Abstract
Legitimacy threatening incidents (such as the use of child labour, human trafficking, factory collapses and fires, and poor health and safety standards) within MNCs’ supply chains operating in developing nations have drawn global criticism. The purpose of this chapter is to provide an overview of social incidents within supply chains which can threaten legitimacy, and which corporate managers and auditors must not overlook. In particular, some specific examples of major social incidents within supply chains, which have created significant concerns for MNCs as well as the global community, will be discussed.
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- 1.
A large number of computer manufacturing (and related products) corporations have shifted their production locations to India and China.
- 2.
Many US corporations have their supply chain operations in mining in the post-conflict African zones and Asia.
- 3.
Every year, the government of Uzbekistan reportedly mobilises hundreds of thousands of children—many from 10 to 15 years old—for the manual harvesting of cotton (Domini 2008).
- 4.
Calvert Investments is a leader in Sustainable and Responsible Investments (SRI) in the USA.
- 5.
In one early study Custers (1997) documented the exploitation of child workers in the supply factories of MNCs within developing countries. Whether a child was younger or older than 14 years of age, he or she was expected to work for the same number of hours in a factory as their male and female adult counterparts. They were forced to work overtime amounting to 100 h per month (Custers 1997). Further, the monthly wages paid to child labourers by a factory owner is insufficient to meet their food demands. Child workers have been paid between Tk 200 and Tk 300 per month (US$5–7) (Custers 1997).
- 6.
A right to adequate food, clothing, and housing.
- 7.
The prevalence of low wages is the principal reason for the relocation of garment production to Bangladesh. The wage of a worker in a Bangladeshi factory is roughly 3 % of the wages of a worker in an American garment factory (Custers 1997, p. 141). Bangladeshi wages are also much lower than those in ‘tiger’ countries like Hong Kong and South Korea (Custers 1997); in fact, they are at the bottom end of wages in Asia (Custers 1997, p. 141). Another study (an ILO study) on labour restructuring estimated that the average annual wage for clothing workers is US$8,700, although wages range from more than $30,000 a year in Denmark to $57 a year in Mozambique (AccountAbility, Business for Social Responsibility and World Bank 2004).
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Islam, M.A. (2015). Legitimacy Threats and Stakeholder Concerns Within Supply Chains. In: Social Compliance Accounting. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-09997-2_5
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