Today, most multinationals have a conspicuous social conscience. They publicize their internal codes of conduct, monitor labor conditions in their global supply chains, and require suppliers to meet basic labor practice standards. But despite efforts to be better global citizens, companies by themselves are unable to eliminate abuses in their supply chains. In fact, so long as the countries with which they do business turn a blind eye to labor abuses or can’t manage the problem, companies have few options—short of canceling contracts—to reduce exploitation and safeguard their reputations.
A version of this article appeared in the May 2005 issue of Harvard Business Review.