Amazon.com Inc. is an American multinational technology company. The company is one of the largest retailers in the world with many supply stores globally. The company employs staff from all over the world and is committed to treating employees with respect. However, in 2018, Amazon faced violations when its Foxconn supplier factory in China, which produces Amazon's Echo smart speakers, was accused of child labor. The Guardian newspaper recently reported findings from the China Labor Watch that Foxconn drafted in hundreds of school children as "interns" to produce Amazon's Alexa device. According to the report, the school children worked overnight shifts and overtime to ensure the device's success. The report raised questions of Amazon's business ethics and social responsibility. This paper looks at the dynamics of companies being ethically responsible for their suppliers in other countries. Also, it discusses the circumstances that Amazon is ethically responsible for this practice by using ethical theories.
Companies Ethical Responsibilities for Labor Practices
In the digital age, companies have to be ethically responsible for their labor practices. Purchasing and supply management professionals are required to show that their supply chains take into account ethical and social responsibility issues. The Chartered Institute of Purchasing & Supply (CIPS) has an ethical code that requires members to have principles of integrity, professionalism, high standards, ideal use of resources, as well as compliance with legal and other obligations. Purchasing and supply management professionals should have a thorough understanding of the principles laid out by the Chartered Institute of Purchasing & Supply (CIPS). This section outlines arguments for and against companies being ethically responsible for the labor practices of suppliers in other countries.
The Argument for Companies to be Ethically Responsible for Labor Practices of Suppliers Abroad
Proponents argue that companies should be ethically responsible for the labor practices of suppliers in other countries. Hartmann and Moeller (2014, p.1) talked about the concept of chain liability. According to the authors, consumers hold firms responsible for the unsustainable behavior of their upstream partners, which creates a chain liability effect. Due to the chain liability notion, companies should be ethically responsible because, in the eyes of the consumer, they are equally liable for the ethical violation. Mintz (2012, p.1) asserted that for a long time, Foxconn in China has been criticized for oppressive working conditions. After a while, Foxconn increased worker pay from 16% to 25%. Foxconn's actions can be looked at it the context of capitalism. Karl Marx created a system of capitalism whereby as a nation develops, the wages and people's lives get better. Due to this, companies doing business abroad should be responsible for the labor practices of their supplier companies while recognizing the interests of the stakeholders.
The act utilitarianism approach can be useful in providing insights on why companies should be ethically responsible for the labor practices of their suppliers in other countries. A company usually enforces ethically sustainable practices to its suppliers through collaborative approaches. Khan, Qianli, and Zhang, (2017, p.93) stated that companies with their supply chains should have a utilitarian friendship and improve the utility of their supply chain. Since the company with its supply chains work collaboratively, it should assume greater responsibility at all levels of production in their supplier factories.
A virtue ethics analysis can be used to support this argument. Khan, et al. (2017, p.95) mentioned that collaboration with supply chain partners is important to fulfill customer's requirements. They talked about Aristotle's approach of virtue ethics by stating that means are morally determined through the end to which they aim. The means for entering into a supply chain partnership should be evaluated ethically beforehand. Companies have to practice virtue ethics by working collaboratively with their suppliers in other countries and having shared ethical responsibilities.
The Argument Against Companies to be Ethically Responsible for Labor Practices of Suppliers Abroad
Others might argue that companies should not be ethically responsible for the labor practices of suppliers in other countries. Their argument touches on limited liability where they contend that a supply chain store is not an extension of the company and should not, therefore, hold any responsibility for their actions. Amaeshi, Osuji, and Nnodim (2008, p.11) stated that according to those who oppose it, suppliers, as firms, should bear the responsibility of their actions. The critic's argument is based on ethical relativism where they believe that if suppliers are not based in a home country, then they should not be responsible for the actions of the main company.
Despite these arguments, ethical imperialism applies here. Ethical imperialism requires people to do everything the way they do it at home. Because of imperialism, it would be fair for companies to be ethically responsible for the labor practices of their suppliers in other countries. Without a doubt, capitalism goes hand in hand with imperialism in the wake of globalization. This is evident with the exploitation of labor for the benefit of the creation of wealth in the Foxconn factory in China (Chamberlain, G. 2019, p.1).
Amazon's Ethical Responsibility
Amazon is ethically responsible for the labor practices of its supplier company Foxconn. Control as a limitation of corporate liability and corporate group will be used to substantiate this argument. In control as a limitation of the corporate liability, the relationship between Amazon and its supplier Foxconn can be considered a subsidiary business relationship. Amaeshi, et al. (2008, p.11) stated that corporate control can exist when the management if one corporation can be appointed or removed by the management of another corporation. Because Amazon has corporate control over Foxconn, it is equally ethically responsible for Foxconn's labor practices because of the chain liability effect. Amaeshi, et al. (2008, p.11) emphasized that using corporate control as a factor in responsibility, a corporation does not avoid responsibility where such responsibility is assumed. Corporate liability can be viewed from the lens of pluralism in a way that a consensus on basic principles should be reached by both Amazon and Foxconn and if either violates those principles, Amazon takes a shared responsibility.
Concerning corporate groups, it is known that corporations own shares in other corporations. Due to this, since Amazon owns shares in Foxconn, it should be ethically responsible for the labor practices of Foxconn. Amaeshi, et al. (2008, p.11) affirmed that it is vital to categorize corporate groups as forms of businesses. They added that subsidiaries are bound to the parent company. Considering the authors' views, Amazon should be ethically responsible for the labor practices of Foxconn because they are subsidiaries and have the power of them. Due to this power, it is expected for Amazon to assume responsibility for the practices of Foxconn. Without a doubt, sharing ethical responsibilities would serve as a moral minimum. Amazon's power over Foxconn takes a deontological perspective. In the deontological perspective, Amazon enforced principles of responsible business practice from an ethical standpoint.
Considering the perspectives discussed in the text, it is clear that Foxconn is most responsible for the issue of illegally employing school children in their factory. As a subsidiary company, it ought to have followed the principles laid out by the parent company, Amazon. Foxconn should have adhered to the Chinese labor laws to avoid violations of labor practices. Foxconn has frequently made headlines due to their working conditions. Corrections need to be rectified to ensure mutual partnerships.
Chamberlain, G 2019, Schoolchildren in China work overnight to produce Amazon Alexa devices. The Guardian. Retrieved from https://www.theguardian.com/global-development/2019/aug/08/schoolchildren-in-china-work-overnight-to-produce-amazon-alexa-devices
Chartered Institute of Purchasing & Supply, n.d. Accessed from https://www.cips.org/en/
Hartmann, J, & Moeller, S 2014. Chain liability in multitier supply chains? Responsibility attributions for unsustainable supplier behavior. Journal of Operations Management, Volume 32, Issue 5, Pages 281-294
Khan, S, Qianli, D, & Zhang, Y 2017. Collaboration in the Supply Chain Management: A Virtue-Ethics Analysis. American Journal of Traffic and Transportation Engineering. Vol. 2, No. 5, pp. 87-96. doi: 10.11648/j.ajtte.20170205.15
Mintz, S, 2012. Social Responsibilities of a U.S. Company Doing Business Abroad. Accessed from https://www.ethicssage.com/2012/05/social-responsibilities-of-a-us-company-doing-business-abroad.html
Amaeshi, K, Nnodim, P & Osuji, O 2008, 'Corporate Social Responsibility in Supply Chains of Global Brands: A Boundaryless Responsibility? Clarifications, Exceptions and Implications', Journal of Business Ethics, vol. 81, no. 1, pp. 223-234. https://doi.org/10.1007/s10551-007-9490-5
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