PULLMAN, Wash.—Reports of Bangladeshi girls sewing American brand-name garments over 12- to 15-hour shifts under squalid conditions for less than 20 cents an hour have turned the national spotlight in recent years on corporate social responsibility (CSR) in the U.S. apparel industry. Much of the media focus has been on large corporations profiting from these third-world sweatshops. But how do smaller apparel companies compare when it comes to doing the right thing by their employees, their investors, the environment and society?
Washington State University assistant professor Ting Chi learned in a preliminary study that senior executives of small- and medium-sized apparel companies run their businesses in a socially responsible way to the extent that they can, given they have fewer resources and personnel than larger firms that have dedicated CSR departments and managers.
Small business, large impact
During 2011, Chi interviewed the executives of eight smaller apparel firms in California and Washington about their perspectives on CSR. The firms reported annual sales revenues of $5 to $60 million, and they employed up to 500 people, he said.
Such a study was needed because these companies make up the majority of the industry, yet little is known about their CSR practices.
“Our understanding of CSR issues among small- and medium-sized enterprises (SMEs) has been largely lagging behind that of large businesses, although more than 80 percent of U.S. apparel companies are SMEs,” said Chi, a faculty member in WSU’s Department of Apparel, Merchandising, Design and Textiles.
“SMEs are not just miniature versions of large businesses,” he said. “Without effective participation by SMEs, the CSR movement in the U.S. apparel industry will never be complete. Given the impact of SMEs on the U.S. apparel economy and society at large, this is a unique opportunity to study a developing phenomenon that holds relevance for business and society.”
How is profit affected?
The executives at the smaller apparel firms Chi interviewed identified primary stakeholders to whom CSR policies are directed, including customers, investors, employees, local communities, the environment and suppliers.
The executives said their motivation for developing and implementing CSR practices was driven not only internally, from their own personal beliefs, but also from external factors, such as the possibility of getting more contracts by being perceived as a socially responsible company.
Most of the executives indicated that practicing their business operations in a socially responsible manner improved their firms’ public image, reputation and employee retention rate, though they couldn’t quantify how CSR policies improved sales, profit and return on investment.
“They’d like to see a proven causal relationship between CSR practices and better financial performance from a bigger sample analysis,” said Chi, who plans to expand the study to national apparel companies with more site visits and possibly an industry-wide survey.
Need for practical knowledge
But the executives said they are prevented from fully developing CSR policies in their companies by several factors: insufficient time and capital, lack of knowledge and expertise, and lack of visibility to the public.
“Yet the expectations on SMEs are the same as on big corporations,” Chi said. “The SME executives want more external help or support for them to learn and pursue CSR practices. I plan to continue to work in this area to get more applied knowledge to help U.S. apparel SMEs achieve CSR goals.”
The knowledge is desperately needed. Chi pointed to another recent example of human rights violations in Saipan, the largest of the Northern Mariana Islands and a U.S. commonwealth. Garment factory owners there, supplying clothing for large U.S. retailers, lured Chinese women and girls as young as 12 with the promise of good “American” jobs.
Once on the island, the women and girls were put to work for 12 hours a day, six days a week, for about $2 an hour. Some factory owners forced female workers to perform in live sex shows or become prostitutes.
“There are many CSR violations around the globe. As the forerunner of globalization and one of the most labor-intensive businesses, this industry has been confronting an increasing number of CSR-related problems,” Chi said. “In recent years, with the growing public awareness of and concern over social responsibility, more large corporations have proactively incorporated better practices in their business operations.”