occurred when Nike was heavily criticized for contracting its
production to Asian “sweatshops,” where workers were treated
very poorly. A widespread boycott of Nike products began and
Nike eventually responded by improving working conditions
and allowing independent monitors into its factories. The threat
of a loss of sales was so powerful that competing companies
Reebok and Adidas, who had not yet attracted any negative
publicity, began making improvements in their factories just to
prevent being tarred by the Nike brush.
What is the bottom line? Corporations do change their
behaviour over time—in response to changes in laws and
regulations, and also in response to changes in consumer
attitudes. If governments can be relied upon to establish and
enforce rules and regulations in the public interest, and
consumers continue to actively express their preferences
through their decisions in the marketplace, then firms may be
able to be socially responsible and profit seeking at the same
time.