Journal of World Business 39 (2004) 49–60

Ethics in international business: multinational approaches

to child labor
Ans Kolka,*, Rob Van Tulderb
a
Amsterdam graduate Business School, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam, The Netherlands
b
Rotterdam School of Management, Erasmus University Rotterdam, The Netherlands

Abstract

How do multinationals address conflicting norms and expectations? This article focuses on corporate codes of ethics in the
area of child labor as possible expressions of Strategic International Human Resource Management. It analyses whether 50
leading multinationals adopt universal ethical norms (related to exportive HRM) or relativist ethical norms (related to adaptive
HRM and multidomestic strategies). Child labor is not an issue where universalism prevails. Although some multinationals
adhere to universal ethical norms, HRM practices are largely multidomestic. To manage the ethical dilemmas, shown from case
material, strategic trade-offs (concerning strategy context, process and content, and particularly organizational purpose) are
outlined.
# 2003 Elsevier Inc. All rights reserved.

Managing across borders increasingly includes dif-
ficult ethical dilemmas, as pointed out in large num-
bers of publications on this topic (e.g., Bansai & Sama,
2000; Buller & McEvoy, 1999; DeGeorge, 1993;
Donaldson, 1989; Enderle, 1999; Van Tulder & Kolk,
2001). The field of business ethics, which aims to
formulate requirements for companies and the man-
agers who act on their behalf (Kaptein & Wempe,
2002), therefore also pays attention to multinationals.
Recent attention has, following the resource-based
perspective, focused on the potential of ethical cap-
abilities to improve multinationals’ competitive
advantage (Bowie & Vaaler, 1999; Buller & McEvoy,
1999; Litz, 1996). Bowie and Vaaler (1999) emphasize
the high asset specificity of certain ethical commit-
ments and the importance of avoiding their dilution,
* cosmopolitan ethics. This tripod is, however, not seen
Corresponding author. Tel.: þ31-20-525-4289;
fax: þ31-20-525-5281.
E-mail addresses: akolk@fee.uva.nl (A. Kolk),
rtulder@fbk.eur.nl (R. Van Tulder).
leading to the argument for universal moral standards
for multinational corporations. According to such a
‘market morality,’ markets would induce multina-
tionals to refrain from cultural relativism.
Buller and McEvoy (1999) take a different
approach, outlining the need to gear ethical capabil-
ities to overall corporate strategy and the vital role for
strategic human resource management (HRM) in this
respect. Building on the integration/responsiveness
grid (Bartlett & Ghoshal, 1989; Prahalad & Doz,
1987) and Taylor, Beechler, and Napier’s (1996)
Strategic International Human Resource Management
approach, they distinguish three possible configura-
tions. A global strategy might be accompanied by
exportive HRM and universal ethical norms; multi-
domestic strategies by adaptive HRM and relativism;
and a transnational strategy by integrative HRM and
as rigid and excluding other options. Using child labor
as an example, Buller and McEvoy (1999) suggest that
for such an ethical issue multinationals might follow a

1090-9516/$ – see front matter # 2003 Elsevier Inc. All rights reserved.
doi:10.1016/j.jwb.2003.08.014
50 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60
universal approach (e.g., through a corporate code of
ethics), even in the case of a multidomestic, adaptive
strategy. At the same time, gift giving could be an
example where local traditions are respected, even by
multinationals that strive for global consistency.
In spite of strategic HRM and ethics, a ‘moral free
space’ thus still exists, in which context matters, and
where managers have to deal with conflicts of relative
development and cultural traditions. As Donaldson
(1996: 56) put it, ‘In this gray zone, there are no tight
prescriptions for a company’s behavior. Managers
must chart their own course.’ This moral free space
is likely to be issue-specific as well (cf. Husted, 2000).
Child labor is such a topic where host-country and
home-country (international) norms sometimes
diverge, with different perceptions of what constitutes
child labor, the position of children in society and the
standards that must be adopted (Kolk & Van Tulder,
2002a). Donaldson (1989) also points at the fact that
views of ‘minimally sufficient education’ for children
depend on countries’ levels of economic development.
In that sense, child labor might be less susceptible to
universalism than Buller and McEvoy (1999) sug-
gested. This paper examines how multinationals
address these dilemmas related to conflicting norms
and expectations, focusing on corporate codes of
ethics as the instruments for expressing HRM strate-
gies. It conceptualizes universalism versus relativism
in the case of child labor codes, and analyses multi-
national policies in this regard as well as the degree of
consistency between norms and their specific com-
pany-internal application.
Existing research on codes of conduct has concen-
trated on descriptive surveys and content analysis,
with rather limited attention to the peculiarities of
multinationals. If multinationals are studied, a sectoral
and/or country approach is generally followed, so far
with scant interest in finding firm-specific factors that
might explain differences. Finally, this research has
focused on aspects that determine whether companies
adopt codes of conduct or not. The search for explana-
tions for ethical/HRM configurations is therefore by
necessity more exploratory, with emphasis on sugges-
tions for further research directions.
Furthermore, the more managerial implications can
be explored by relating corporate decision-making
on child labor to companies’ strategic choices in gen-
eral. In order to assess the effectiveness of Strategic
International Human Resource Management, it can be
positioned in a number of fundamental strategic
trade-offs, which includes universalism/convergence
versus localism/diversity (or particularism, as it has
been called, see e.g., Hampden-Turner & Trompe-
naars, 2000), but also the extent to which companies
want to focus on planning and control or a more
incremental approach to organizational change, and
aspire to be industry leaders or rather follow main-
stream developments. Pettigrew (1992) distinguishes
three logically distinct, yet related areas of strategy:
strategy context, strategy process, and strategy con-
tent. To these three basic categories, De Wit and
Meyer (1999) have added ‘organizational purpose,’
identifying, for the resulting four areas, ten ‘trade-
offs’ or strategy tensions (Table 1). In the final section
of this paper, these ten trade-offs will be used to
explore the strategic managerial aspects related to
child labor codes, on the basis of the ethical dilemmas
emanating from the analysis. It is in the organiza-
tional purpose where the tension between profitabil-
ity and responsibility, and between shareholder and
stakeholder values finally crystallizes, as the paper
underlines.
1. Child labor codes
To examine multinationals’ approach to child labor,
we collected corporate codes of ethics (frequently also
designated as ‘codes of conduct’ to distinguish such
external, societal, usually international documents
from the more internally-oriented ethical ones). From
a set of approximately one hundred codes of the
largest multinationals and companies that have been
pioneers in the field of corporate social responsibility,
those codes were selected that explicitly addressed the
issue of child labor (Kolk, Van Tulder, & Welters,
1999). Only 13 large companies turned out to have a
code with such provisions. Therefore, we added a set
of slightly smaller firms that are known as pioneers in
the adoption of codes (Van Tulder & Kolk, 2001;
Wolfe & Dickson, 2002). These appeared to have a
substantially higher share of child labor provisions.
The sectors in which these leading companies operate
are the ones with the highest likelihood of child labor:
retail and apparel (Kolk & Van Tulder, 2002a; Wolfe
& Dickson, 2002). The selection procedure resulted in
 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60 51

Table 1
Strategy issues and trade-offs

Category Strategic issue Strategic tension Strategic perspective

Strategy context International context Globalization Localization Convergence Diversity

Industry context Compliance Choice Industry evolution Industry creation
Organizational context Control Chaos Leadership Dynamics
Strategy process Strategic thinking Logic Creativity Rational thinking Generative thinking
Strategy formation Deliberateness Emergence Planning Incrementalism
Strategic change Revolution Evolution Discontinuous change Continuous change
Strategy content Business level strategy Markets Resources Outside-in Inside-out
Corporate level strategy Responsiveness Synergy Portfolio Core competencies
Network level strategy Competition Cooperation Discrete organization Embedded organization
Organizational purpose Profitability Responsibility Shareholder values Stakeholder values

Source. Based on De Wit and Meyer (1999).

a total set of fifty so-called ‘child labor codes.’ The
appendix lists the 50 companies, of which more than
60% originates from the US, and 35% from Europe; no
Japanese companies could be included in the sample.
Almost 75% is active in the apparel industry, with the
remainder spread over a variety of sectors.
While the relatively small number of child labor
codes issued by large industrial companies thus has a
clear sector effect related to types of products and
labor intensity, there is also another possibility for the
absence of child labor codes, as the case of Shell
illustrates. This company has a corporate code of
conduct without explicit child labor provisions, but
it issued a separate, rather extensive ‘management
primer’ on the issue, which clearly analyzes the
dilemmas, to which we will return later. Moreover,
other companies with a child labor code also point at
the fact that it cannot include everything. Levi Strauss,
for example, notes that ‘A code of conduct is a
statement of principles, which should be supported
by implementation policies in the factories from
which the company sources. Therefore, not everything
is detailed in a code of conduct, as often the solutions
to situations are on a case-by-case basis, depending on
what is the most suitable form of support.’ And Nike
states that ‘Codes of conduct are not the only formal
strategies that companies have. In case the use of child
labor is detected, other formal policies come into
force. However, these policies are not visible to the
public. But the code of conduct would become an
enormous document, if all the possibilities are
addressed at each and every provision.’
With these caveats in mind, all the fifty codes
collected were examined with an existing standardized
framework of analysis, adapted to the peculiarities of
child labor (see Table 2). This framework focuses on
the specificity of the child labor provisions included in
the codes (both with regard to contents and scope), and
the compliance mechanisms (monitoring and sanc-
tions in case of violations). For the purpose of this
paper, particular attention was paid to two aspects:
standards and the company-internal applicability of
minimum-age norms (respectively components 1.4
and 1.1/1.2 in Table 2). Both serve to identify a
multidomestic versus a global approach. The other
aspects in the table, which as such do not present
evidence on universalism or localism but involve
implementation and compliance, will be mentioned
in the paper where relevant.
‘Standards’ refer to the extent to which corporate
codes mention international ILO (International Labor
Organization) and UN (United Nations) conventions
on child labor, which can be done either explicitly or
implicitly, through the inclusion of the major provi-
sions of international organizations’ standards in the
corporate codes. Alternatively, child labor codes can
also refer to host-country or home-country laws, or to
none of them. Industry standards, such as those that
have emerged recently in for example apparel, are not
included in this category, as they do not represent
governmental attempts to arrive at generally applic-
able, legal rules. It must be noted that the codes that
have been analyzed do not refer to sector standards,
possibly because these are too recent or seen as less
52 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60

Table 2
A model to analyze and compare codes of conduct on child labor issues

Criteria Short elaboration Classification

Specificity 1.1 Minimum age to Does the code include a minimum age to Yes (age); no
employment employment? If so, what age?
1.2 Applicability Is this a universal minimum age or are N.a.; universal; country-specific
country-specific exceptions indicated?
1.3 Organization targeted To whom is the code addressed? General, Actor category (exact wording)
governments; internal operations of specific
firms; business partners (suppliers,
subcontractors, vendors, manufacturers)
1.4 Reference Is reference made to international standards None; home; host;
(ILO, UN), either implicit or explicit, or to international (implicit/explicit)
home-country or host-country laws?
1.5 Nature of code Are alternative measures included in the code Broad; strict
(such as education for children)? Or does the
code only prohibit child labor?
Compliance 2.1 Monitoring systems Good insight into system and process (clear); Clear; clear to vague; vague; none
and processes reference to some parts, but criteria or time
frames are lacking (clear to vague); only general
reference to monitoring without details (vague)
2.2 Position of Firms themselves (first party); BSGs (second party); Ranging from: 1st to 6th party
monitoring actor external professionals paid by firms (third party);
combinations of different actors (fourth party);
NGOs (fifth party); legal authorities (sixth party)
2.3 Sanctions Measures have no large implications, e.g., warnings None; mild; severe
and exclusion of membership (mild); threat to
business activities (severe)
2.4 Sanctions to third parties Measures such as fines, or demands for corrective N.a.; none; mild; severe
action (mild); severance of relationship, cancellation
of contract (severe)

Source. Kolk and Van Tulder (2002b).

‘hard’ than those prescribed by law. Earlier research
has shown that codes drawn up by industry associa-
tions are least specific and have the lowest compliance
likelihood compared to codes developed by three other
types of actors (companies, international organiza-
tions and non-governmental organizations; Kolk
et al., 1999). A few companies in the set of fifty base
their code on the Social Accountability 8000 Standard
(SA8000; see the next section), developed by the
Council on Economic Priorities Accreditation Agency
(CEPAA, now renamed to Social Accountability Inter-
national, SAI), but SA8000 is firmly rooted on the
recognition of ILO and UN conventions.
In addition to these legal norms, we focused on the
company-internal HRM issue of the minimum age for
its employees. This involves the question whether a
company regards a minimum age to employment as
universal, regardless of the country where it operates,
or as country-specific and thus contingent on the
situation in its various locations.
2. Global or multidomestic approaches to
child labor?
Of the fifty multinationals with child labor codes,
none mentions home-country laws. Codes never refer
to the standards that are applicable in the companies’
country of origin (usually the US or Europe). This can
be explained from the fact that international conven-
tions have incorporated prevailing ideas in Europe and
North America about those requirements for child
labor employment that are deemed feasible in the
international context. Home-country laws, which are
usually stricter, therefore apparently fall beyond the
scope of corporate codes.
 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60
Whereas home-country standards are not men-
tioned in codes of conduct, multinationals do refer
to host-country laws and/or to international standards.
Typical examples of the former are Lands’ End, which
prohibits ‘child labor below the minimum working age
in the host-country’ and KMART, which states that
‘Suppliers and their subcontractors must comply with
local child labor laws and regulations. Children under
the local age will not be employed by the supplier.’ A
case in point of the reliance on international standards
is Hennes & Mauritz, which explicitly follows the
definitions of children laid down in international
conventions, also with regard to the rules for types
of work allowed under apprenticeship programs.
As Table 3 shows, one quarter of the companies
refers to international conventions, whereas slightly
more than half of them only mentions to adhere to the
laws in host countries. The remaining 20% does not at
all indicate its standards. The reliance on international
child labor standards is higher than previous research
on codes of conduct in general showed, where refer-
ence to international conventions remained below
20% (Kolk et al., 1999; OECD, 1999). Both studies
also observed a much higher corporate commitment to
observe the local laws in the countries of investment,
which is in fact not a very surprising statement since
this seems a basic condition for doing business in a
(host) country in the first place. In the case of child
labor norms, it can be concluded that a multidomestic
approach is more prevalent than a global strategy, but
that both are followed by a considerable number of the
multinationals studied.
One of the main issues concerning child labor is the
minimum-age requirement, in other words, at what age
do companies regard children as old enough to become
their employees. Almost all multinationals that stipu-
late a minimum age to employment explicitly mention
host-country specificity. They thus adopt a multido-
mestic ethical strategy. Only a very small percentage
Table 3
Ethical norms referred to in child labor codes (n ¼ 50)
Standard Percentage
Host-country laws only 52
International conventions 26
None 22
53
Table 4
Company-internal applicability of minimum-age requirements
(n ¼ 50)
Applicability Percentage
Country-specific 66
Universal, worldwide 6
Not indicated 28
adheres to a minimum-age requirement that applies to
all locations, and is thus universal (see Table 4). An
example is Sara Lee, which states that ‘while the legal
definition of ‘‘children’’ sometimes varies from coun-
try to country, Sara Lee will not knowingly employ
individuals who are under 15 years of age.’
Phrased in terms of Buller and McEvoy’s (1999)
configurations, a global strategy can thus be observed
in the case of the child labor norms (a universal
approach to ethics). This is, however, relatively sel-
dom with regard to the company-wide application of a
major component, the minimum age to employment
(which would represent exportive HRM practices).
Hence, even if multinationals have a global instrument
such as a code of conduct with child labor provisions,
their approaches can much more be characterized as
local responsiveness, although this picture does not
apply to all of them.
Moreover, ethical and HRM approaches can
diverge, in that the former is universal (representing
global integration), whereas the latter is adaptive
(a multidomestic strategy). Table 5 presents this infor-
mation for those 35 multinationals that have made
their ethical and HRM approaches explicit in their
child labor codes. Almost 70% has an internally
consistent approach for the two dimensions, which
aims, in nearly all cases, at local responsiveness. By
contrast, 30% supports universal ethical norms, while
following a country-specific approach in the imple-
mentation of HRM practices.
Table 5
Classification of explicit ethical and HRM approaches in child
labor codes (in percentage n ¼ 35)
Ethics: norms for HRM: applicability of child labor policy
child labor
Exportive Adaptive
Universal 3 31
Relativist 0 66
54 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60
This phenomenon reflects the different perceptions
of child labor and the position of children in society
with which multinational managers are confronted in
their international activities. Frequently, diverging
views can be noted between the host countries in
which multinationals operate and their country of
origin. In their home countries, companies face a quite
different set of expectations about their role in society,
and possibly stakeholder pressure that deviates from
what host governments find reasonable. This can lead
to difficult dilemmas, for example, with consumers at
home urging a complete ban on child labor, and
accompanying strict monitoring of compliance, while
company plants are located in countries where the host
government support and the regulatory infrastructure
is lacking, and where child labor is (still) as common
as it was in many Western countries a century ago.
Multinationals run the risk of being accused of show-
ing a lack of respect for cultural traditions, and for
interfering with national approaches. Apparently, one
way to deal with this complexity is to adhere to
universal ethical norms, while adapting the implemen-
tation more to local circumstances.
The way in which Shell approaches child labor in its
‘management primer’ clearly shows awareness of
these dilemmas, on the basis of the experiences of
other companies. Shell points at the difficulty that a
very strict prohibitive policy would preserve its good
reputation with customers, but might, at the same time,
in some cases harm the situation of children by driving
them to more hazardous work. However, as the primer
notes ‘A company which focuses on the needs of its
supplier and local community stakeholders might well
have a different response to the same problem. Rather
than seeking to eliminate all work undertaken by
children, it might choose instead to change the nature
of work, in line with ILO recommendations and
ideally in consultation with a local community based
organization. The risk with this approach is that
although the children may benefit from restructured
working hours and conditions, the company may be
exposed to allegations of exploitation from quarters
where the complexity of the child labor issue is not
understood.’ The Shell advice to its companies is
therefore to gather detailed information on a case-
by-case basis, to develop an ‘appropriate response in
the context of the particular country and business
sector’ and thus ‘respond to local needs in their
markets across the world’ through a ‘multi-local’
approach. International universal standards from the
ILO and UN serve as references when drawing up
models and contracts.
Looking at the child labor codes in our study,
another way out of these difficult dilemmas seems a
less explicit child labor code. As Tables 3 and 4 show,
a considerable percentage of the multinationals does
not disclose information about their ethical and/or
HRM approaches at all. They merely state, for exam-
ple, to support a ‘ban on forced child or prison labor’
(Body Shop), to ‘reject the use of child labor’ (Elf
Acquitaine) or to ‘not knowingly allow the importa-
tion into the United States of merchandise manufac-
tured with illegal child labor’ (JCPenney). By leaving
such aspects vague, these companies to some extent
also avoid other dilemmas that explicit child labor
codes raise (Kolk & Van Tulder, 2002a).
One issue concerns the appropriate minimum age,
for which different standards are followed. Important
factors in this regard are the type of work (light or
heavy), local cultural perceptions about the moment at
which children become adults, a country’s stage of
development, and the existence of alternatives (such as
education) for non-working children. Explicit child
labor codes, moreover, lead to questions concerning
monitoring (how and by whom), and the enforcement
in case the provisions are violated. Whereas strict
measures tend to be received with approval in com-
panies’ home societies, they may be counterproduc-
tive because the underlying causes of child labor are
not addressed, and the situation of the child workers
can be worsened by driving them into more hazardous
work in the informal sector. Final dilemmas concern
the extent to which multinationals are responsible for
the activities of direct suppliers and other companies
in the whole supply chain, and for supplementing
governments in case of insufficient regulatory and
enforcement capabilities.
Case research into companies that have experience
with explicit child labor codes provides some inter-
esting illustrations. Nike, for example, has reviewed
its code of conduct a few times since 1992, which
included an increase in the minimum age from 14 to
18 years for footwear factory workers and from 14 to
16 for equipment and apparel, exceptionally high
compared to other company codes and the ILO
minimum-age convention. The company also started
 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60
an internal compliance program, supplemented with
external monitoring, but this seems not to have been
sufficient to silence the staunchest critics. Its website
reflects the way in which Nike tries to openly address
this critique, with ample information about the mon-
itoring of facilities and the dilemmas the company
faces after the introduction of its latest code.
A different approach to monitoring has been taken
by C&A, which set up its own internal unit, an
organization structured in such a way as to be fully
independent of the company’s commercial activities.
It has full and independent authority to monitor the
standards included in the code of conduct, and pub-
lishes an annual report. The company does not object
to third-party, external auditing, but prefers a detailed,
so-called ‘grass-roots’ approach from an organization
that has a profound understanding of C&A’s sourcing
system, the national context of its suppliers, and the
peculiarities of garment production.
Chiquita Banana almost completely follows the
SA8000 standard, including all references to interna-
tional conventions, but with a few modifications,
primarily to take account of workplace issues specific
to agriculture. The company’s strict child labor provi-
sions do not apply to family farms, small-scale hold-
ings in the seasonal, non-banana businesses which do
not regularly employ hired workers. This is also meant
to allow for employment of a farmer’s own children in
seasonal activities. WE’s code of conduct is fully
equivalent to the SA8000 standard. In line with this
standard, both companies include provisions for reme-
diation of children found to be working in supplying
factories by giving ‘adequate support to enable such
children to attend and remain in school until no longer
a child.’
Such a broad approach to child labor, in which
responsibility for the fate of the children prevails over
strictly punitive measures towards suppliers, is taken
by a very few other companies as well. Hennes &
Mauritz explicitly recognize the social context in
which children are forced to work, emphasizing that
it cannot be solved without broader policies. The
company therefore underlines its responsibility for
ensuring that measures are taken in the child’s best
interest, considering its specific social situation, edu-
cation and age. Similar statements are included in
Nestlé’s code of conduct, which states that ‘ill-con-
sidered policies and commercial measures can make
55
the situation worse for children,’ and showing clear
awareness of the broader societal context and the
complexity of the causes of child labor.
These experiences of companies with explicit child
labor codes clearly show the dilemmas involved in
addressing this issue. Most companies have been less
explicit in their codes so far, as our data show.
Although we cannot draw definite conclusions about
the type of ethical and HRM strategies for all multi-
nationals studied, the analysis clearly shows that child
labor is not an issue where universalism prevails. The
picture is more diverse, with both global and multi-
domestic ethical approaches, but predominantly mul-
tidomestic HRM practices.
3. Implications for research
As already mentioned in the introductory section,
the few studies that have analyzed child labor codes
have largely focused on content analysis and on the
factors that influence their adoption by companies,
generally taking a sectoral and/or case study approach.
Sectors that have received particular attention have
been the production of carpets, leather footwear,
soccer balls, tea, sporting goods and/or apparel (Kolk
& Van Tulder, 2002a; US DOL, 1997; Wolfe &
Dickson, 2002). The concentration on sector as impor-
tant determinant clearly stems from the fact that the
sectors mentioned have a relatively high number of
child workers. Moreover, they sell their products on
consumer markets, not on business-to-business mar-
kets, frequently even with children as final consumers.
These peculiarities strongly increase the vulnerability
of companies to societal demands for action on the
issue of child labor, and thus the likelihood of code
adoption, both at the corporate and the industry level.
Likewise, research in the international sporting
goods industry on multinationals from different home
countries (US, Europe and Japan) showed that the
domestic context influences corporate inclinations to
draw up codes of conduct, due to the dynamics of the
interaction between various stakeholders (Van Tulder
& Kolk, 2001). This domestic stakeholder context
affected US companies in particular. A study in the
late 1980s, which compared the US and Europe, also
underlined that the adoption of corporate codes started
much earlier and was more widespread in the US
56 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60

(Langlois & Schlegelmilch, 1990). Japanese multi- the diversity concerning global versus multidomestic
nationals are least inclined to adopt codes, which approaches, as noted for all multinationals, equally
seems in line with their general HRM approach that applies to the two other sets. While repeating the caveat
stresses informal coordination and control rather than mentioned before about the limited number of observa-
specific contractual relations. tions, the tables appear to underline the societal scrutiny
While sector and country characteristics thus influ- in the US in general, and the US apparel industry in
ence the adoption and evolution of corporate codes of particular, as the smaller percentages of ‘none’ and ‘not
conduct, these are likely to be of much less direct indicated’ reveal. Compared to the more than 20% for
importance once multinationals have them in place, all fifty multinationals, the percentages are much lower
and when it comes to the specific way in which ethical for the US, and especially for the apparel subset. These
standards are approached and implemented internally. companies seem to have felt much more pressure to be
Langlois and Schlegelmilch (1990) also noted that specific with regard to the child labor issue, mostly
there are no differences between European and US resulting in multidomestic approaches.
multinationals with regard to ethical principles that On the basis of this exploratory study, it can be
transcend cultures. Although the set of multinationals hypothesized that the most important determinants of
in our study is relatively small, this assumption could companies’ integration/responsiveness grid concern-
nevertheless be considered with regard to US multi- ing the ethics of child labor will be firm-specific.
nationals in general and US apparel companies in Research on the evolution of codes of conduct, includ-
particular. Of the fifty child labor codes, a consider- ing both adoption and stringency, has pointed at the
able percentage originated from the US (64%), and a structure of multinationals’ production networks (Van
smaller, but still substantial, share from the US apparel Tulder & Kolk, 2001). The spread and intensity of
industry (44%). international production increases coordination pro-
Tables 6A and 6B show the information on ethical blems, and thus the likelihood that multinationals need
norms and HRM practices for the three sets of multi- codes of conduct to guide their ethical conduct. How-
nationals, listing multinationals from the US, from the ever, this does not necessarily result in the adoption of
US apparel industry, and for the full set (as already a universal approach. Internationalization of produc-
presented in Tables 3 and 4). It can be concluded that tion thus seems less relevant for the specific imple-
mentation of an ethical strategy than for the adoption
Table 6A as such. A comparable logic seems to apply to the
Ethical norms referred to in child labor codes (in percentage) employment characteristics of multinationals, that is
the extent to which they employ production workers
Standard Whole set All US MNEs US apparel
(n ¼ 50) (n ¼ 32) (n ¼ 22) outside their home country, whether this involves their
own staff and production facilities or has been out-
Host-country 52 59 64
sourced, and the economic situation in the countries
laws only
International 26 25 27 where this takes place. Here again, codes of conduct
conventions can be vital instruments to improve coordination
None 22 16 9 within the multinational and to address its ‘vulner-
ability’ to ethical pressure from stakeholders, but seem
less important for the peculiar internal arrangements
Table 6B of such provisions. They do, however, represent pro-
Company-internal applicability of minimum-age requirements (in
mising venues for investigation into the adoption
percentage)
likelihood of ethical codes by multinationals.
Standard Whole set All US MNEs US apparel Particularly the distribution and types of markets,
(n ¼ 50) (n ¼ 32) (n ¼ 22)
and market shares appear important factors to be
Country-specific 66 75 86 considered further. It might be suggested that the more
Universal, 6 9 9 multinationals are truly internationalized in terms of
worldwide sales and markets, the greater the tendency to gear to
Not indicated 28 16 5
local contexts (cf. UNCTAD, 2001). This would also
 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60
involve the need to be responsive to specific require-
ments in these countries. It can be hypothesized that
when these countries are those where child labor still
exists, multinationals will be inclined to adopt a
multidomestic approach, whereas universality will
prevail in other cases. The latter might also apply
for multinationals with low degrees of internationali-
zation, or with a predominant market share in one or
more industrialized countries. In addition, it is worth-
while to analyze to what extent a reliance on universal
or local ethical standards also originates from firm-
specific characteristics which lead to large corporate
visibility, such as market leadership, brand reputation
and profitability. Further research into these various
aspects with potentially different degrees of influence
could help to shed light on the way in which multi-
nationals’ ethical approaches are related to their over-
all corporate strategies. This linkage is also very
important to management practice.
4. On the management of strategic and
ethical trade-offs
As pointed out in the introductory section, corporate
policy on child labor codes involves a number of
strategic trade-offs. They can be discussed in the
context of strategic tensions, especially to shed light
on how managers could deal with dilemmas, and
possibly embed it in the organizational purpose
(Table 1). The strategy context, discussed in more
detail in this article, deals not only with globalization
versus localization, and the managerial choice for
convergence (universalism) or divergence, which in
the case of child labor has so far led to multidomestic,
relativistic approaches. It also involves the trade-off
between ‘compliance’ and choice, where managers
will take the ethical and strategic behavior of other
firms in their sector into account. This implies a
consideration of the preferred position of the com-
pany: to what extent will it follow industry practices
with regard to reliance on international networks of
production and supply, and outsourcing? Moreover,
does it aspire to be a leader in ethics, with concomitant
uncertainties surrounding (rising) stakeholder expecta-
tions and possible criticism from other companies
in the industry, or merely aim to follow the general
evolution of approaches in the sector, usually embodied
57
in industry codes? As such, the rise of industry codes
can be expected to have a converging effect, and
follow-up research into the influence of these codes
will be worthwhile. It is, however, unclear how spe-
cific such industry attempts will be, in view of
previous research which showed that such codes tend
to be rather vague and weak on compliance and
monitoring, also when compared to company codes
(Kolk & Van Tulder, 2002b; Kolk et al., 1999). The
tendency towards the ‘lowest common denominator,’
noted in other studies on industry self-regulation as
well (e.g., King & Lenox, 2000) means that leadership
from individual companies in the sector continues to
be necessary to guide (future) ethical behavior.
This issue of leadership, included in the organiza-
tional context in Table 1, refers to the trade-off
between more or less managerial control. A more
‘empowered’ management style means a high toler-
ance for ambiguity. As noted by Whetten et al. (2000:
17), ‘managers with a high tolerance of ambiguity are
more likely to be entrepreneurial in their actions, to
screen out less information in a complex environment
and to choose specialties in their occupations that
involve less structured tasks.’ Buller and McEvoy
(1999) already noted that ethical management in
multinational corporations requires transactional lea-
dership, which thus in practice should be operationa-
lized as a high tolerance for ambiguity.
From the analysis of the child labor issue, it can be
concluded that a limited number of multinationals,
indicated in the case material in this article, have
adopted an active policy with explicit codes and poli-
cies, while others follow with rather general statements.
External pressure, either on the industry as a whole or on
individual companies, has sometimes played an impor-
tant role in this regard. Nike, subject to harsh criticism
concerning labor conditions from the early 1990s
onwards, is a case in point. This also applies to Shell,
forced to overhaul its overall ethical and environmental
positioning following Nigeria and the Brent Spar. Inter-
estingly enough, the company has issued a ‘business
primer’ on child labor, although the industry is hardly
involved in it, only perhaps indirectly through supply
chain relationships. Shell’s strategy of extending its
activities to retail seems to have inspired the company to
become a leader on the issue in its ‘old’ industry. It uses
this as a first step to facilitate stakeholder dialogue,
which aims at mutual learning processes.
58 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60

Table 7
Shareholder versus stakeholder values perspective

Shareholder value perspective Stakeholder value perspective

Emphasis Profitability over responsibility Responsibility over profitability

Organizational objective
Measure of success
Major difficulty
Corporate governance through
Stakeholder management
Social responsibility
Society best served by
To serve owner
Share price and dividends
Getting agent to pursue principal’s interests
Independent outside directors with shares
Means
Individual, not organizational matter
Pursuing self-interest (economic efficiency)
To serve all parties involved
Satisfaction among all stakeholders
Balancing interests of various stakeholders
Stakeholder representation
End and means
Both individual and organizational
Pursuing joint interests (economic symbiosis)

Source. Based on De Wit and Meyer (1999).

We thus see that those companies with a more
explicit ethical policy make particular choices with
regard to the strategy process and content. With regard
to strategic thinking (the trade-off between rational
and generative thinking), strategy formation (planning
versus incrementalism) and strategic change (discon-
tinuous or continuous), these companies engage in
continuous, incremental change, leaning more
towards generative thinking. The nature of leadership
involves an open attitude towards stakeholders in
different countries and settings, in which a universal,
standardized approach does not really fit. This also
means a perspective of an embedded (rather than a
discrete) organization, which focuses on cooperation
and dialogue.
Unilever provides a clear illustration with the state-
ment that ‘there is no such thing as a ‘‘universal’’
standard. The Universal Declaration of Human Rights
is intended to be such a standard (. . .), but is often
interpreted in different ways. Observance of ethical
standards (. . ..) is also in our commercial interests.
Companies like ours are very much dependent on the
trust that they receive from society. In a continuous
dialogue with society, companies must establish what
is acceptable and what is not. That differs from one
society to another and from one period to another.’
(Tummers, 1999: 54).
Likewise, some leading companies mentioned in
earlier sections of this article explicitly acknowledge
responsibility for the fate of the children found work-
ing in supplying factories and recognize the broader
social and economic context. In such a broad approach
to child labor, the code of conduct is part of an ongoing
negotiation process, in which the company reckons
with the implications of its policy for internal and
external stakeholders, including (former) employees,
managers and suppliers (at whatever distance in the
supply chain), and the effects on other companies in
the industry.
The linkage between ethics and corporate strategy
ultimately affects the organizational purpose, which
underlies all other strategic trade-offs. In the trade-off
between profitability and responsibility, and between
shareholder and stakeholder values, companies that
want to integrate ethics will lean more towards the
stakeholder values perspective and emphasize
responsibility, not only profitability. Table 7 outlines
the different elements in these two perspectives,
which might help managers to position themselves
when dealing with their ‘moral free space.’ While
companies that aspire ethical leadership will move in
the direction of the stakeholder values perspective,
those that prefer a low profile on ethics will stick more
to the shareholder model, with the ‘ethical followers’
in between. Although an active policy on an issue
such as child labor involves many dilemmas, as
shown in this article, an open dialogue and a clear
choice for stakeholder values can be expected to bring
many positive spin-offs as well, and avoid risks that
a more passive approach to ethics might entail. Case
study research, which compares a typical ‘stake-
holder-oriented’ company with a ‘shareholder-
oriented’ company could be helpful to shed more
light on these issues.
Acknowledgments
This article is one of the publications resulting from
a joint, long-term project on multinational enterprises
 A. Kolk, R. Van Tulder / Journal of World Business 39 (2004) 49–60 59

and corporate social responsibility. Inge Sloekers is TotalFinaElf

gratefully acknowledged for her contribution to creat- Tultex Corporation
ing the dataset on which this paper is based. Vendex KBB
Venture Stores
VF Corporation
Appendix A. List of codes of conduct Wal-Mart Stores
analyzed in this article Walt Disney
Warnaco
Allied Domecq WE
Body Shop Woolworth
Burton Group
C&A
Chiquita Banana
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