Research for Public Relations: Is Transparency Good for Business?

Does academic research matter to public relations practitioners? Do not be afraid. Come into the light with me, a non-PhD practitioner who finds value in academic research. In the weeks ahead, I will seek out quality academic and other research, drawing insights for communications practitioners.

When activists target an organization, typically the corporate communications function is on point for a response. The challenge is to understand the gap between activist demands and corporate culture, navigating between the two to change the trajectory of the issue. All too often, however, corporate leadership reacts to the critics without seeing opportunity for value in the criticism.

Such was the case with calls for transparency in the sneaker and apparel businesses. Dr. David J. Doorey, a Professor of Employment & Labour Law in the School of Human Resource Management at York University in Toronto, has written an accessible case study of the evolution of transparency at Nike and Levi-Strauss in the face of activist challenges to business and industry strategies.  Doorey examines whether calls for transparency – expressed as public reporting of specific business decisions and practices – contributed to improved management of the supply chain and labor practices.

This article can help communications practitioners become familiar with the vocabulary of transparency, as well as the likely arguments against it.

Doorey examines the path followed by Nike and Levi-Strauss as they faced similar pressures to examine, disclose and improve workplace practices in factories with which they contracted. He covers who exerted pressure on each company, and how the company responded over time as the issue – and society’s expectations – changed.

The Nike case is well known. In the 1990s students working with the trade union UNITE began investigating the source of university-branded clothing to examine the working conditions of the factories that produced the apparel. The brands targeted were reluctant to release information on their contracts, citing the relationships as proprietary. A student movement (United Students Against Sweatshops) was launched with the intention of using the market power of students to force the companies to examine workplace conditions at factories they owned or with which they contracted.

The article walks us through the evolution of the movement and of the corporations that were the target of the activists. After conceding that “the Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse,” Phil Knight of Nike announced a transformation of a business model built on outsourcing to factories for which it took no responsibility to tiered system of monitoring, compliance and reporting.

Levi-Strauss had branded itself as a good employer with a philosophy of fair treatment of employees and standards that were well beyond the minimum. In 1990 it shut down a factory in Texas and laid off 1,000 employees in San Antonio while moving jobs to Costa Rica. The company faced two issues – outrage from laid-off US employees and lack of control over the working conditions in its offshore factories. Central to the challenge was its “fundamental aversion to transparency.”

Eventually both companies moved to full factory disclosure, but not without reverses and challenges. Doorey lays out the learning for us, including the steps that were essential before executives were comfortable with voluntary disclosure. A key conclusion of the article is that the companies had to build confidence in the systems they created to enable factory disclosure. The systems they developed weren’t perfect out of the gate. Issues such as decentralization presented significant obstacles to creating the right monitoring processes but ultimately are essential if a company expects to understand what the working conditions in its factories actually are.

Doorey concludes that the efforts of activists to create transparent supply chains were successful in moving the companies to create tracking and monitoring systems. We can conclude that such efforts will likely continue. Companies that have no idea which factories supply their products are unlikely to be prepared to respond reactively nor are they able to address potential problems proactively. This article will help the practitioner engaged in scenario planning to predict the criticism the company may face and more importantly the steps it should take before the criticism becomes public. In our technology-enabled world, one assumes every large company is listening to its stakeholders.

Doorey also debunks one rationale for resistance to factory disclosure – that the names of supplier factories are “proprietary” and thus should not be released. He shows how easy it is for competitors – and activists – to discover the names of suppliers. Doorey suggests there is short-term value in changing perceptions and long-term value in fostering industry collaboration and information-sharing on factory conditions, especially in industries where multiple brands contract with the same factories. He also suggests that a gradual move to disclosure is likely to be more successful, and that the first movers in an industry should support mandatory disclosure to ensure that companies that do not monitor their supply chain cannot hide behind the leaders in transparency.

The Transparent Supply Chain: From Resistance to Implementation at Nike and Levi-Strauss (Journal of Business Ethics, 2011, 103:587-603), by David J. Doorey, School of Human Resource Management, York University, Toronto.  To buy the article: www.springer.com/social+sciences/applied+ethics/journal/10551.

Linda Locke subscribes to a number of academic journals from which she draws inspiration and concepts for clients of her corporate reputation consulting practice. If you wish to suggest a research article for her review, contact her at Linda.Locke@ReputareConsulting.com, or DM her on Twitter @Reputationista.