour and harsh working conditions. Are these companies really concerned about the well being of the foreign workers, or are they more concerned about losing the reputation of their firm? In order to please the shareholders, large corporations are driven by profits. Cheaper labour cost means higher profits. However, bad publicity and tarnished reputations can hurt the company’s image. Exposed companies feel disadvantaged if competitors continue to use abused workers. Everyone wants a level playing field.  Better working conditions require co-operative efforts and participation of all companies. Edward Freeman claims that a company’s long-term survival is dependent on whether the company adds value to ALL of its stakeholders. Companies cannot simply focus on the shareholders who want higher profits. To survive in the long run, companies must address all of its stakeholders including suppliers, employees, shareholders and society. As a result, if a company practices ethical supply chains and truly act as a good corporate citizen it will be recognized and rewarded. Don’t worry about the competitor’s practices. Do what is ethical and right and you will be rewarded.