NIKE Inc.s Corporate Social Responsibility - Case Study Example

NIKE Inc.’s Corporate Social Responsibility (CSR) Executive Summary NIKE, Inc. has shown exemplary commitment to Corporate Social Responsibility (CSR) in nearly all countries where it has its subsidiaries. Although private contractors run the subsidiaries of the company, CSR policy of NIKE Inc. is consistent across the globe. This paper explores the Corporate Social Responsibility (CSR) of NIKE Inc. from a global context. Besides, defining the Corporate Social Responsibility of NIKE Inc., the paper also focuses on the six core characteristics of CSR as they apply to the company, including Voluntariness, Multiple stakeholder orientation, Practices and Values, Beyond philanthropy, Alignment of social and economic activities, and Internalizing or managing externalities. The four primary theoretical concepts of Corporate Social Responsibility (CSR) are evident in the paper, particularly in line with the activities of NIKE Inc. NIKE Inc. uses the three key strategic approaches to fulfil its community responsibilities. These strategic approaches include the Pyramid of CSR, Three-Domain Model of CSR, and theory of stakeholder Identification. The paper concludes by highlighting how Continuous improvement, Comparability, Evolution, Completeness, Disclosure, Externally verified, and Evolution have helped NIKE Inc. achieve its CSR objectives. The paper recommends that NIKE Inc. should initiate social welfare enhancement, environmental sustainability, and employee attraction/retaining as key areas for developing the company’s CSR strategy. Introduction Corporate Social Responsibility (CSR) is a technique through which companies attempt to regulate themselves in the way they operate by following international standards, legal ethics, and even doing social good that transcend the interest of such companies. Companies can engage in Corporate Social Responsibility (CSR) either by undertaking a number of projects that help the communities directly or by taking care of the environment through waste reduction and pollution control (Contreras 2004, p.77). Various organizations have different dimensions of CSR depending on the national and organizational context. Nonetheless, it is worth noting that Corporate Social responsibility (CSR) comes with a number of benefits not only to the immediate communities around the companies, but also to the companies themselves. Several dimensions of Corporate Social responsibility (CSR) exist, particularly when one looks at the basic concepts and theories of CSR as they relate to organizations (Mullerat 2010, p. 110). NIKE Inc.’s Corporate Social responsibility (CSR) NIKE, Inc. is one of the many multinationals that have embraced Corporate Social responsibility (CSR) over the years and all the six characteristics of CSR are evident in the company. Since its inception, NIKE Inc. has participated actively in a number of Corporate Social responsibility (CSR) projects ranging from health to environmental projects. In essence, NIKE, Inc. understands that any of its CSR initiatives must comply with the law of the land in addition to being non-profitable. Ethics is an essential component of Corporate Social responsibility (CSR), especially in a footwear and apparels company such as NIKE, Inc. With a well-coordinated global supply chain, NIKE, Inc. has always integrated all the six characters of CSR in its global initiatives (Soule 2009, p. 116). Owing to the fact that NIKE, Inc. is the leading producer and distributor of sportswear in the world, the company recognizes the responsibility that it has, particularly social responsibility. The company has an excellent stakeholder management strategy in which sense the customers are the most valued internal shareholders that the company has. In this regard, NIKE, Inc. has continued to inculcate innovation and motivation in all its products in order to promote customer satisfactions. Besides, NIKE, Inc. is committed to sustainability in its operations in the apparel and footwear industry. The footwear giant has established a comprehensive plan of ensuring sustainability mainly through the formulation of sustainable business models and production of sustainable goods. The vision statement of NIKE, Inc. is geared towards sustainability by striking a balance between people, planet, and profits (Contreras 2004, p.77). Six Characteristics of NIKE Inc.’s Corporate Social responsibility Although Corporate Social responsibility (CSR) is largely seen as an acceptable practice by corporations, it is worth noting that there is a level to which an initiative qualities as CSR. Not all non-profit activities that a company engages in meet the definition of CSR. It means that a particular initiative by an organization, whether by a multinational or not, must meet certain characteristics in order to satisfy the definition of corporate Social Responsibility (CSR). This section looks at the six Characteristics of NIKE, Inc.’s Corporate Social Responsibility (CSR) both in national and organizational contexts (Hancock 2005, p. 33). Voluntariness All Corporate Social Responsibility (CSR) are voluntary in nature in the sense that they do not need any policy measures to guide them. CSR initiatives usually go beyond the ethical, corporate, and legal requirements because they engage in some of the activities that have nothing to do with the company. The company must learn that CSR means going beyond the corporate interest in order to deliver social good to the people. No regulation exists to enforce the participation by companies in Corporate Social Responsibility (CSR) projects. Instead, the companies find it within themselves to look into community, stakeholder, and environmental interests. A classic example of voluntary nature of CSR was evident when NIKE Inc. announced grant availability and when the company called on the U.S. schools to inculcate and observe regular physical education classes (Hancock 2005, p. 33). Multiple stakeholder orientation NIKE Inc. extends is Corporate Social Responsibility (CSR) beyond the normal standards of attending to community interests in order to include stakeholder interests. Fundamentally, the company has internal and external stakeholders to take care of (Banerjee 2007, p. 49). The internal stakeholders include the shareholders and the society while the external stakeholders include the suppliers, customers, government, and creditors. Stakeholder interest is an essential component of CSR because of the power, urgency, and legitimacy of stakeholders. By awarding its best performing supplier in terms of sustainability, NIKE Inc. is aware of stakeholder importance (Mullerat 2010, p. 110). Practices and Values When it comes to values and practices, it is worth noting that NIKE Inc. has a strong customer-centric philosophy that fortifies its CSR practices. In virtually every Corporate Social Responsibility affair that NIKE Inc. engages in, the core values of the company set in. For instance, NIKE Inc. strives to develop people through the provision of education, health, and financial support. Furthermore, NIKE Inc. believes in a sustainable environment and perhaps this is the reason why it continues to sponsor environment and sustainability projects in every way it can. This value is inculcated in all the CSR activities of NIKE Inc. all over the world (PrašNikar 2006, pp. 327-340). Beyond philanthropy One of NIKE Inc. key objectives is to develop the people and the best way of accomplishing this aim is to extend support to the less fortunate. There is no better way of helping the less fortunate and the vulnerable within the society than through engagement in Corporate Social Responsibility projects. NIKE Inc. has proved its worth and relevance over the years because it has initiated projects that help the community and the world in a number of aspects. In essence, NIKE Inc. has declared it major interest in growing schools kids to become better citizens in future. For instance, the footwear designer granted Hillsboro Schools with $200,000 in addition to urging youth to participate actively in development projects (Soule 2009, p. 116). Alignment of social and economic activities In as much as the NIKE Inc. would wish to extend social good beyond the legal and corporate requirement, it is critical for the footwear designer not to compromise its profits ate the expense of Corporate Social responsibility. Corporate Social responsibility is indeed a good thing, but only if a balance exists between maintain corporate affairs and promoting social good. Over the years, the company has grown to be the largest footwear designer, marketer, manufacturer, and distributor in the world with a global clientele. Operating in more than one hundred countries, NIKE Inc. has always ensured that it continues to be profitable in spite of the numerous CSR initiatives that it has undertaken. Sustainability is a key factor in all the operations of NIKE Inc., particularly when it comes to innovations, governance, and reporting (Idowu & Louche 2011, p. 143). Internalizing or managing externalities NIKE Inc. is alive to the fact that all its activities have both positive and negative consequences, particularly to third parties. Such externalities may hinder the footwear designer from achieving its overall objective, particularly if it does not manage them well. In this regard, NIKE Inc. places exceptional emphasis on sustainability in order to limit the negative effects that its activities may have on the environment and largely the society. Some of the key CSR commitments of NIKE Inc. include advertising responsibly, sustainable innovation, good governance, and embracing the highest levels of business ethics (Idowu, Frederiksen, Mermod, & Nielsen 2015, p. 156). CSR Theories as they apply to NIKE Inc. Instrumental Theories NIKE Inc. aim is to achieve its financial objectives by engaging in social activities. It means that the firm’s engagement in CSR does not only end at the social level but some level of profitability is attached to such initiatives. By involving its subsidiaries in activities of Corporate Social responsibility, NIKE Inc. is keen about profitability that may not be derived directly from such initiatives, but from the publicity and trust that the company gains as the ultimate price (Banerjee 2007, p. 49). The value that NIKE Inc. has placed on its shareholders is unmatched, considering that shareholder confidence is a primary factor when it comes to profitability of any business. NIKE Inc. engages its shareholders in all critical decision-making processes in addition to promoting accountability at all levels for its shareholders. The numerous altruistic activities that NIKE Inc. participates in through CSR act as platforms for the company to market itself both regionally and globally. In addition, customer-centric approach and sustainability have given NIKE Inc. a competitive advantage over its rivals (Mullerat 2010, p. 110). Political Theories This theory deals with the political performance of corporates as they go about their profit-making operations. Once can admit that, from a political perspective, NIKE Inc. has employed its corporate power responsibly to drive certain political goals. In essence, NIKE Inc. recognizes itself not only as a separate legal entity, but also as a corporate citizen. The giant footwear distributor embraces corporate citizenship in the sense that it recognizes and abides by the laws of host countries. In addition, NIKE Inc. attempts to customize its footwear products according to the unique tastes of the local citizenry, who make a majority of its customers, and the prevailing sports (Idowu & Louche 2011, p. 143). When it comes to corporate constitutionalism, it is worth noting that NIKE Inc. has only been able to undertake such massive social responsibilities because of the enormous business power that it has gained over the years. Had it not been for the profitability and stability that the global footwear designer has enjoyed over the years, then it would have less political and business power to initiate and influence social responsibilities. Besides, integrative social contract theory dictates that a company with global presence such as NIKE Inc. ought to conduct a Corporate Social Responsibility Audit (Mullerat 2005, pp. 545-547). Integrative Theories (Social Demands) Although the core objective of NIKE Inc. is purely profit making, the company has gone out of its way to incorporate social demands in its operations. Stakeholder management is perhaps of the most critical social demands that NIKE Inc. strives to perfect. NIKE Inc. has both internal and external stakeholders to take care of. The management of stakeholders is a fundamental business operation that the company takes care of through its agencies and departments scattered across the globe. Perhaps it is worth noting that customers are the greatest internal stakeholders that NIKE Inc. has (Banerjee 2007, p. 49). The social legitimacy that NIKE Inc. has gained has arisen from its corporate social performance. The numerous CSR that the company has initiated has catapulted the company’s social status, particularly in countries where citizens have felt the positive impacts of such CSR activities. Furthermore, NIKE Inc. has successfully fulfilled its public responsibilities by abiding by all the business regulations and policies. The company has always maintained a healthy relationship with host countries by obeying the law of the land. When it comes to issues management, NIKE Inc. has clear stipulations in its company policies about whom, how, and when to deal with political, corporate, and social issues (Soule 2009, p. 116). Ethical Theories NIKE Inc. vision is driven by upholding ethical values in sustainable production in the sense that it aims at making the world better in order for the society to enjoy. Through its numerous Corporate Social responsibility projects, NIKE Inc. aim has been to help in the alleviation of poverty and support efforts towards sustainable development for a better world. Indeed, NIKE Inc. is committed to delivering services in an efficient manner for the common good. Ethical standards demand that the corporate world should embrace sustainability in all their operations and NIKE Inc. has taken the lead as far as the athletic footwear industry is concerned. This virtue was evident when NIKE Inc. awarded its suppliers for embracing sustainability (PrašNikar 2006, pp. 327-340). Moreover, NIKE Inc. upholds universal rights in every country where it has presence. All the subsidiaries of the company uphold the highest ethical standards in regards to labour laws, human rights, and the environment. In an effort to enhance collaboration and accountability in regards to the labour conditions within the footwear and apparels industry, the company published the names of leading contract factories across the globe (Mullerat 2005, pp. 545-547). NIKE Inc.’s strategic approaches to fulfilling community responsibilities Pyramid of CSR NIKE Inc. pyramid of CSR gives the economic, ethical, and legal perspectives of the company in that order. The philanthropic dimension comes after all the three dimensions have been satisfied (Freeman, R E 2010, p. 235). Fundamentally, NIKE Inc. has fulfilled its economic obligation in the sense that it has stayed profitable over the years hence it can accommodate social responsibilities. Additionally, the giant footwear designer has obeyed the law in all its operation because legal obligation is a requisite when initiating CSR projects. The projects that NIKE Inc. has accomplished have all been legally sound. When it comes to the ethical dimension, NIKE Inc. has practiced good stakeholder management, human rights protection, and sustainable development. Therefore, NIKE Inc. deserves ever right to engage itself in CSR projects in any part of the world it desires to fulfil community responsibilities, particularly because the company has fulfilled the necessary CSR requirements (Segerlund 2010, p. 110). Three-Domain Model of CSR In order to fulfil is community responsibilities, NIKE Inc. has applied a three-pronged approach in its Corporate Social Responsibility. The three key elements included in the approach are the ethical, legal, and economic factors. The firm could decide to go purely economic, purely legal, and purely ethical in its operation. Nonetheless, the integration of these strategic elements by the company places it in a much better position to deliver on its CSR projects. NIKE Inc. has instead adopted legal-ethical-economic dimension to its CSR projects, which is the most desirable (GöSsling 2011, pp. 36.40). Theory of stakeholder Identification and assessing their importance NIKE Inc. has mapped its stakeholders in order to identify and evaluate its stakeholders according to their importance. The stakeholders can be either internal or external and their level of importance, as portrayed by NIKE Inc. is heavily dependent on the power, urgency, and legitimacy of such stakeholders. In addition, NIKE Inc. has also evaluated its stakeholders in order to identify the most salient ones, who are currently are the stakeholders who appear to be definitive, dominant, and dependant (Idowu & Louche 2011, p. 143). Conclusion NIKE Inc. has continued to thrive because it embraces inclusivity by considering the opinions of both its internal and external stakeholders. Indeed, the company has evolved over the years by initiating various CSR projects all over the world and on a yearly basis. Perhaps one can cite NIKE Inc.’s succinct management systems and policies as being responsible for its success in fulfilling community responsibilities. Moreover, NIKE Inc. usually seeks external verification in the sense that it engages independent professionals to validate its CSR materials. Through constant audits and performance assessments, the company has been tracking its progress and it has been continually improving over the years. Perhaps formality and transparency as far as the disclosure of CSR information is concerned are responsible for the good global image that NIKE Inc. prides itself in (Mullerat 2010, p. 110). Recommendations 1. Besides Indonesia, China, and Vietnam, Nike Inc. should encourage its investor to venture into the Middle East and Far East market it order to increase revenue and customer base. Such countries may include Japan, UAE, Taiwan, and India (PrašNikar 2006, pp. 327-340). 2. Nike should direct its Indian subsidiary to look into workers welfare by paying the workers well in addition to improving their working conditions (Hancock 2005, p. 33). 3. Nike Inc. should abandon child labour, especially in countries such as India and China where child labour is prevalent (Segerlund 2010, p. 110). 4. Nike Inc. should review the price of its footwear products to match the economic conditions of the host countries instead of using a standard price for its products (Hancock 2005, p. 33). 5. Nike Inc. should embark on aggressive marketing and active involvement in CSR activities, considering that it major rivals such as Adidas and Fubu are remodelling their strategies (PrašNikar 2006, pp. 327-340). 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