Global Brands and Labour in Developing Countries

This is a grounded theory study about unethical labour practices associated with global brands' operations in developing countries. The research paper develops a substantive theory or at least a set of propositions explaining the wider contextual underpinnings of unethical labour practices deriving from the operations of global brand companies. The grounded theory method chosen to undertake the research necessitates theoretical sampling of global brand companies that can substantiate the phenomenon in question. Data are obtained using tertiary literature, and analysis is performed using the constant comparative method of grounded theory approach.

The study methodology contributes in the development of grounded theory model of unethical labour practices associated with global brand companies in developing countries. Findings of the research paper refine understanding of the wider contextual issues surrounding abuse of labour often associated with the major global brand companies. Keywords: Global brands; Consumerism; Unethical labour practices; Developing Countries; Grounded Theory.

1.1 Problem Statement Through the World Trade Organization and regional and bilateral trade agreements, corporations now enjoy global protection for many newly introduced rights (Raworth 2005). As investors, the same companies are legally protected against a wide range of governments' actions (Wright 2006). Workers' rights have moved in the opposite direction (Somavia 2006; Raworth 2005). The result is that corporate rights are becoming ever stronger, while poor people's rights and protections at work are being weakened (Raworth 2005). One cause of such precarious conditions is the new business model that has emerged under globalisation. Global brand companies have positioned themselves as powerful gatekeepers between the world's consumers and producers.

Their global supply chains stretch from the supermarket shelves and clothes rails in the world's major shopping centres to the fruit and vegetable farms of Latin America and Africa and the garment factories of South Asia and China. Globalisation has hugely strengthened the negotiating hand global brand companies (Raworth 2005). New technologies, trade liberalisation, and capital mobility have dramatically opened up the number of countries and producers from which they can source their products, creating a growing number of producers vying for a place in their supply chains. At the same time, international mergers and acquisitions and aggressive pricing strategies have concentrated market power in the hands of a few major retailers, now building international empires (Raworth 2005).

These companies have tremendous power in their negotiations with producers and they use that power to push the costs and risks of business down the supply chain. Their business model, focused on maximising returns for shareholders, demands increasing flexibility through ‘just-in-time' delivery, but tighter control over inputs and standards, and ever-lower prices.

Though a host of factors contribute to labour abuse, one root cause is the pressures of global brand companies' own supply-chain purchasing practices, undermining the very labour standards that they claim to support. The foregoing premise, as simplistic as it is, yields limited understanding as to the wider contextual underpinnings favouring abuse of labour in developing countries. It is against this backdrop that the current paper provides a grounded theory model of unethical labour practices associated with global brands in developing countries. 1.2 Research Questions

To move forward the investigation, a main research question in figure 1 (with sub-research questions) guides the theoretical constructs of this paper: Figure 1: Research questions for this paper What are the contextual underpinnings for unethical labour practices associated with global brands in developing countries? iWhat factors induce the environment for unethical labour practices? iiWhat are these unethical labour practices?

iiiWhich global brands have been/are associated with unethical labour practices in developing countries?

1.3 Definition of Terms In the interest of clarity, the term—global brand be defined to eliminate any ambiguity and misconstruction. Global Brands: These are brands that are available, well known and highly regarded throughout the world's market (Johansson 2006). This includes such brands as Coca Cola, McDonalds, Microsoft, Nestle, Nike, Mercedes, Sony, and Nokia. Also, there are other organisations that have the stature of global brands yet operate a limited brand image. More often these are multinational corporations such as Wal-Mart, Gap, Tesco, and General Electric. 2.1 Methodology

The theoretical framework chosen for this paper is that of grounded theory. Grounded theory is a qualitative inductive approach, through which explanatory theory is derived from a close consideration of the data (Strauss & Corbin 1990, pp. 20–23). Data systematically obtained and analysed is allowed to shed substantive light about the phenomenon investigated (Creswell 1998, p. 98). Its intent is to further an understanding of social phenomena. The current research refrains from testing any hypothesis; rather it collects the data and allows the data to ‘tell the story'.

The grounded theory process allows for emphasis on identifying concepts from documents, for example. Generated concepts and their relationships, explain and/interpret variations in the substantive area under study (Glaser 1992, p. 16). The outcome is the development of theoretical formulations and propositions through the agency of rigorous pattern of analysis (Glaser 1992; Seibold 2002; Douglas 2003). Consequently, the research questions formulated are framed within with the knowledge that grounded theory particularly orientates towards eliciting improved understanding of theoretical conceptualisations of processes of social interactivity (Douglas 2003; Creswell 1998).

Put simply, grounded theory provides the researcher with an explanatory framework to understand the phenomenon—unethical labour practices—associated with global brands' operations in developing countries. The theoretical implications of the current research paper are then presented as propositions. Constraints of the said methodology are also discussed at the end of this paper. 2.2 Data Collection

Secondary data is mainly used in this paper, yet data collection is directed by theoretical sampling (Douglas 2003; Davidson 2002; Creswell 1998). That is a homogenous sample is selected to explain the phenomenon under study. In other words, only global brands associated with unethical labour practices in developing countries are sampled for this paper. In the early stages, the researcher used the open sampling methods of identifying companies and documents. In later phases, a systematic relational or variational sampling is employed with the objective of locating data that either confirms the relationships between categories, or limits their applicability (Davidson 2002).

The final phase involves discriminate sampling, (Davidson 2002; Creswell 1998) which consists of the deliberate and directed selection of additional companies or documents to verify the core category and the theory as a whole, as well as to compensate for other, less developed categories. 2.3 Data Analysis

Data analysis is conducted through the constant comparative method in which every piece of data is compared with every other piece. By virtue of grounded theory method, data is analysed through open coding, axial coding and selective coding (Douglas 2003; Davidson 2002). 3.1 Presentation of Findings

The findings are arranged into 9 categories descended from the data collected. Each of these categories is a cluster theme which captures an important explanatory aspect or qualitative dimension of the overall phenomenon of interest: unethical labour practices associated with global brands in developing countries. Figure 3.1: Author's own; Categories & concepts emerging from sampled literature

CategoryProperties 1Competitive advantage— 2Ethical negligence— 3Consumers' expectationFalling prices 4Shareholders' expectationsAdded value 5Weak national legislations— 6DestitutionSurvival 7Unduly acceptance— 8Undesirable outcomesHealth degradation, family unit breakdown, sexual harassment, & poverty 9Unethical labour practices Low wages, long working hours, intimidations, insecure contracts & child labouring The naming of the categories is arbitrary. In each case, it represents an attempt by the researcher to capture and imply the ‘connecting logic' which ties together the various concepts. Although the categories and their associated properties may be somewhat ambiguous and overlapping in meaning, as they stand, it is assumed that each is sufficiently relevant to its category to offer a helpful and valid base for the discussion and subsequent presentation of the grounded theory.

More so, the categories are grounded in their respective data and the real meaning of a category is dependent upon an understanding and appreciation of its defining concepts and properties. Regrettably, the word limitation imposed for this paper restricts the researcher's latitude to richly substantiate the emerging categories in line with the tenets of grounded theory. To overcome this restriction, the findings substantiation and analysis are merged together in the ensuing section.

4.1 Data Analysis, Grounded Theory Model Presentation & Propositions Derived from the avalanche of tertiary literature studied, the grounded theory model of unethical labour practices associated with global brand companies in developing countries is presented thus: Figure 4.1: Author's own; Grounded Theory Model of Unethical Labour Practices associated with Global Brands

Phenomenon In the grounded theory model, a phenomenon is defined as ‘the central idea, event, happening, incident about which a set of actions or interactions are directed at managing, handling, or to which the set of actions is related' (Strauss and Corbin, 1990, p. 96). In this regard, the abuse of labour in developing countries is the phenomenon in focus, brought about by the causal conditions.

The central phenomenon is conceptualised as low wages, low working hours, intimidations, insecure contracts and child labouring; and they came about as a results of the operational activities of some of known global brands. Nike, which for years denied claims of worker exploitation, acknowledged that some of the factories that made its products had harassed workers and forced them to work overtime, and had also used child labour (Mercury 2005). Similarly, Cadbury Schweppes admitted the alleged use of enforced child labour in cocoa farms in West Africa (particularly the Côte d'Ivoire) five years ago. More so, investigation reveals that majority of the workers whose efforts contribute to the growth of these global brands have insecure contracts (Raworth 2005; Mercury 2005).

This then results to the lack of protections and benefits – such as limits on overtime, rest days, sick leave, accident cover, and maternity leave – that are invaluable for women in supporting their families. For instance, according an Oxfam report (2006), in Morocco, women in one Tangier garment factory put in around 90 hours of overtime in July 2003. But according to their employer, the extra hours were simply part of the workers' obligation to meet their targets, so did not count as official overtime. At the end of the month the women received only 50 to 60 per cent of their rightful earnings as a result. Proposition 1: Global brands operating in developing countries are likely to commit unethical labour practices. Causal Conditions

Causal conditions refer to ‘the events or incidents that lead to the occurrence or development of a phenomenon' (Strauss and Corbin, 1990, p. 100). Causal conditions emerging from the current investigation, which led to the unethical labour practices, are competitive advantage and ethical negligence on the part of global brand companies. Competitive Advantage: Contributing factors to such precarious conditions are the new business models that have emerged under globalisation.

One of such business model is offshore outsourcing wherein the global brands, driven by cost cut policy, source cheaper production offshore, majority of which is from developing countries. Wal-Mart, the world's biggest retailer, has driven this model, buying products from 65,000 suppliers worldwide and selling to over 138 million consumers every week through its 1,300 stores in 10 countries (Raworth 2005).

Competitive advantage that these global brands gained through falling production cost, lower sales prices, just-in-time product delivery and above all strong brand recognition comes at the expense of the enduring, harsh labour practices that workers in developing country go through. Ethical Negligence: Investigation reveals a weakening corporate social responsibility (CSR) of the global brand companies operating in developing countries. The inscription of adherence to good labour practices in their CSR in some cases are mere window dressing as the conditions of work for employees at the lower stratum of the supply chain remain precarious.

The footwear company Nike, in a shift-of-blame tactic, attributed the deplorable working conditions to its partner-producers who hire these workers. The local producers in turn, attempting to fend off market pressures of squeezing profit margins pushed down by the global brands, deprived the workers of their own share of the gains by their own right are entitled to. Hence, the CSR is systematically undermined at every level of the supply-chain. Proposition 2: Ethical labour negligence by global brands is likely to cause abuse of labour in developing countries. Proposition 3: Business model fuelled by the drive for competitive advantage is likely exploiting labour in developing countries at the expense of the latter. Intervening Conditions

Besides causal conditions are intervening conditions, which can be identified as moderating variables leveraging on the responsive strategies managers of the global brand companies adopt that sadly result to unethical labour practices in developing countries. Intervening conditions that influenced the causal conditions are—consumer and shareholder expectations. Consumer Expectations: Consumers have come to expect high quality and year-round availability at ‘value' prices. The global brands compete to capture their loyalty through new products, short fashion cycles, and price wars, and so increase their own market share. Shareholder Expectations: global brand companies face intense pressure from their shareholders to deliver added value (Raworth 2005).

They deliver those results by stripping out low-profit activities and minimising the cash used in running the business through offshore outsourcing. These intervening conditions have a clear impact on the causal conditions, which have a direct relationship with the unethical labour practices. Proposition 4: Global brand companies are likely to reward consumers and shareholders more than employees in developing countries working for the brands. Context

A context refers to ‘the specific set of properties that pertain to a phenomenon and the particular set of conditions within which the action strategies are taken to manage, handle, carry out, or respond to a specific phenomenon' (Strauss and Corbin, 1990, p. 96). In other words, these are sub-environmental factors which allow abuse of labour in developing countries to occur. This paper categorises these factors as destitution, and weak labour legislations. Destitution: The abuses are made possible given the deprived circumstances the workers including women and children find themselves. With the need to at least abate their tumultuous conditions, workers desperately succumb to the unduly systemic treatment meted out to them by the supply-chain of the global brands.

The workers are constrained to work at lower wages in order to overcome poverty. Rawoth (2005) noted: ‘There's a girl who's seven months pregnant working ten hours a day,' said one garment worker, ‘and as she has to make a lot of pieces per hour the employer doesn't let her go to the toilet. It's sheer torture for her, but she can't afford to lose her job.' Weak labour legislations: a far greater number of governments simply fail to enforce their labour laws (Raworth 2005; ILO 2005). Governments in many countries are actively eroding labour rights by encouraging flexible labour, often on the mistaken assumption that it is necessary in order to attract foreign investment and fuel growth (Raworth 2005).

The situation is worsened when employers' tactics of intimidation, firing, and physical violence are exacerbated when governments fail to step in. Proposition 5: The governments of developing countries' failure to enforce labour laws are likely to encourage unethical labour practices. Coping Strategies

Strategies refer to the method the agent(s) ‘manage, handle, carry out, or respond to a phenomenon under a specific set of perceived conditions' (Strauss and Corbin, 1990, p. 97). In the midst of these circumstances of deprivation and helplessness, the workers face the lone choice of acceptance. This unduly acceptance is understandably brought on by causal, context, intervening and phenomenon variables already discussed above. Proposition 6: Overwhelming power of global brands' supply-chain is likely to coerce employees in developing countries working for these global brands to unduly condone ethical labour practices Consequences

Strauss and Corbin (1990) refer to consequences that are outcomes or results of actions taken for handling, managing, or responding to a phenomenon under a specific set of perceived conditions. In respect to the current study, health degradation, family unit breakdown, sexual harassment and poverty are the consequential variables from the coping strategy of unduly acceptance.

5.1 Summary of Findings What are the contextual underpinnings for unethical labour practices in developing countries associated with global brands?

Section 4.1 provides a comprehensive theoretical understanding for the main research question. In fact, section 4.1 maps out the wider contextual issues that instigate unethical labour practices; how and why they are instigated. What factors induce the environment for unethical labour practices? In the review of literature, the answer to this question is often skewed towards ethical negligence on the part of the global brands. However, the current research paper in its employment of grounded theory approach, demonstrates that the environmental factors are wider than sometimes documented in tertiary literature. The inducing factors include: •Workers' destitution circumstances

•Weak labour legislations in developing countries •Global brands' ethical negligence •Unethical labour practices (breeds further unethical labour practices) Which global brands have been/are associated with unethical labour practices in developing countries? CompaniesCountry of alleged labour abuse

Cadbury SchweppesGhana NikeVietnam, Pakistan, Thailand, China Wal-MartKenya, China GapEl Salvador Levi's StraussMexico Coca ColaColumbia

Constraints Caution is exercised throughout the conduct of the research paper to ensure that it lives up to its intended objectives. Nonetheless, some methodological constraints—that do not discredit the research paper—but should be recognised. A grounded theory approach is deployed to develop propositions from the collected data and analysed findings. The research collects data across broad categories to develop propositions that could lead to the development of new or refinement of existing theories.

A grounded theory approach may need to be replicated a number of times before any clear theoretical framework may emerge. By using a grounded theory approach, the intention is not to link to existing theories. The nature of the grounded theory approach lends itself to exploratory research and this investigation is not designed to establish generalised findings. The data analysis, while producing preliminary findings, led to the development of a series of propositions, which should form the basis of future empirical research.

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